When it was founded more than 40 years ago, 5th Avenue Chocolatiere made a line of fine truffles and created corporate logos made from Belgian chocolate. Joseph Whaley has taken the company to explosive new heights: Since receiving a $720,000 loan in 2008 through the SBA 504 loan program, the New York City-based manufacturer has expanded to a franchise operation with 11 Chocolate Works retail outlets currently operating in New York and New Jersey, and another 13 - including the first one in Connecticut - set to open soon.
Whaley's company is doing so well that he and The 504 Company are finalizing an agreement for a second loan. The $1.5 million loan, also through the SBA's 504 program, will help buy and makeover a 22,000-square-foot manufacturing facility in Freeport, Long Island.
The first loan helped buy and equip the current 8,000-square-foot facility in Valley Stream, and also funded the move from 2,000 square feet of leased space in Long Island City. Now the company makes its own chocolate-covered pretzels and other products that previously were outsourced because of limited space. Expanding production immediately created 12 new manufacturing jobs.
Richard Amsterdam, vice president for The 504 Company, said the first loan gave Whaley the ability to grow and add jobs. The second loan allows for even greater levels of growth.
"The manufacturing performed at this location will allow Joe to grant more franchises throughout the world, and create numerous new jobs both at the manufacturing facility as well as at each of the franchise locations," Amsterdam said.
Whaley describes the Chocolate Works franchises as a three-tiered concept: The first tier operates as a retail seller of candy, ice cream and other confections. The second tier provides candy-making services for children's birthday parties. "We've shrunk the machines so the kids can have their own candy-making classes," he says. Tier three manufactures gift baskets and corporate logos using the company's fine-chocolate products. Each franchise employs between six and eight people.
"The story is so much deeper than just expanding our manufacturing operations," said Whaley, a military veteran who bought the business from his father, founder John Whaley, in 1999. In 2004, when Joseph Whaley was called back to active duty, John assumed control of the business until his son returned from Iraq.
Upon his return, the younger Whaley pursued the company's first loan through The 504 Company and its affiliate NYBDC. Citibank provided a $400,000 first mortgage, and The 504 Company provided a $320,000 second mortgage.
NYBDC also provided a $50,000 SBA 7(a) loan through the Veterans Loan Program that supported relocating to the new production facility. That $50,000 loan has since been repaid.
Whaley credits The 504 Company with providing the starting point for his expansion. "Without them, none of this would be possible," he said. There are also Chocolate Works franchises in Saudi Arabia and the United Arab Emirates, and Whaley is in talks with potential franchisees in South Korea and Singapore.
"Sales are strong, we are thrilled and the franchisees are making a good return on their investment," he said. "I have always had huge dreams to grow this out, but I certainly never thought that I would ever again be looking for more space."
Richard Amsterdam, NYBDC; Steve Schramm, Citibank; Joseph Whaley, 5th Avenue Chocolatiere; and Ted Sasso, Town of Hempstead IDA.