Thanks to Krystal Knapp, writer for the Times of Trenton, for citing UnhappyFranchisee.com as a source for her recent article on the closing of the corporate-owned flagship Ricky’s Candy, Cones & Chaos store in Princeton, NJ (Princeton Borough sweetshop closes on a sour economic note).
Knapp’s article quotes comments left here and on the retired Franchise Pick website in which Ricky’s new president Donald Cheng blamed the economy for the struggles of the Princeton store and the chain as a whole. “The current economy has impacted the retail sector much more heavily than others. The Ricky’s model was heavily dependent on a robust economy where parents splurge on their children and friends,” wrote Cheng. “However, as the economy worsened, more people became budget conscious and retailers have to react by providing better value and Ricky’s did not adjust fast enough."
Cheng had promised a repositioning of the Ricky’s concept to adapt to current economic climate, starting with the Princeton store. After his short burst of comments here were questioned by current and former franchisees, Cheng was never seen nor heard here again.
The Times article includes some telling details of the financial woes of the failing chain, and its unsuccessful attempt at gaining bankruptcy protection:
In December 2008, the company filed for Chapter 11 bankruptcy. Among other creditors, court records show Ricky’s owed thousands of dollars in back rent to Nassau Tower Realty and $100,000 to the state in sales tax.
Ricky’s struggled to pay rent of $14,590 a month that increased to $15,673 a month in April, court records show. Ricky’s made a partial payment of $2,000 for September 2008, and the realtor tapped into a $75,000 deposit to pay for rent in the coming months. That money was exhausted and Ricky’s owed Nassau Tower $42,301 for March, April and most of February.
The bankruptcy was rejected by a judge and dismissed in May.
According to Knapp, “The Willy Wonka-esque franchise that sold candy, ice cream and other sweets went sour along with the economy, records show.”
Ricky’s demise may have occured “along with” the decline of the economy, but some argue not because of the tough economic times. According to Guest, commenting on a related Ricky’s Candy post:
…The one flaw of the article is the idea that the economic conditions were a factor in the fall of Ricky’s. NO, IT WAS NOT…… Court documents from the Ch 11 attempt clearly showed that even when the economy was roaring and Toll Brothers couldn’t build a McMansion fast enough Ricky’s was not making any money and the only income supporting the shell was the franchise fees and royalties paid by people who thought they were buying into a successful business model. The house of cards began to crumble once the store owners began to communicate directly and the fact checking began.
Was the Princeton store simply a franchise sales tool from the start?
Ricky’s Candy, Cones & Chaos franchisees have alleged that the Ricky’s concept was not viable from the start and the company’s – and founder’s – main goal was to sell franchises. Nearly all franchise stores have failed and closed, and angry franchisees are suing.
The shockingly high rent of the Princeton store suggests that it perhaps was designed to be a brand showcase and franchise sales vehicle rather than a profitable candy store. Could a candy store in Princeton, NJ, even in good economic times, realistically sell enough candy and cones to justify rent of more than $175,000 per year?
Or did Ricky’s corporate assume the high rent and high overhead would be recouped not by selling candy, but by selling the dream of owning a successful Ricky’s franchise?
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