Apr 16, 2010
Funk Farm Market to Close This Year

So, what do you do when you’re ready to step away from the farm market, but nobody wants to take it over?

Start early, said Fred Funk.

“You won’t execute your exit plan in a year or two,” he said. “It will take five years or more.”

And before you start executing your plan, give yourself five or 10 years to come up with one. Consider your short-term, long-term and personal goals and find a way to balance all of them.

“Don’t build a 3 million dollar market at age 65, unless you have children who want to be part of it,” Fred said.

Now 65 himself, Fred won’t be making that mistake. After nearly five decades, Funk’s Farm Market & Garden Center is closing up shop, to be replaced by a retirement community. The Lancaster County, Pa., landmark will no longer exist after this summer.

It wasn’t Fred’s first choice, but he seems content. He’s been a farm marketer since his teens, and he’s looking for new challenges. He’s excited about the retirement community, which was his idea.

It’s a long story.

Deep roots

The Funk family’s farming roots in Lancaster County go back to 1873, according to the market’s Web site.

The family farm gradually evolved over the years, from a dairy to a produce operation. Fred’s father, Amos Funk – the well-known farmland preservation advocate who died earlier this year – loved growing fruits and vegetables, but he didn’t like selling them. He left that to his wife, five of his six children and his employees.

Amos grew so much fresh produce, in fact, that at one point it took 13 different farmers’ markets to sell it all, Fred said.

At age 14, Fred was an old hand at farmers’ market sales. He already was managing employees and earning a decent wage. By the time he finished high school in 1962, his two older brothers had left the family business and his father was seriously considering selling it.

“Well, boy, what are you gonna do?” Amos asked him.

“I told him that if he took care of the growing, I would see that the stuff got sold,” Fred said.

Fred decided the family farm needed its own market, which was completed in 1963. He sold $18,000 worth of produce in the market’s first year. Sales doubled every year for the next eight years, to the point where farmers’ markets weren’t really necessary.

The home market kept expanding, both in sales and in square footage. By 1972, it was fully enclosed and air conditioned, with a bakery, deli and gift shop. Sales were going year round. In 1976, Amos sold the family business to Fred, who dived into greenhouse sales. The garden center specialized in annual and perennial flowers, and eventually became the most profitable part of the business, Fred said.

For the last eight years, Fred and his wife, Jacque, have been business consultants for 86 clients, mostly other farm markets and garden centers. They’ll continue to do that after their market closes, he said.

“Helping other markets and enhancing their bottom lines is very satisfying to my wife and I,” Fred said. “It’s like having dozens of satellite locations without all the headaches.”

Walking away

By 1990, Fred was starting to feel burned out after nearly three decades of farm marketing. He talked to his two daughters about taking over the family business some day, but they weren’t sure. Both were pursuing careers in education.

“They both have master’s degrees,” he said. “I guess they were smarter than their dad.”

Fred only wanted his daughters to take over if their hearts were in it, so he gave them five years to make up their minds. He waited six, but neither of them stepped forward.

So, not wanting to see his well-established business just fizzle away, he went to Plan B: offering the market to his employees.

Fred spent $15,000 creating a bonus stock option plan for his eight managers, a plan that would allow them to eventually buy the business for half of its appraised value, “without taking a nickel out of their pockets,” he said.

He gave an example: If a manager earned a bonus under the plan, he or she could take, say, $3,000 in cash or $4,500 in company stock – a 50 percent premium for taking the stock.

In 2002, all eight managers earned a bonus. Two of them took the stock, but everybody else took the cash. Fred was disappointed.

“That told me they weren’t really that interested in taking over the business,” he said.

After consulting with his attorney and his accountant, both of whom advised him it wouldn’t work, Fred gave up on Plan B. He was 12 years into his exit plan, and he had nothing to show for it.

He started casting about for a Plan C, and hit on the idea of building a retirement community. It made sense to him. There’s one small retirement community in his area, but more than 300 farm stands. With baby boomers nearing retirement age, there’s going to be more demand for the former than the latter, he said.

So, he decided to replace his market and greenhouses with a state-of-the-art retirement village. He spent two years talking to assisted-living facilities and developers before he found a combination he was happy with. He plans to be a full partner in the creation of the community, which he’d like to call Funk’s Farm Village, or maybe Village at Funk’s Farm.

“I want to be proud of the final product,” he said.

According to his plans, the retirement community will stretch across 66 acres, and will include a “village-type” assemblage of cottages and condominiums (for people over 55), along with a bank, drug store, café, small market and possibly boutique stores. Half the property will remain green space, with walking paths and a pond. There also will be an assisted-living facility for seniors who need more care. The barn and the house Fred grew up in will be preserved, he said.

That’s the idea, but it’s not entirely up to him. Fred submitted his plans to his municipality, Manor Township, almost five years ago, and he’s still working through the approval process. Final approval might come later this year, or next year.

His decision did stir some controversy. As the son of Amos Funk, Lancaster County’s well-known farmland preservationist, some questioned why Fred would replace farm property with a retirement village.

But the people who raised objections didn’t understand his father’s philosophy, Fred said. Funk’s Farm Market is in an area zoned general commercial, not agricultural, and has access to water and sewer lines. On land like that, Amos believed you should build as many homes as possible, which would help preserve the farmland in outlying agricultural districts. As long as the population keeps growing, you have to build somewhere, but you can do it in a way that keeps people and farms separate. Amos called it “smart growth.”

Amos went on record five years ago, favoring his son’s plan – the same way he favored a golf club community across the street in 1970.

As for the family’s other farmland, Fred is leasing a 65-acre parcel to another farm, and he sold 89 acres to an Amish grower – land that will be preserved as farmland no matter what, because Fred donated the development rights to the county in 1982.

Last year

Funk’s Farm Market was going to close at the end of 2009, but Fred decided to stay open part of this year to give his employees more time to find other jobs. He has between 60 and 70 employees, some full-time and some part-time.

The market will open March 31 and close after July 31, and that will be that. Fred held an auction last fall and got rid of a lot of equipment. He’ll hold another auction in September.

Fred and his wife will stay in Lancaster County.

The market’s customers have been very understanding about his decision, even though they’re going to miss shopping at Funk’s, he said.

Funk’s Farm Market has won a local award as the best farm market for nine years running. That’s a source of pride for Fred, but he’s tired of working the long hours required to maintain that standard.

“I don’t have the burning desire I used to have,” he said. “I want to finish while we still have a great reputation.”

75 Applewood Drive, Suite A
P.O. Box 128
Sparta, MI 49345
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