When the founder and owner of the Scout & Molly’s fashion boutique in North Hills wanted to expand by selling franchises, she decided the smart move was teaming up with someone who knew how to maximize the business’s potential.
Lisa Kornstein Kaufman figured she could either “be a smaller part of something really big, or a bigger part of something really small.”
So Kaufman sold 80 percent of the Scout & Molly’s brand – but not the flagship store she owns in North Hills – to FranLogic, a franchise investment company in King of Prussia, Pa., led by Ed Samane. Samane, an eighth degree black belt in karate, also is the founder and CEO of a company that has 48 Pro Martial Arts franchises nationwide.
The franchising business the pair formed, FranLogic Scout Development, began offering franchises in 2015 and today has 30 stores. Based on franchises that have already been sold, “realistically, we’ll open at least another 30 this year,” Samane said.
From the beginning, Samane was convinced that the ambiance and the proactive ways of making customers feel comfortable that Kaufman had honed at her store would play well across the country. He also liked that Kaufman was “a dynamic founder” with a great story to tell prospective franchisees.
Another plus was that brick-and-mortar fashion boutiques have been performing pretty well despite the increased competition from online retailers.
“The boutique customer is looking for a personalized shopping experience and relationship with the person who is dressing them,” Samane said. “They are a customer that’s willing to pay a little more for service.”
Kaufman, 41, calls teaming up with Samane the “best decision I ever made, aside from marrying my hubby.”
Shortly after Kaufman and Samane teamed up, he told her he was sending two experts in writing franchise operating manuals down to Raleigh to learn how the business was run. She told him not to bother because she already had prepared a 40-page manual.
But Samane insisted they should make the trip anyway.
“They put together a 250-page operating manual,” Kaufman said. “That was the moment I realized we were going to be operating at a different level.”
This month, the Scout & Molly’s franchising team was augmented with the addition of Dawn Robertson, who has been president or CEO of several retailers, including Stein Mart. Robertson was named president of FranLogic Scout Development.
An individual Scout & Molly’s franchise requires an initial investment of $250,000 to $300,000, which includes a $50,000 franchise fee. Franchisees also pay a royalty of 5 percent to 6 percent.
One distinguishing feature of a Scout & Molly’s franchise is that retail experience isn’t a necessity for franchise owners.
“Someone who isn’t a retailer can step in and, by following the system, can have a high probability of success,” Samane said.
Terri Stein, a bank loan officer, is teaming up with Ami Bertrand, an operations specialist with a technology company, on a franchise store in Lexington, Ky., that is scheduled to open next month.
Stein noted that “as a banker, I have retail banking experience.” But she and her partner will be “absentee owners,” having hired an experienced manager – which is something Scout & Molly’s advocates.
Stein likes that Scout & Molly’s occupies a niche between selling blue jeans and “big-time event dresses” and will enable them to offer designer clothing that isn’t available in local big-box stores.
“Lisa has made contacts ... and knows designers that that we’ve never even seen before in Lexington,” she said.
As Kaufman describes it, Scout & Molly’s features “women’s contemporary clothing, mostly designer and moderately priced. It’s not low-priced and it’s not couture.” Tops range from $60 to $200, while dresses start at $98 and extend to $350.
Scout & Molly’s week-long training for new franchise owners and store managers stresses clienteling – that is, establishing relationships with customers.
Maryalice Keller is a franchisee who opened a Scout & Molly’s in Sarasota, Fla., 12 months ago.
“I would have to say that, overall, I’m pleased with my first-year results,” Keller said. “Knowing that it takes a good, solid three years to build a new business, I think I’m on my way.”
Like many Scout and Molly’s franchisees, her store hosts “Sip and Shop” events about twice a month.
A customer is invited to host up to a dozen of her friends at one of these events, which are typically held in the evening after the store is closed to the public. The store provides wine and refreshments and “some styling tips,” and the group also gets the opportunity to shop. They also get a 10 percent discount on their purchases.
The store also typically donates 10 percent of the event proceeds to a charitable organization selected by the hostess.
“So, over time, it’s allowing us to engage with more customers ... and it’s also a way for us to give back to the community,” Keller said.
Keller said she and her staff also make a point of getting to know what designers and styles their customers like.
“We’re always on the outlook for them,” she said. “We might text them about a great new dress that came in or call them when a new shipment of a brand comes in.” Such efforts, she added, are “very much part of the Scout & Molly’s culture.”
Growing up in Charlotte, Kaufman, now 41, was a tomboy who wasn’t much interested in fashion. But it was in her DNA.
“Ironically, my dad was a women’s clothing rep. He actually sold to stores like Scout & Molly’s,” she said.
Even as a young woman, Kaufman, who majored in communications at N.C. State University, was intimidated by boutiques and viewed them as “uppity.”
But, while she was attending graduate school at the University of South Carolina, she used to jog past a boutique with her two Labrador retrievers named – you guessed it – Scout & Molly.
“The owner was so friendly,” Kaufman recalled. “She would always come out to pet the dogs and talk to me. She didn’t care if I was sweaty.”
One day the owner mentioned she was looking for part-time help. Kaufman told her she had no experience but she’d be happy to fill in “until you find somebody.”
“I fell in love with it and I realized I had the ability to put people at ease and make them comfortable when they came in the door,” Kaufman said. “Before you knew it, I was selling more than the owner was.”
After getting her master’s degree in higher education administration, Kaufman took a job in business development with the Manpower staffing office in Raleigh. But she couldn’t stop thinking about opening her own store and left Manpower after less than a year to do just that.
With $20,000 that she inherited from her father, who died of cancer when she was 15, and an $80,000 Small Business Administration loan, she opened a Scout & Molly’s store at the Falls Village shopping center at Falls of Neuse Road in Raleigh in the spring of 2002.
From the get-go, the store thrived. And Kaufman did it all, aided by a minimal staff.
“I was the janitor. I was the light bulb changer. I cleaned the bathrooms. I did all the buying, the merchandising, and I was the main salesperson,” she recalled.
That was the way she operated, even after giving birth to two children, until she was diagnosed with multiple sclerosis in 2008. Knowing that she might have to be off work for weeks at a time, she hired a full-time manager, a bookkeeper and extra part-time help. She also sold a second store that she had opened in Chapel Hill.
And the business started doing better than ever.
“That is one of the things I tell my franchisees now,” she said. “If you want to control everything, you can’t do everything really well. If you are humble enough to surround yourself with people who are smarter than you in certain areas, that you can actually learn from, your business will perform at a different level.”
At first, Kaufman hesitated to tell people of her disease because “I didn’t want to be known as the girl with MS. I didn’t want it to change my identity.”
But ultimately she chose to be straightforward about it, reasoning that “I was in such a unique situation because I meet new people every day and I could use it as a platform to educate people and show them just because you have a disease, you’re not the disease.”
“I’m doing great now,” she continued as she knocked on the wooden desk in the rear of her North Hills store. “I haven’t had a flare-up in over three years. I’m so thankful.”