Alison Nelson's West Village cafe and sweet shop has attracted all sorts of offers from would-be partners and even acquirers. Up until the beginning of this year, she had rejected them, vowing to expand her business, Chocolate Bar, on her own in a carefully controlled fashion.
That's when the entrepreneur got an offer from a totally unexpected quarter. Belhasa | United Restaurant Development, a company based in Dubai, wanted to license her concept and open as many as 30 Chocolate Bar locations in the Middle East.
Though at first she refused, "they were persistent, and kept contacting me and e-mailing me," says Ms. Nelson, 33. "The more research I did, the more sense it made to me."
She was impressed by the track record of her would-be licensee and attracted by the chance to add a second, potentially powerful, revenue stream.
URD, as it is known, specializes in franchise development and successfully introduced Seattle's Best Coffee and Cinnabon to the region.
"Doing [a licensing deal] in the Middle East, with a company that has done this before, seems safer to me than rolling out stores across the United States," Ms. Nelson observes.
Striking the deal
Ms. Nelson and a lawyer spent five months honing the deal with URD. Finally, in August, she signed an agreement. It gives Chocolate Bar an up-front fee, as well as an annual licensing fee for each store and a percentage of its sales. Chocolate Bar will also profit as the wholesale supplier of chocolate bars and truffles to the new locations.
In addition, the licensing arrangement detailed what the shops should look like. They will be modeled on the first one, at 19 Eighth Ave., but will be larger — a whopping 3,500 square feet instead of 650 square feet — they will be restaurants with full menus and have more seating.
In another development, Ms. Nelson is working on some recipes tailored to her newest market, including local ingredients like figs and dates. She plans to make two trips annually to the region to oversee her licensees.
"We want to retain the integrity of our brand and concept," says Jack Woodhull, Chocolate Bar's general manager. "That's what allowed us to expand in the first place."
To help gear up to meet demand from the other side of the world, Ms. Nelson has transferred some of the company's production to New Jersey [Manasquan] factories from smaller kitchens in Manhattan.
She has also been busy growing locally. She opened a second location this summer, in Manasquan, N.J.
Learning to let go
"When you're a small business owner, you get accustomed to wearing many hats and being in many places," Ms. Nelson says.
"It's an interesting step when you realize, if you want to expand your business, you have to trust other people and turn over some responsibilities."
If everything goes smoothly, Ms. Nelson would love to open stores in Philadelphia, Boston and a flagship here in New York. But, she says, it has occurred to her that "if it didn't work, I could always be that little shop in the Village."