Sanders Chocolates was first opened by Fred Sanders on June 17, 1875. The business grew to more than 57 stores in the Great Lakes Region and elsewhere. Sanders retailers sold candy, fudge toppings, and baked goods, as well as light lunches and an assortment of desserts at fountain counters, including Ice Cream Sodas, Sundaes and Hot Fudge Cream Puffs.
Sanders became a leading purveyor of confections in the region and started selling directly to national supermarket chains, as well as to other retailers in the area. In 2002 Morley Candy Makers purchased the Sanders name and original recipes to add to its own tradition since 1919. 
The company was founded by German-born Frederick Sanders Schmidt on June 17, 1875, when he opened a candy store with nothing besides his childhood dreams, a barrel of borrowed sugar and a leased shop on Woodward Avenue at Gratiot in downtown Detroit . Schmidt, who went by his middle name, had originally opened his first shop in Chicago but relocated to Detroit after his Chicago store was destroyed in the Great Fire of 1871. Ice cream was soon added to the menu, then baked goods and sweet cream sodas. One popular story asserts that on a hot summer day, the store was packed with thirsty customers, and Sanders noticed that the sweet cream used for the sodas had gone sour. So he quickly substituted ice cream, and it became the talk of the town. Sanders is among those who claim to have invented the ice cream soda. Business became so brisk that the store expanded and Sanders hired more employees.
“The Pavilion of Sweets,” Sanders’ most famed confectionery shop, opened on Woodward in 1891. It had a red and white awning and tower that was similar to a mosque. It was here that the nation’s first ice cream soda was supposedly born, though Sanders is not the only man to stake his claim for inventing the drink. One evening during the summer of 1876, Sanders ran out of fresh cream for his cream sodas. In an effort to please the store full of eager customers, he used a scoop of ice-cream instead. His patrons were thrilled with the taste and word of the new beverage spread. The substitution of ice cream for regular cream became a customary offering at soda fountains and stores throughout the nation.
In addition to candy and the ice cream soda, hot fudge became one of Sanders’ prime products. Like other Sanders treats, the recipe was passed down through generations. Another especially sought after treat that has delighted "sweet tooths" for years is Sanders’ “Bumpy Cake,” named for the chocolate ganache that covers thick ridges of buttercream. 
Before long, Sanders had cornered the candy market in the Motor City. The company started a chain of stand-alone neighborhood candy stores, some featuring counters that also served light lunches and soda fountain drinks. The chain also expanded into shopping centers and the Detroit Free Press reported “In 1962, when John Sanders, great-grandson of the founder, took over the company from his father, Sanders had 111 stores and more than $20 million a year in sales.” However, the real world eventually caught up with the family-owned company, and the 1970s and 1980s saw many ups and downs with the struggling firm. “Trouble began in the mid-1970s,” the Detroit Free Press reported, “as Sanders faced increasing competition. The decline became clear when the company closed its flagship downtown store. Sanders ultimately went through several different owners, and at one point was forced to file for bankruptcy. 
Sanders closed most of its lunch counters and its headquarters in Highland Park. The company restructured itself by selling its products directly to grocery stores. The company was purchased in 2002 by the Morley Candy Company, another Michigan-based confectionery firm, and under the new ownership, the Sanders retail outlets and products began making a comeback in the Detroit area. As of 2014, there were 9 Metro Detroit Sanders Chocolate & Ice Cream Shops and two additional retail outlets located on Mackinac Island, Michigan. 
Sanders had been one of the first businesses in Detroit to be open on Sunday. Although business would be good, Fred Sanders would eventually bow to pressure and close on Sundays.
While the ice cream soda was the first signature menu item, Sanders would also become known for its dessert toppings, including hot fudge and classic caramel - using the original recipes passed down from generation to generation. Other popular menu items include the Hot Fudge Cream Puff, which Sanders still offers in its retails stores, and the "Bumpy Cake", which is a devil's food cake topped with "bumps" of buttercream which is cloaked in chocolate ganache. Many consumers who no longer live in Michigan still place online orders for Bumpy Cake today.
Henry Ford worked for Sanders. Sanders was one of the first companies in Detroit to use electric motors to run equipment. As a new source of technology the motors would often break down. To remedy this, Fred Sanders hired Henry Ford as a young mechanic who worked at Edison Illuminating Company before he started Ford Motor Company.
Fred Sanders was a true visionary. In the early 1900s the Sanders family owned one of the first electric automobiles; it provided much amusement for the early skeptics. The “electric “ seemed to have a temperamental streak; it would bring the family downtown in grand style, but once parked in front of the Sanders store it would refuse to run except in reverse.
To commemorate the centennial of the company in 1975, Jack Sanders, great-grandson of the founder, invited then-Detroit mayor Coleman Young, the Detroit city council, and other Detroit celebrities to create their favorite ice cream desserts. Sanders also recreated an 1890s horse-drawn wagon that crisscrossed the Detroit area to celebrate the centennial.
The Detroit Historical Society honored Sanders that same year for innovations that included the first carry-out service, the low stools and counters, and the use of dry ice to keep ice cream cold.
Sanders now once again offers its ice cream in retail stores across the United States and provides hand-dipped scoops at its own Sanders Chocolate & Ice Cream Shops in Michigan.