Apricot Lane is ideally positioned in the world of women’s fashion.

By Chris Kelsch

Apricot Lane Boutique Founder and CEO Ken Petersen was no stranger to franchising when he founded Apricot Lane in 2007. In 1991, while serving as a firefighter, Petersen suffered a devastating accident.

Realizing he could either remain a firefighter only through a desk job, Petersen decided to leave that life and explore his entrepreneurial side. He ventured into the retail world, and ended up starting Country Clutter, a retail gift and collectibles franchise.

In 2007, however, Petersen took a good long look at the world of women’s fashion and noticed there was something missing.

“You had small, independent boutiques and big national stores,” Petersen recalls. “But you really had nothing in the middle. We realized we could fill that void.”

What Petersen realized was that when it came to women’s fashion, there were no franchise concepts offering boutique owners the infrastructure and purchasing power that large national chains enjoyed. To fill this void, Petersen started Apricot Lane, which has since become the nation’s leading women’s fashion boutique franchisor, with 72 stores spread across 34 states.

“With this concept, franchise owners can get leveraged buying and strong technology with cloud-based point-of-sale [POS] systems,” Petersen notes. “We have given the independent retailer the same strengths that a national chain offers.”

Small is Big

Petersen’s idea has definitely struck a chord, and not just in fashion. Realizing that smaller stores are more connected to their communities as well as their customer base, Target announced in 2016 that it would be opening hundreds of small-format stores in dense urban areas and college towns. Best Buy has announced in recent years that it will open 800 small-format stores as well, in similar areas.

“You see what is happening across a variety of retail sectors, and you see that small is the next big story,” Petersen explains. “Smaller stores can really cater to their customer base, and that is us. We are perfectly positioned.”

And while being small offers the opportunity to better serve customers, Petersen’s concept can offer another huge advantage: flexibility. “You know, you think of franchising and the words ‘franchising’ and ‘flexible’ don’t go in the same sentence,” Petersen says. “But you have to realize that customers in Montana are different from those in Texas and are different from those in Florida. The idea is to give individual franchise owners some flexibility in the items they stock.”

What Petersen quickly came to realize was that by giving its franchise owners more flexibility in purchasing, he also uncovered a key growth driver: the ability of franchise owners to contribute their views on which items could be successful. “The franchisees are able to let us know what is working, and what isn’t working,” Petersen explains. “Just as important, they are able to do their own sourcing, and contribute ideas that come from local artisans in their communities.”

For Moms and Daughters

Although it has a lot of flexibility with individual items, Apricot Lane was founded as a fashion boutique for moms and daughters. Again, Petersen came up with the idea after studying the fashion market and seeing that something was missing.

“When we looked at fashion, we knew we didn’t want to be a juniors retailer,” Petersen recalls, referring to a market that was saturated with players such as Forever 21. “And I also knew I didn’t want to go the other end, which already had successful stores like Talbots.”

What Petersen really wanted to do was go after a broad but unique customer base by creating a store where both moms and daughters can shop. “Again, we found there weren’t that many competitors in the middle,” Petersen says. “We really designed and developed from that mentality.”

Adhering to that basic idea but expanding on it in certain areas, the end-result is a truly unique shopping experience, Petersen says. “When I think of boutiques, I think of very unique stores,” he says, outlining his vision. “They are almost an adventure, where you can find something that is special and not everyone has.” 

Once the concept was developed, the key challenge then became finding the right merchandise for the stores to sell. Here, Apricot Lane’s headquarters location serves as an advantage because it is not far from Los Angeles, a key fashion center, especially for purchasing.

Apricot Lane is able to see a lot of up-and-coming trendy styles and designers, but again, the franchise owners are given the freedom to choose styles that ultimately fit their markets. “This really is the beauty of the model,” Petersen explains. “While owners can certainly bring in the latest names from either coast, they are ideally connected to their own customer base and orient their purchasing toward that base.”

And though items in each store may vary, the general premise is fairly consistent. Typically, stores carry denim, jewelry, accessories such as handbags and other items found in a full boutique. “We have a little bit of everything,” Petersen notes. “Though the categories are consistent.”

Culture of Support

Although its market of moms and daughters is fairly unique, Petersen’s day-to-day approach to keeping Apricot Lane successful is singularly focused. “Our whole philosophy is, basically we are as successful as our franchisees,” Petersen says. “In essence, we are always asking ourselves, ‘What can we do for our franchisees and therefore have everyone benefit?’”

That support has been amplified with technological upgrades, which include webinars and support videos, both designed to educate the franchisee and offer suggestions from merchandising to store layout. Petersen also recently hired a new president, Patrick Stewart. Stewart formerly served as the chief marketing officer for Sears and K-Mart, and will be the first person to hold an executive title not promoted from within the company. And while Stewart’s retail expertise was a major factor, Petersen notes he was also the right fit culturally, which is a must.

“Culture is so important,” Petersen explains. “My view is ‘life is too short.’ You have to be able to have fun with this.” Petersen’s views on the culture he has created also reflect a deeper perspective on what it means to own a business. “My philosophy is ‘we don’t own any of this.’ The question is ‘what do we do with this while we have it?’” Petersen fosters an environment where franchisees run their business in a positive manner, making a difference in the lives of their customers, employees and the communities they serve.

Opening Process

Now that there is a president in place creating a layer between Petersen and all of operations, he will have more freedom to work on strategy, vision casting and to do what he does best, which is to go out and meet prospective franchisees and manage the real estate location process. It is a lengthy and thorough process and one designed to get franchisees up to speed quickly. That right “fit” and location are so important, that Petersen actually flies to a prospective franchisee’s location, meeting with them and looking at potential real estate options as part of their approval process without any cost to the prospective franchisee.

Once it is determined there is a fit, franchisees learn everything from POS management to staffing and merchandising in a rigorous online home training program. Then, there are trips to the West Coast for a week of training that includes a trip to the Los Angeles Fashion District to meet Apricot Lane buyers, as well as an on-site training session that covers store opening, visual merchandising techniques and how to set up computers and train staff.

Once a store is opened, a rigorous support system continues for the new franchisee. “It’s really a 120-day program,” Petersen explains. “There are monthly FaceTime calls where the franchisee can walk around and show us their store, so we can help with suggestions.”

Petersen notes that franchisees are supported with inventory suggestions as well. “We are able to look at the franchisee inventory and help them customize it,” he says. “And we continue to support them with webinars, seminars and monthly systemwide calls. Our support is available on an ongoing basis with an emphasis on continuous improvement.”

Robust Growth

The secret is definitely out with the Apricot Lane model, as there is an aggressive plan for growth in the coming years. Stores are located in regional malls, lifestyle centers, downtown and in neighborhood strip centers and average about 2,200 square feet. “With 18 stores scheduled to open in 2017 and a projected 30 stores in 2018, we are excited and embracing the strong interest as we prepare to support the aggressive growth,” Petersen declares. Additionally, Apricot Lane opened its seventh corporate store in 2017.

Given the strong network of training and support that Apricot Lane provides, it should come as no surprise that many franchise owners want to own more than one store. Currently, 50 percent of its stores are operated by multiple store franchisees.

And yet, despite the enthusiasm for the Apricot Lane name, it is Petersen’s job to remain focused on finding quality franchisees, which can be difficult. “It’s part of my job to make sure we don’t grow too soon and too fast,” Petersen says. “The focus really has to remain on finding the right franchisee.”

The Right Partners

To sustain Apricot Lane’s success, it is important to develop relationships not only on the franchisee side, but on the vendor side as well. Petersen has taken great care in developing long-term partnerships, including some that have been with him since he started back in 1991, such as POSIM, Apricot Lane’s POS provider.

“The great thing about POSIM was they were one of the few Apple-based POS providers,” Petersen recalls. “We have been very blessed to grow along with them. When they became cloud-based, we went along with them. Their prices and the support they have offered has been perfect for us.”

Another partner is Levick Legal Group, a Chicago-based law firm that has expertise in real estate law. “Our job as a franchisor is to help protect the downside risk of our franchisees,” Petersen notes. “We do that through our comprehensive site selection process and a great real estate attorney, Michael Levick with Levick Legal Group, to represent our franchisees with their leases and lease negotiations.”

Petersen adds that Levick’s expertise combined with Apricot Lane’s reputation can offer a franchisee tremendous support. “Their extensive retail lease negotiation experience combined with a sought-after brand protects our franchisee,” Petersen notes. “For example, we won’t allow a franchisee to provide a full-term lease personal guaranty.”

Sidebar:

Social Justice

With a thriving franchise concept and a name that consumers connect with, Petersen could rightfully be content with all his good fortune since launching Apricot Lane in 2007. However, several years ago he sensed that there had to be more to his personal journey, and that he still needed to give back to others. “Our leadership team sat down and decided we needed to leave a legacy,” Petersen recalls. “We weren’t really sure what that would be, but we wanted to be more than just about opening stores and making money.”

Soon after, his wife, Kris called and asked if he would be interested in sponsoring a young girl from Cambodia who was a victim of sex trafficking. Not only did Petersen say yes to the sponsorship, today she is his daughter and is now entering her final year at William Jessup University in northern California. Clearly, Petersen presented this cause to the franchise system to see if this was a cause they could embrace together to make a difference. “No other retailer has embraced this cause,” Petersen says. “It is so dark and evil, it is difficult to talk about. I was so proud of our franchise system when they agreed to support this important cause.”

Despite its dark nature, Petersen continued to champion the issue, eventually meeting with Don and Bridget Brewster of Agape International Missions (AIM). Learning of AIM’s efforts at building a trafficking-free world, the Petersens soon discovered that survivors needed a key ingredient to reintegrate into society: jobs.

So Petersen and his partners started 3Strands, a company that fights to eliminate global human trafficking by creating employment opportunities for trafficking survivors and those at risk. The survivors make bracelets, necklaces and other items that are sold in Apricot Lane stores and stores throughout the world. “We started it seven years ago and products are sold internationally,” Petersen says. “It has since grown and helped many victims, and that’s what life is all about: giving back and making a positive difference in the lives of people.”