Lillian’s Continues Rapid Growth via Franchising
Women’s specialty retailer Lillian’s, which currently operates 28 stores in seven Midwestern and Southwestern states, plans to add two stores a month through franchising. Lillian’s has doubled in size in the past year and executed franchise licenses in 41 states.
Lillian’s charges franchisees approximately $50,000 in start-up costs, as well as vendor relationships and support and training. In a press release, Lillian’s officials termed the company’s franchise strategy “recession-proof.”
While there is no empirical way to prove whether Lillian’s franchise strategy is “recession-proof,” it should be noted that Lillian’s is rapidly expanding while many other retailers in the women’s specialty segment are experiencing significant financial downturns and contracting, rather than expanding, their store counts. Jones Apparel Group recently announced
plans to close 225 stores. In addition, retailers in the segment such as
Claire’s,
Bon Ton,
Ann Taylor,
Coldwater Creek,
Chico’s, and
Limited Brands have all reported varying quarterly and annual losses in sales, revenues, and profit margins.
It is also notable that other retailers, many of them in the foodservice vertical, are turning to franchising as a way of expanding during difficult economic times while avoiding the cost of opening new company-owned locations. Pizza retailer Papa John’s is offering
special discounts to new franchisees as a marker of its 25th anniversary. Coffee retailer Dunkin’ Donuts has publicly said it plans to expand via franchising in existing markets and enter new markets this year as part of a “steady and strategic growth strategy.” So far this year, Dunkin’ Donuts has used franchise development agreements to enter new markets including Chattanooga, TN, St. Louis, MO, Savannah, GA, and Owensboro, KY.
In addition, fast food chicken retailer Church’s Chicken recently unveiled a modular restaurant prototype designed to allow franchisees to open new restaurants with greater speed at less cost. Quick service restaurant chain IHOP is using franchise development to enter Vermont, which until recently was the only U.S. state without an IHOP location. During 2009, quick service restaurant chain Denny’s plans to add 30 new franchise units.
Outside of the foodservice vertical, Gamer Doc, a franchise-only retailer of video game products, is opening new stores in at least 10 different U.S. areas this year.
