Praxis Bookstore Group LLC

P.O. Box 3160
Ann Arbor, Michigan 48103
U.S.A.
Toll Free: (800) 899-6232
Fax: (734) 663-8738
Web site: http://www.littleprofessor.com

Private Company
Incorporated: 1969 as Little Professor Book Centers
Employees: 6 (corporate)
Sales: $34 million (2007 est.)
NAIC: 451211 Book Stores; 533110 Lessors of Nonfinancial Intangible Assets (Except Copyrighted Works)

Praxis Bookstore Group LLC provides start-up help and support services for independent bookstores and also licenses the Little Professor Book Center name, which is used by more than a dozen stores in ten states around the United States. The firm offers assistance with site selection, financing, ordering, marketing, and other matters, charging an initial licensing fee and a 2 percent royalty for its services. Praxis is owned by members of management.

BEGINNINGS

The roots of Praxis Bookstore Group can be traced to the 1960s, when Frank Fera founded a bookstore in Dearborn, Michigan, called the Little Professor, from a nickname his glasses-wearing, book-loving son had been given. The store proved so successful that in 1969 he joined with brothers Tony and John to franchise the concept, and Little Professor Book Centers soon began appearing in college towns from the Midwest to the East Coast.

As the chain grew the brothers added a book distribution business to supply their franchisees, but the new operation began to cause cash-flow problems. Soon after opening a warehouse the Fera brothers were forced to sell the nearly bankrupt company, and in 1972 it was bought by a Pennsylvania-based book printing and distribution firm called Maple Press. At this time there were 15 franchised outlets.

During the mid-1970s the number of stores increased steadily while Maple Press focused on expanding the distribution business, which was projected to become the largest source of revenues. It grew to encompass warehouses in Michigan and Florida, while store operations were overseen by a staff of just five.

In 1981 Maple decided to close the unprofitable distribution business and began seeking a buyer for the franchise operation. By this time there were 125 Little Professor stores in 38 states, but discontent among owners was high, with many feeling that they were receiving little in the way of support for the royalty that they paid on sales.

When Maple chairman John Wisotzkey was unable to find a buyer for the company, his 29-year-old son Jon offered to purchase the franchising unit with partners Mike Conroy and Carla Garbin. Jon Wisotzkey had begun working as a stock boy and clerk at a Little Professor store while in college, and had become a corporate manager for the firm upon graduation in 1974. His father was unable to talk him out of buying the money-losing concern, and a leveraged buyout was soon arranged with a combination of loans from banks and Maple Press itself. By the time the deal was consummated the number of stores stood at 110.

FRANCHISEE EXODUS SPURS RESTRUCTURING

After taking control Wisotzkey and his partners began visiting franchisees to share their vision for the company's future and listen to grievances. Some were extremely unhappy, and in a bid to win their confidence they were given the option of tearing up their contracts. To the partners' dismay nearly 40 took up the offer, resulting in a loss of more than a third of the stores in the chain. To retain the ones that were left Wisotzkey began overhauling the company by adding more staff and improving services, which included site selection, marketing, planning, training, and operational support. Believing communication with stores was critical, he also hired more regional managers to offer in-person assistance and created the Franchise Advisory Council to give an official voice to owners. A key component of the firm's new plan was ensuring that franchisees saw they were getting value for their money, and only after a new store became profitable would it be charged a 2.75 percent royalty on gross annual sales.

Little Professor Book Centers were not "cookiecutter" franchises, and individual owners were given complete control over the titles they chose to stock and could add personal touches such as having pets in the store. The firm's outlets were targeted to satisfying the needs of book lovers and an emphasis was placed on working to develop community connections by sponsoring book readings and other in-store events. Unlike larger chains B. Dalton and Waldenbooks, which were generally situated in indoor shopping malls, Little Professor outlets tended to be in strip malls, with a typical store 2,000 square feet in size and carrying 15,000 to 20,000 titles. The initial investment required to open a store was approximately $150,000 and included a $21,000 franchise fee. Established stores earned a profit of 11 to 15 percent of revenues, which could reach $500,000.

In 1986 Little Professor's headquarters moved from Novi, Michigan, to Ann Arbor, a few miles west. Wisotzkey's efforts to turn the company around were bearing fruit, and in the late 1980s the firm began turning a profit as it signed on more franchise operators than ever before. By 1990 there were 145 stores, a number that was expected to double in five years' time. Total sales for the chain topped $62 million, up $12 million from a year earlier. Little Professor was the fourth largest bookstore chain in the United States behind Waldenbooks, B. Dalton, and Crown.

FIRST SUPERSTORE OPENS IN 1990

By this time other chains had begun to open so-called big box bookstores that dwarfed the company's small outlets, and many independent booksellers around the country were experiencing a steady drop in business. In 1990 a Little Professor franchisee opened a 10,000-square-foot store in Fort Wayne, Indiana, and a year later the company itself added a 9,800-square-foot outlet in Ann Arbor complete with a fireplace and living-room furniture, which it would use in part as a training center. These were soon followed by a 19,000-square-foot store in Cincinnati, Ohio, and three in Columbus, which were owned by major franchisee Gaylord Companies. These new superstores stocked 50,000 to 60,000 titles (a quarter of which were children's books), about four times the number of a standard location. The cost of start-up was around $1 million, and annual revenues could top $3 million. In 1992 a new division called Little Professor Book Company was created to further develop the superstore concept.

On June 23, 1992, company head Jon Wisotzkey died of cancer at the age of 39. He was praised by management and franchisees alike for the energy and vision he had brought to the firm. His widow Sally would retain controlling interest, and ten-year Little Professor veteran John Glazer was named president.

COMPANY PERSPECTIVES

Little Professor Booksellers know and love books. Their book knowledge goes beyond the popular to offer unique books that nourish the particular interests of book lovers.

With some stores closing in the face of stiff national competition, others leaving the fold when their ten-year franchise agreements ended, and a few consolidated into superstores, by the fall of 1993 the number of Little Professor Book Centers had shrunk to 110. During the year the firm began testing a buying program called the Alliance of Independent Booksellers, which was intended to combine stores' orders to gain a better discount from publishers, which the major national chains were able to secure due to their large numbers of stores.

As outlets dropped from its ranks the firm continued to seek franchisees, in December 1995 placing advertisements in selected airport terminals for a year's run. The ads were targeted at business travelers and generated 60 to 90 responses per month, which led to at least one store opening.

While sales for the industry as a whole were increasing, the competition from new superstore chains like Barnes & Noble and Ann Arbor-based Borders was fierce. Dissatisfaction among franchisees was rising, and in 1997 a group of 28 store owners formed the Little Professor Franchisees' Association to represent their interests to the firm. They complained that they were not receiving all the services they had paid for and that they were owed money from magazine sales rebates collected in their name. The flagship superstore in Ann Arbor also left the fold during the year when owner Nicola Rooney (who had purchased it from the company in 1995) changed its name to Nicola's Books, citing a lack of corporate support. The firm took her to court, and the judge ordered her to restore the name. A court-ordered arbitration agreement later allowed Rooney to become a licensee, rather than a franchisee, and her store became known as Nicola's Little Professor Books.

WOLVERINE INVESTMENTS BUYS COMPANY IN 1998

The struggling firm had begun seeking outside capital, and in the summer of 1998 it was purchased by Ann Arbor-based Wolverine Investments LLC, an offshoot of William Brannan's Linden Group. The company's name was subsequently amended to Little Professor Book Centers LLC, with John Glazer continuing to serve as president.

In response to franchisee complaints and the ongoing decline in stores, during the year the company made several policy changes. These included the elimination of an unpopular advertising fee and giving franchisees the option of licensing the Little Professor name without using the firm's services.

With Borders and Barnes & Noble ramping up the pace of expansion and heavily discounting bestsellers to increase market share, and new web-based competitors like Amazon.com enabling anyone with a computer to buy books at bargain prices, the plight of independent booksellers continued to worsen. The situation reached a boiling point in the fall of 1998 when Barnes & Noble announced plans to acquire leading wholesaler Ingram Book Group, the source of most titles stocked by Little Professor stores. Amid fears that prices and availability would be negatively affected, the American Booksellers Association and numerous authors protested the sale, and it was ultimately called off.

In 2000 the national chains cut back on their discount policies, as did Amazon.com, giving independent booksellers breathing room, but the company's franchise total continued to decline. By the spring of 2001 there were only 40 Little Professor stores left, which were located in 16 states. In early 2002 company head John Glazer and two partners bought the firm from Wolverine Investments, forming a new parent entity known as Praxis Bookstore Group LLC.

During the early 2000s the market share of independent and small-chain bookstores began to increase, rising from less than 7 percent of the national total in 2002 to 9 percent in 2004, after dropping precipitously during the preceding decade. The decline in the number of Little Professor franchises continued, however.

KEY DATES

1969:

Fera brothers begin franchising Little Professor Book Centers.

1972:

Feras sell firm to Maple Press after distribution arm incurs heavy losses.

1981:

Maple Press halts book distribution; Jon Wisotzkey buys franchising unit.

1980s:

More than one-third of 110 franchisees quit; firm begins improving service.

1986:

Company moves headquarters from Novi to Ann Arbor, Michigan.

1990:

First Superstore format opened in Indiana; others follow in Michigan and Ohio.

1998:

Wolverine Investments buys company.

2000:

Number of franchised outlets drops from early 1990s high of 145 to less than 50.

2002:

Company president John Glazer leads buyout of firm; name changed to Praxis.

2003:

Firm shifts focus to licensing name, providing start-up help for new stores.

2005:

Ann Arbor flagship store exits chain; number of outlets falls to 16.

In the spring of 2005 Nicola Rooney removed the name Little Professor from her Ann Arbor bookstore, ending the company's retail presence in its hometown. Tony Fera had also closed the original Little Professor store in Dearborn the previous December, and the total number of outlets stood at just 16 nationwide.

Despite these setbacks the firm had coordinated three store openings in 2004 and a handful more were on track for 2005. Praxis Bookstore Group, whose three employees shared ownership, was using a new business model. Acknowledging its inability to compete with Borders and Barnes & Noble, the firm targeted smaller markets like Athens, Ohio, and Plymouth, Michigan. The company charged a small initial fee to license the Little Professor name, as well as a 2 percent royalty for services that included site selection, store setup, book purchasing assistance, financial advice, training, software, and marketing materials. No contract was signed, and when owners were ready to go it alone they were free to stop paying the royalty. Not all stores used the Little Professor name, and the company did not require it.

Nearly 40 years after the Fera brothers began franchising Little Professor Book Centers, the Praxis Bookstore Group LLC was carrying on their vision of helping people open their own small stores. The firm's business model had been scaled back in the face of big box chains and online sales, but its experienced staff remained committed to helping independent store owners realize their dreams.

Frank Uhle

PRINCIPAL SUBSIDIARIES

Little Professor Book Centers.

PRINCIPAL COMPETITORS

Borders Group, Inc.; Barnes & Noble, Inc.; Books-A-Million, Inc.; Amazon.com, Inc.; Wal-Mart Stores, Inc.

FURTHER READING

Bernstein, Elizabeth, "Little Professor Targets Business Travelers," Publishers Weekly, October 7, 1996, p. 23.

Bridgeforth, Arthur, Jr., "Investors Acquire Ann Arbor Bookstore Chain," Crain's Detroit Business, August 10, 1998, p. 3.

Denne, Lorianne, "Bookstore Franchisor Seeks to Open a Half-Dozen Outlets," Puget Sound Business Journal, March 11, 1991, p. 10.

Doll, Lesa, "Little Professor Grows Up—And Up," Business Detroit, January 1991, p. 32.

Gossett, Polly Paddock, "Independent Book Sellers Fight Megamerger," Charlotte Observer, December 11, 1998.

Howell, Kevin, "Last Columbus Little Professor Closes," Publishers Weekly, April 30, 2001, p. 22.

"Jon Wisotzkey" (Obituary), Publishers Weekly, July 6, 1992, p. 13.

"Little Professor Grows Up," Chain Store Age Executive with Shopping Center Age, September 1993, p. 28.

Milliot, Jim, "Group of Little Professor Stores Forms Association," Publishers Weekly, October 20, 1997, p. 11.

Mutter, John, "Little Professor Grows Up," Publishers Weekly, July 6, 1992, p. 14.

O'Brien, Maureen J., "Little Professor Book Centers: Happy at Last," Publishers Weekly, June 2, 1989, pp. 50–53.

Ramsey, Mike, "Declaring Independence, Nicola's Books Breaks with Little Professor," Ann Arbor News, April 29, 2005

——, "Little Professor Turns a Page," Ann Arbor News, July 31, 2005.

Zeitchick, Steven M., "Little Professor Franchise Sold to Private Investors," Publishers Weekly, August 3, 1998, p. 11.