Franchisee Takes Over 16 Handles And Aims To Reinvigorate It

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Neil Hershman, an experienced franchisee of 16 Handles, a New York City-based frozen yogurt chain, owns seven of its 30 all-franchised units. In August 2022, he and Danny Duncan, a noted You Tuber and influencer with over 1.5 billion views on his channel, acquired 16 Handles from its long-time founder. Their goal is to reinvigorate it, boost sales, and open more franchised units.

Who knows better how a franchise operates, and what is holding it back, than one of its own franchisees? And Hershman, who is 28-years old, based in New York City, and a former analyst at a hedge fund, is also a franchisee of other brands since he also operates three Dippin’ Dots, an ice cream store.

16 Handles stores are located mostly in the Northeast in New York, New Jersey, Connecticut and also in Florida, but is spreading its wings and expanding to Texas, South Carolina and Washington, D.C.

In 2021, according to Technomic, 16 Handles generated $18.7 million in sales, which was up 7.5% from the previous year. But 16 Handles also faced several setbacks.

Post-pandemic, it was forced to close three under-performing stores, two in Manhattan, and one at the Columbus Circle Turnstyle Underground Market in the New York City subway system, due to declining ridership.

It Launched in 2008

It was launched by Solomon Choi in 2008 in the East Village who ran it for nearly 14 years and now runs Jabba Brands, a restaurant consulting firm. It became known for its 16 different self-serve frozen yogurts and over 50 toppings and sauces.

Its name 16 Handles was a play on the then popular film “Sixteen Candles” (starring Molly Ringwald and John Cusack) and also invoked its original 16 yogurt flavors.

When he acquired the brand, Hershman described its status as “lacking energy with no growth in terms of franchising and very little growth in revenue,” despite a bounce back post-Covid. He made changes in his Murray Hill shop that boosted sales 10%, which he felt could be duplicated.

The New York Times Food section noted in late June 2023 that a host of ice-cream chains including 16 Handles, Cold Stone Creamery, Yogurtland and Pinkberry all scaled back post-pandemic.

Hershman is the majority owner and hooked up with Duncan, as a minority owner, who serves as chief creative officer, and develops new branding ideas and viral, guerilla marketing techniques.

But doesn’t being involved in two different franchises, Dippin’ Dots and 16 Handles, divert his attention? Hershman swats away that idea saying it creates “synergies since I own two brands in the frozen dessert marketing segment.”

Moreover, his management team consists of two franchisees, Lisa Mallon as VP of Operations and Training, and her husband Erik Mallon, as VP of Franchise Development, who run a 16 Handles in Fairfield, Ct. Having franchisees take a leadership role in franchising works because “you can’t tell someone how to run a successful shop until” you’ve done it, he suggested.

Reducing Start-Up Costs Makes 16 Handles More Attractive to Franchisees

In the past, franchisees in pricey Manhattan would have to pay as high as $600,000 to open a Sixteen Handles location. It reduced construction costs, created a quicker turnaround time, and has curtailed start-up costs that now range from $242,000 and up to $550,000 for a standard 1,500 square feet store, depending on locations and lease factors.

Its goal is to keep start-up costs under $350,000 including franchise fees, Hershman indicated.

To increase margins, it has brought many of its toppings and flavor creations in house, “which allows us to control the costs and buy ingredients direct in bulk,” he noted.

Hershman has ambitious goals to improve the culture of 16 Handles. He aims to make it more welcoming. “Our staff is trained to greet each customer at the door, and for example, ask if they’d like to taste a sample flavor,” he said.

Moreover, it’s expanding the product line going beyond traditional frozen yogurt to encompass, soft-serve ice cream, Italian ice, and edible cookie dough. To make that last item happen, he acquired Cookie Dough Confections, to provide that product.

It’s also ramping up customer loyalty through its own app. If customers earn points for free items, they’ll keep coming back for more was his underlying point.

Hershman says that it attracts customers in several waves: upon opening, people line-up for lunch of frozen yogurt plus granola or fruit, then around 3 p.m. the after-school rush happens, and from 7 to 10 p.m. comes the post-dinner dessert. Many of its customers are Gen Xers and millennials who grew up with frozen yogurt, which debuted in the late 1980’s or so.

Healthier than Ice Cream

The website Healthy Eats noted that a “half-cup serving of frozen yogurt typically averages 100 to 140 calories, and zero to three grams of fat, compared to some premium brands of ice cream, which contain three times more calories and five times more fat than frozen yogurt.”

Consumer response on Yelp may help explain why 16 Handles needed new leadership. Coco from Manhattan likes the flavors, but complained that it takes very few toppings to reach a $7 price. And Christine from the Bronx noted that her server was having a conversation on the phone.

Nonetheless, it has ambitious plans for growth. It expects to open five or six more locations by the end of 2023 with another 12 on board the next year and growing to around 50 to 60 locations by 2024.

He described the keys to its sustained success as: 1) Concentrated focus on the customer, 2) Maintaining the franchisee’s involvement with their stores, 3) Making opening a store easy and less expensive.

How does he expect to attract new franchisees? “We’re working the ground up, going to trade shows, meeting with entrepreneurs, approaching landlords before we reach out to franchisees,” he replied.

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