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When Customers Become Franchisees

Stocks in this article: PNRA AA ENR

3. Auntie Anne's
As a national sales rep for consumer brands including Dial Soap, Energizer (ENR) batteries, Northern Tissue and Brawny, Bob Phillips traveled cross-country for years, racking up more than 1 million in American Airlines (AA) frequent-flier miles. But no matter what airport he was in, Phillips would always seek out his favorite travel snack -- Auntie Anne's pretzels.

If you've ever had an Auntie Anne's pretzel, hot and covered with salt and melted butter, it's not hard to imagine Phillips' obsession with the treat. He once missed a flight as he waited in line for one.

In 2007, Phillips decided to turn that passion into a business and opened his franchise in a mall in Rogers, Ark.

Phillips' franchise differs than other Auntie Anne's. He owns the only Auntie Anne's/ Rocky Mountain Chocolate Factory franchise, an idea that became the solution to a potential space problem.

When researching sites for Auntie Anne's, Phillips came across availability in a mall, but the space was too big. But he'd heard that Rocky Mountain was also looking at space there. Luckily, the companies agreed to the joint space, which to customers looks like separate stores.

It's worked out well -- there are plans in the works for another dual franchised location in California -- but the arrangement presents its own challenges, Phillips acknowledges. There are separate cash register systems and requirements for preparing and selling product, and Phillips must make sure all 13 employees are trained for both.

Phillips had to figure out how to sell his products when foot traffic is light in the mall. One solution he came up with is offering promotions to employees of other stores in the mall. Each month he puts together a flier of specials and goes around to each store to drop them off.

"It lets them know we care about the other people who work for the stores," he says.

Phillips' passion for the brand and dedication to his franchise earned him an internal award as Franchisee of the Year in 2009. The company has roughly 1,100 stores.

He says he couldn't be happier that he made the switch from corporate sales to business owner.

Auntie Anne's "home office staff, support group -- everything is just top-notch and they follow through so well," he says. For now Phillips is content with his one location, but says he would be willing to look at further opportunities.

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