Children’s merchandiser aims to expand as a franchise: Kids Kloset opens third store in Castleton this month

One night almost a decade ago, Kim Cassel woke up in a hotel room at 3 a.m. It was the latest of hundreds of hotels she’d slept in during her career as corporate vice president of a nationwide candy shop chain. Disoriented, she needed to check the phone book to remember she was in Boston.

That’s when Cassel knew she had to open her own business. Within months, she had quit her job, returned to her hometown of Greenwood, leased a storefront, and Kids Kloset was born.

“I realized it was time to do something for myself,” she said. “I had made the owner of my [former] company pretty wealthy, but I was doing the work and the travel and I never saw my family or my friends.”

Since Cassel opened Kids Kloset nine years ago, it has become a destination for cost-conscious parents on Indianapolis’ south side. The store offers discounted new and lightly used children’s goods, such as clothes, toys, cribs and car seats.

Last year, Kids Kloset expanded for the first time, franchising a store in Plainfield. On April 28, it will grow again, this time with a franchised shop in Castleton. And Cassel thinks she can repeat the formula nationally.

But the odds against her are long. Less than 1 percent of companies that attempt to grow by franchising succeed, said Richard Feinberg, a Purdue University professor of consumer sciences and retailing.

And Kids Kloset isn’t the only business attempting to sell discounted children’s merchandise. There are two dozen in the Indianapolis area alone, including Once Upon a Child, which has six local stores.

“Everybody who has a small, successful business has the dream of franchising,” Feinberg said. “But very few dreams come true.”

Fortunately, Cassel has experience in the franchising area. She spent 13 years rising through the ranks at Mr. Bulky’s, a Troy, Mich.-based candy and novelty business.

At its peak, Mr. Bulky’s had 1,200 employees and 260 stores around the nation. The company broke up its franchise network five years ago, selling its stores to their local owners.

Responsible for 90 stores by the time she resigned, Cassel crisscrossed the country, making sure each new outlet remained consistent with the Mr. Bulky’s formula. She learned about customer service, negotiating leases and how to spot bargains when toy wholesalers overstocked goods.

Those skills came in handy at Kids Kloset. Reasoning that every parent struggles to keep fast-growing toddlers in pajamas that fit, she expected customers would come back again and again. It’s not just the discounted prices that draw them. Cassel said she creates a friendly atmosphere where parents and kids alike feel welcome.

Merchandise turns over so fast, she said, that it’s difficult to keep most items in stock. That’s why Cassel established a second business, a wholesale distribution company called Castle Grove Inc. She uses it as a vehicle to purchase surplus new items from other retailers, such as shoes or strollers. She said Kids Kloset then passes the bargains on to its customers, charging one-third or less than the big-box stores.

Kids Kloset’s first expansion came when a longtime customer asked if the business might be for sale. Instead, Cassel licensed the name and spent months training her first franchisee. Attorneys with Barnes & Thornburg LLP now are attempting to distill the Kids Kloset concept, so Cassel can protect and duplicate it.

Terry Hill, spokesman for the Washington, D.C.-based International Franchise Association, said successful franchise expansion boils down to protecting the core concept. Cassel will have to be very careful whom she chooses to trust as franchisees.

“Take your time and do it right. Don’t go with the temptation to sell franchises as fast as people will come to you,” Hill said. “Measured growth is the key.”

Former Mr. Bulky’s CEO Sid Rubin is confident Cassel can succeed. After all, she already helped develop and manage a large franchise once before.

“I’m quite confident she’s the kind of person who can roll out a successful chain of stores,” he said. “She has a velvet touch for merchandise.”