HATTIE: Hi. I'm Hattie Bryant. This series is about small business, and today you'll learn about a lemonade stand that has gone global. Every week we introduce you to the founders and operators of small businesses. From Tampa to Seattle and from San Diego to Boston, owners tell us how they do what they do. We call this 30 minutes a Master Class -- no journalists and no academics -- just real business owners who teach you out of their personal experience.

Unidentified Girl: Can I please have a...

This is probably what most of us picture when we think of a lemonade stand. It's the archetype of American entrepreneurship.

CHARLEY ABERG: One cup.

HATTIE: (Voiceover) This is Charley's lemonade stand, and Charley Aberg works hard to quench his customers' thirst on a hot afternoon in Dallas.

Unidentified Boy #1: You gotta give some to Michael.

HATTIE: (Voiceover) In Cranston, Rhode Island, we found a lemonade stand that's been around for 50 years, and business is still growing. This is Rhode Island's pride and joy, ice, lemon juice and sugar, mixed just right and frozen. It is refreshing.

So how many Dels do you think you've consumed?

Unidentified Man #1: Oh, quite a few. Probably about 1,000, 2,000. Since I was little, I've had them.

HATTIE: (Voiceover) Del's is so popular, both the mayor and the lieutenant governor showed up to celebrate Del's 50th anniversary.

Unidentified Man #2: Here is one family that has grown a business to where it's really a very recognizable product, even outside our borders, and in turn, employs a lot of people.

HATTIE: (Voiceover) Fifty years ago, in 1948, Angelo Delucia sold his first Del's frozen lemonade from this spot. Today there are 45 franchises operating in eight states, and you can even buy a Del's in Tokyo.

Angelo, when did you first taste this recipe?

ANGELO DELUCIA (Del's Owner): When I was about 10, 12 years old. My dad used to make this in front of his house, on his street, and then the war broke out and it just stopped. There was no more sugar and no one to buy, so he decided--and it was 10 years, and I came home from the service and they sent me to dental school. I was a dental technician.

HATTIE: Your parents sent you to d--did you want to go to dental school?

ANGELO: That was the government. No, I had to be rehabilitated back to civilian life through an injury. So anyways--so then I went from the dental into a bowling business. I had a partner who gambled the money that we made in the dental business, so I, in turn, decided to close it down and go into the bowling business.

HATTIE: Wait a minute. You had a partner in the dental business that lost your money by gambling it away?

ANGELO: Right. So...

HATTIE: So what did you do with this partner? Did you just walk away from it? Did you...

ANGELO: No, I dissolved the company.

HATTIE: OK.

ANGELO: And my father and I, we decided to buy this building next door called Oak Hill Bowl-Away. So my father could not stand the pin boys and he left. He left me with an exorbitant mortgage, so I decided, `Well, I'll put up a little 10-by-10 little building next door,' because lemonade was unheard of for 10, 11 years. Years ago, all the Italians of Federal Hill all made a lemonade--ice cream and lemonade. It was one of the most popular thing going.

HATTIE: And these are recipes they brought from home...

ANGELO: Absolutely.

HATTIE: ...from Italy?

ANGELO: Right. Right.

HATTIE: And everybody would do it themselves?

ANGELO: Everybody would do it themselves and they would always do it to their satisfaction, their taste and that's how we started with a little White Mountain ice cream freezer, rock salt and ice.

I couldn't stand the fluctuation of the lemon acidity. Some lemons are tart, some lemons are sweet, some don't have enough juice, some of them are too thick. So I had this--Tony Maneera, quality guy at the laboratory, we worked together. Then I made what they called a set pattern of ingredients. I mean, I wanted to be certain that we had the blend of product to be every batch, not to be--not to be inconsistency with the...

HATTIE: So way back then, your goal was to standardize the flavor?

ANGELO: Absolutely.

HATTIE: Because you knew that if you made it different every time...

ANGELO: It'd be...

HATTIE: ...people would say...

ANGELO: ...it'd be a questi...

HATTIE: ...`This doesn't taste like you gave it to me yesterday, Angelo.'

ANGELO: Absolutely.

HATTIE: `I'm not gonna pay you for this.'

ANGELO: Right. Right. And that was done with chopped ice around a stainless steel tank in a little bucket, and I got tired of turning a wheel, so I decided to put a motor on a rack. And I got two belts and put them together and we put them around the bel--around the big wheel, and we would help it along. It made it very easy to make the product. It was--took about 15, 20 minutes to keep turning and turning.

HATTIE: So you became an engineer out of necessity?

ANGELO: Yeah, it was something that I didn't think I did anything spectacular. It was just, you know, a--and I was doing five gallons, selling maybe one or two. Running back to the bowling alley, watching the pin boys, staying open.

HATTIE: Did you start the stand to generate more dollars or did you s...

ANGELO: Oh, yeah, absolutely. Sure. The bowling alley--there's no participation in the summer, no air condition. People would just--well, they...

HATTIE: OK. So it was to level out your cash flow through the 12 months.

ANGELO: That's it. Sure. And--that's right.

HATTIE: (Voiceover) Del's will squeeze nearly four million lemons this year. The large freezer stores juice, pulps and skins, all important to the secret mixture.

Unidentified Man #3: We do all these peels during the winter. They're whole lemons. We have to dice them up our ourselves. We have a machine that does it. Then we have to package them. We freeze them here, so like--'cause in the summertime, you don't have enough of time.

HATTIE: At what point did you say, `OK, my future's in lemonade, or my future's...'

ANGELO: 1955. 1955. I decided--the wife decided, not me. She says, `You can't have this seven day a week, 365 days. You have no family life.' So I decided to sell the bowling alley and go into--permanently into Del's, which was doing very well. And I bought two TableTalk pie trucks and I cut the side out of both of them and painted them and sent them on the road to sell the product at the baseball, block dances, and that's how we ended up with two, four, six, 10, 12, 15, 18, 20 moving units. And I was running them all over the state.

HATTIE: Where'd you get the start-up money to even buy the bowling alley?

ANGELO: Before I was married--or before I went in the service, I worked in a place called Unker's Manufacturing Company, 32 cents an hour. When I came home from the service, I had $5,000.

HATTIE: That you'd saved by earning 32 cents an hour?

ANGELO: That I saved--that I've saved on my own. I never drank, never smoked, never ran around, never had a car. We put that money into that bowling alley and we went to a s--a bank called Centreville National, up in west Warwick and Mr. Yostin--we told him what our problem was. He says, `You look like two--hardworking Italian couple. I'm going to invest $25,000 on my name into your endeavors.' And they gave us--gave us $25,000 in 1949.

HATTIE: Wow! A banker looked at you...

ANGELO: That's right.

HATTIE: ...and liked you...

ANGELO: Me and my wife.

HATTIE: ...as human beings.

ANGELO: Right.

HATTIE: You didn't have the...

ANGELO: No collateral, no--we just put the down payment...

HATTIE: You didn't have a P&L, you didn't have a financial statement, you didn't...

ANGELO: Nothing. No, no, nothing.

HATTIE: You just walked in...

ANGELO: Walked into a little building and into his little office, and he says, `You look like two good Italian'--he made it very pointing...

HATTIE: Hard workers.

ANGELO: ...`hardworking kids, and I'm gonna invest $25,000 into you.' But it meant working 8 in the morning, 1 at midnight with the bowling alley. And then in the summer, starting 3, 4 in the morning.

Delete HATTIE: When you d...

Key Idea #3: Franchise to Grow

ANGELO: Because you had one machine to try to make 100 gallons; it's very difficult. And I decided, `Well, I gotta expand. How am I gonna expand?' And I opened the place on Tioque Avenue 1961, my first franchiser.

HATTIE: OK.

ANGELO: I bought the land, paid cash for it, put up the building, paid cash for it, put all the equipment in it, and I got one of the drivers, and I said, `Would you like to become owner-operator?' `I ain't got no money.' `You don't need any money,' I said. `All you gotta do is pay me $1 per bottle that makes five gallons,' on consignment...

HATTIE: Wow.

ANGELO: ...with a guarantee that I give him a $10,000 net or I put the difference. `But you have to work the way I gotta tell you. You gotta start early in the morning, you gotta be there every day, and you gotta run two mobile units out of the location.' Worked out very nice. He's still down there. 1961, the fella's still down there.

HATTIE: And he's making money?

ANGELO: Yes. And he just opened a satellite, put his son in it. The following year, I opened the second one. The year after that, I opened the third, and the year after that, I opened a fourth, and a fifth all on consignment.

HATTIE: OK. The teaching moment now to--other people could learn from you about this. And so what would you say when you want great--when you want to attract good people, when you want the business to be run right, maybe you need to give people ownership.

ANGELO: Well, sure, you have to.

HATTIE: (Voiceover) Bruce Long owns the franchise for Newport County.

BRUCE LONG (Franchise Owner): I grew up in Rhode Island and I lived in Wickford. And when I was a little boy, six years old, I drank Del's lemonade. And here I am as an adult, I have an opportunity to be a Del's franchisee. I grabbed it immediately, and they interviewed three different people and they accepted me as their franchisee.

HATTIE: Oh, you had to compete.

BRUCE LONG: I had to compete.

HATTIE: So you would recommend Del's to someone who's looking for a business?

BRUCE LONG: If you're looking for a business, you're willing to work very, very hard for three or four months and make an annual income, this is a perfect place for it. But it's an owner-occupied-type business. It must be owner-run. This is not a business for a lawyer that's gonna hire managers. It doesn't work.

HATTIE: And how do you know what's a good location?

ANGELO: Well, in the winter, I used to go to a location, like Thakey's Province. I sit there for hours counting out cars with a clicker. And I'd leave and I'd look at properties, and I'd say, `Boy, there's a nice piece of property. It's on a corner, 100-by-100. I could put a little 20-by-20 building on it.' So I'd go into the City Hall, look at who owns it, forget the Realtor, I'd go up to the person and say, `Listen, I'm interested in your property. How much you want for it?' `Well, we're looking for $12,000.' `Well, gee, I gotta knock that building down. Can you make a deal?' `How about $10,000?' `That's good. It's OK.' I give them the money, I own the property.

HATTIE: There you go.

Delete for web play...(Voiceover) Bruce, Angelo's son, learned by doing.

BRUCE DELUCIA (Angelo's Son): Well, I would get out of school, and I would come down and chop lemons, cut the ends off, squash them, clean the parking lots, work in the front serving customers.

HATTIE: What do you have to do to keep these people happy? You know, what do you do to work with your franchisees so that they're successful?

BRUCE DELUCIA: We communicate with them. You know, we talk to them often. But our business is wholly-related to the weather. The hotter it is, the more we sell, and that's really the answer.

HATTIE: So, if a franchisee wants to really make nice dollars with Del's, it'd be good if they were in a hot place.

BRUCE DELUCIA: Yes.

JOE REILLY (Better Community Living): We help people who are developmentally delayed adults; they live and work in a community.

HATTIE: (Voiceover) Joe Reilly's non-profit organization, Better Community Living, owns a Del's franchise.

JOE REILLY: Well, to get people jobs in the community is very difficult. So as an alternative to it, we decided to come up with a business to bring into New Bedford that would get people jobs. We chose Del's because it's a wholesome, family-owned business. We wanted to get a business that would build the community and in the process we would be able to build skills for the people we serve.

HATTIE: (Voiceover) Del's will generate $5 million in sales, with six full-time employees at the home office, 45 franchise owners, with about 300 employees serving up the icy treat in the summer.

Delete for web play: HATTIE: How do you hire this group of 30 people--there's a core of six or seven.

BRUCE DELUCIA: Yeah.

HATTIE: Where did that core come from? I mean, how did you...

BRUCE DELUCIA: Well, Joe Padula, my right-hand person here - he started with my father when he was seven, and we grew up together.

JOE PADULA: It's 43 seasons of work, not years.

BRUCE DELUCIA: Yeah, it's...

JOE PADULA: I tried to grab the watch early, but he wouldn't give it to me.

HATTIE: And what do you do around here?

JOE PADULA: I do a little bit of everything, between making mix for Del's and selling franchises and selling Del's, period, you know, all those things.

HATTIE: OK. You've been here 43 of the 50 years of the company's existence.

JOE PADULA: Yes, I have, 43 years, and I started out picking up papers in the parking lot and just worked myself up to the position now, where I'm still picking papers up, but other things, too.

John...Move Lightbulb here to be part of this key point.

HATTIE: You don't have to be Burger King to franchise your business. Angelo did it because he knew he could attract more talent by franchising than simply by hiring employees.

Keep this in mind: All businesses have a product, processes and people. If you want to develop a franchise organization, you must have a product and processes in place. The franchisee supplies the people. Angelo had his recipe, Del's lemonade, and he had the processes clearly defined. The processes must include standard operating procedures so that your product looks and, in this case, tastes the same, no matter where the customer experiences it. Del's franchise owners serve up the same delicious beverage in Tokyo as Angelo serves here in Rhode Island. Franchising can be a great way to grow your business. It has worked for thousands of companies, and can work for you, too.

Key Idea #4: Keep Improving

Dr. DIMITRI KAZANTZIS: We can look at the liquid products...

HATTIE: (Voiceover) The responsibility for quality control and new product development falls into the hands of Dr. Dimitri Kazantzis, a PhD in food science.

DIMITRI: The future's exciting and challenging all the time because the preferences of the people are changing by the day, and you have to follow the trends. If you don't follow the trends, you cannot stay in the market.

HATTIE: As you grow and add locations and just get bigger, are there more OSHA--are there more federal regulations, rules and regs that when you're selling a product that people consume that you have to pay attention to, and that's one of the real reasons we need a doctor or a PhD in food science to be here?

DIMITRI: We have to keep up with the new regulations and the new laws that are existing not only nationally, but we have specific regulations for each and every state and county sometimes that are different. Of course, for out-of-state and out-of-country, specifically franchises, we have to deal with whole new bunch of regulations.

Also, the franchise in Japan is looking into new products right away, including the powder lemonade that we're developing.

HATTIE: That's what I was gonna say. What's the next step? Two or three years from now, we won't see the jugs coming out of here, right? We'll see packages.

DIMITRI: We're not going to have the syrup anymore, we're going to have just the powder, and all we add is the local sugar and the local water--filtered water.

HATTIE: So, when that happens, is it going to be more cost-effective for everyone?

DIMITRI: It is going to be more cost-effective not only in terms of shipping, storage and simpler to use, no spillage, no refrigeration and easy to transport.

HATTIE: Are you having fun?

DIMITRI: Of course I do. It is a challenge for me.

HATTIE: All right. Now it's gotta have sugar, it's got lemons and it's got filtered water. What else is in there?

DIMITRI: We have a couple things that we try to keep under lock and key, which are the secret ingredients, basically.

HATTIE: So you're not gonna tell me?

DIMITRI: We try to keep it a secret as long as we can.

ANGELO: This is a secret. There is ingredients in here that will never be exposed to outside the...

HATTIE: OK. So when I taste this, I'm tasting...

ANGELO: He's dead, you know, if he tries to do anything.

HATTIE: Oh.

ANGELO: I'm putting it on tape.

HATTIE: The chemist is dead if he tells anybody.

ANGELO: Oh, he go back to Greece.

HATTIE: But--he'll go back to Greece. The--it tastes like water, sugar and lemon.

ANGELO: Right.

HATTIE: And you're saying there's something else in there?

ANGELO: Oh, yes, there's an ingredients to this. The lemon is the most important. When we make the product, you will not like it coming out of the machine. But it's the lemon rinds that get into the product after an hour, ferments the product, like wine with grapes.

HATTIE: Mmm. But it has no oth...

ANGELO: It's the lemon that starts--all the acids and all the oils and all the--in the lemon skin, eventually gets into this product and seems to blend and give you a real nice, refreshingly different taste.

Move up to be the end of key point #3. HATTIE: You don't have to be Burger King to franchise your business. Angelo did it because he knew he could attract more talent by franchising than simply by hiring employees.Keep this in mind: All businesses have a product, processes and people. If you want to develop a franchise organization, you must have a product and processes in place. The franchisee supplies the people. Angelo had his recipe, Del's lemonade, and he had the processes clearly defined. The processes must include standard operating procedures so that your product looks and, in this case, tastes the same, no matter where the customer experiences it. Del's franchise owners serve up the same delicious beverage in Tokyo as Angelo serves here in Rhode Island. Franchising can be a great way to grow your business. It has worked for thousands of companies, and can work for you, too.

Delete for web play...Even a lemonade stand needs an Internet presence, and Del's is gearing up to sell more franchises internationally. Julio Bergo is Del's local Internet service provider, and he talks with Justin Golden of IBM Global Services.

JULIO BERGO: Type in www.dels.com, that's D-E-L-S.com, and that'll bring you to their home page. From their home page, we have a list of four buttons that you can navigate through, going anywhere from getting some history about Del's to getting franchise information.

Actually, currently, right now, a prospective franchisee could actually get the franchise application online, submit that to Del's headquarters via an e-mail form.

JUSTIN GOLDEN (Computer network and Internet wizard): You know, the first wave of the Internet was awareness, presence. Now it is all about e-commerce, the idea that you can actually do business via the Internet -- all aspects -- accounts receivable, payables, sales analysis, inventory control, business planning, market analysis, sales forecasting . . . everything. All the things you do now in an office on a typewriter, on a personal computer, can be done via the Internet. It's quicker, faster, more reliable and, obviously cost-effective.

Key Idea #5: Work Long and Hard

Move up from below***HATTIE: (Voiceover) And remember Charley's lemonade stand in Dallas? Charley is learning his own lessons.

Unidentified Woman: Thank you.

HATTIE: Now, Charley, I heard that the joggers who come by get special treatment from you. What do you do for the joggers?

CHARLEY: I let them pay later if they don't have the money.

HATTIE: So you trust them to come back?

CHARLEY: Yeah.

HATTIE: Well, do you think you're gonna own your own business when you grow up?

CHARLEY: Yeah, I think I am.

HATTIE: Angelo, what does it take to run a business?

ANGELO: You gotta have good health fortitude and believe in what you're doing. I mean, I find--I don't know how this thing ever developed the way it did. I always say my customers made it possible. I did nothing in this. I gave a product, and they, in turn, rewarded me. I mean, if it wasn't for them, I wouldn't be here.

But I gave a lot of product away. I wanted people to know what it was. I would serve 100 people, five people would refuse, 95 would take. I always said there's a narcotics in that product. Once you've had it, you gotta have it.

HATTIE: OK, Angelo, one parting moment here, if you could tell a 25-year-old who's just opened her or his business...

ANGELO: I'd put them right in that chair...

HATTIE: What'd you tell them?

ANGELO: ...and I told Bruce and I told Joey, ` . . this is a hard-income business. You've got to work for it. You've got to want to have it . You've got to be at it as often as possible, even when you're sleeping; you got to think about it.'

move up from here to begin point 5***HATTIE: (Voiceover) And remember Charley's lemonade stand in Dallas? Charley is learning his own lessons.

Unidentified Woman: Thank you.

HATTIE: Now, Charley, I heard that the joggers who come by get special treatment from you. What do you do for the joggers?

CHARLEY: I let them pay later if they don't have the money.

HATTIE: So you trust them to come back?

CHARLEY: Yeah.

HATTIE: Well, do you think you're gonna own your own business when you grow up?

CHARLEY: Yeah, I think I am.

Key Idea #6: Save Money on Mail

HATTIE: Here's an idea from marketing adviser John Wargo about how to save money on direct marketing:

John, as small-business owners, we're conservative. We're afraid to spend money, we're afraid to go to an ad agency or designers to get help, but this example shows why it's probably smart. This restaurant started mailing these pieces and they're paying premium. What's wrong with these pieces?

JOHN WARGO (Marketing Consultant): Well, first of all, they're oversized, and because they're oversized, they're probably trying to attract attention, but they're paying a surcharge. They're paying a surcharge for being oversized. On this particular piece, not only is it oversized, it probably, in the design's, gonna cost them more to tab it or somehow seal it so that it's a complete piece.

HATTIE: So now they're doing this.

JOHN: Right. Well, what they've done here is they've gone to a standard size. The Postal Service has a group of specialists that are available to work with small businesses. If you go in and you talk to the specialists, what they'll do is they'll show you a template. They'll show you what is a standard size, they'll show you the oversize, they'll show you the tradeoffs. I'm not suggesting that you should all mail standard size, you shouldn't use oversize. I'm just suggesting that, depending on what you're looking for, you might want to look at both options. In this case, I think what you're gonna find is that you can probably make more mailings. 'Cause you have a total mailing budget. Now you need to decide, you know, `Do I want to make more mailings? Do I want to get the impact?' And it appears to me that they've probably gone to a design in a letter shop that showed them how to get all the material, how to put it all together, how to use it as a reference, how to tab it, probably just one time...

HATTIE: Once.

JOHN: ...how to put the right address label on here. Now what happens? Yeah, small businesses are conservative, but it's not how much money you spend, it's how much money you make. When you're talking to the experts, don't be afraid of them 'cause you don't have to buy anything. Ask them for a proposal. Ask them for options. What you want to do as a small-business person is not just go with your gut reaction, look at options. Go to the Postal Service. Go to the letter shops. Go to the printers. Ask them for options.

HATTIE: So what we want is results.

JOHN: That's right. Right.

HATTIE: And this is getting--we've talked to these people... this is getting just as much results as this oversize and it's less money.

JOHN: Well, I think that the key in any direct-mail program is you've shown three different pieces. What you want to do is measure the results of each one. I can't emphasize enough that small businesses should take each mailing and measure the response rates from each mailing, because there is no formula for anybody for any mailing, but for your business and your customers, there may be a formula. And the only way you're gonna know what the formula is, is if you measure the response rates. If you're a small-business man and you work with the numbers, you're gonna become a big business.

Delete for web play: HATTIE: To investigate franchising, click on `Franchise.' Compare yourself with these other business stories we have done. You may have a business that can be franchised.

If you have a fabulous product as Del's does, plus refined processes, then all you need for growth is more people. Think about franchising.