Buyer Beware
When purchasing a franchise beware of the hidden pitfalls. The unfortunate story of two Bakers Delight Franchisees and their fate with one of Australias largest a seemingly best franchises. If you are considering purchasing a franchise this is a must read.
Franchisees Story 1
Andrew Austin: Franchisee 12 years
I Purchased Bakers Delight Rozelle NSW from Bakers Delight Holdings for $ 320,000 with a verbal conformation that the profit was around $80,000 per year which seemed fair at the time. We went into the business earlier then we expected due to them not having a operator to run the business, and a promise from Bakers Delight that the paperwork on the profits would be passed on to us from head office in Melbourne (we ended up with no figures on the profits.). From the first day of business the shop was running at a massive loss and when I questioned Bakers Delight on the subject firstly I just received excuses then later on the breaches started arriving some of which were just made up and made no sense at all. At one point I became so desperate I asked Bakers Delight to buy back Rozelle for just $100,000 so we could keep our profitable Avalon store. I tried to get legal help through several lawyers however Bakers Delight made sure that the whole process was extremely expensive with legal fees beyond $30,000 just to get to mediation. The other problems we had with legal help was further hindered due to the fact that we were trying to survive financially with a business that was running at a loss.
Up until this point I had a very successful business in Avalon but due to the financial pressure Rozelle placed on us we put both stores on the market. The store remained on the market for 3years with no intrest, a large problem I am assuming is due to the fact that Bakers Delight controls the sale of shops as all there stores are sold internally. We gave up on trying to sell in May 2006 and placed the company into liquidation. Bakers Delight used a clause in the franchise agreement that gave them the rights to leasing the shops out for six months. Bakers Delight closed down Rozelle (they wanted no part of a unprofitable business) and 6mths later purchased Avalon for exactly half the amount that I purchased the business for. It was not until recently that I was made aware that Bakers Delight were forced by lawyers to buy Rozelle from the original franchisee they had sold it to using a buy back clause in the franchise agreement(subsequently that clause has now been removed) and Rozelle was sold on to me to recoup their costs. To this day I cant believe that a large very wealthy company like Bakers Delight Holdings could let me take the fall for a doggy business and their loyalty towards me after over fifteen years in the company.
Franchisees story 2
James Provoost: Employed Bakers Delight 13 years
I started with Bakers Delight in 1992 as a baker in several of the first stores in NSW and continued working as a production manager up until 2004. Throughout this time I increased sales in all the stores I managed and won numerous bread competitions. Due to my performance Ross\r Mcgowan the state manager NSW offered me the opportunity to lease and then buy my own business in Queensland. Ross Mcgowan put me in contact with Gail Buttler from the Queensland office and upon arriving we discussed several options and were given a long list of stores that Bakers Delight were prepared to finance me into. I knew of several of these stores and questioned Gail on the considerably lower prices that Bakers Delight were quoting compared to the advertised prices, she commented Dont worry they will take that price their shops have been on the market for years they are desperate. This did concern me at the time considering there were about half the stores in Queensland on the market and here attitude seemed ruthless.
We settled for Jimboomba the owner had it listed for $250,000 however Gail made the deal at $100,000 Bakers Delight informed me that the deal was done and instructed me to move my family to Jimboomba. I raised my concerns to Bakers Delight that relocating would cost me a substantial amount of money. Bakers Delight assured me that they would help by paying for the Registration of my company. Everyday I would receive a call from Gail Butler or the QLD Training manager asking if we had moved. Rental accommodation was scarce and the pressure from B/D forced us into a $250.00pw home with a 12mth lease. I informed Gail Buttler we had moved, we where running the store the next day. While waiting for Bakers Delight to organize our lease we increase the sales from $4000.00 to $6000.00 through a lot of hard work. After months of running the store and questioning when our lease would be ready to sign I was informed that the NOW profitable store was to be sold to another franchisee. I was told my last day would be 3rd Aug 2005 and I was to relocate to Toowoomba by the 1st Sept 05. I could not believe my ears, we had just moved!! We had just signed a 12 month lease and now they wanted us to move and take over Bakers Delight Toowoomba Central on the 1st September 05. I told Gail this was not financially viable for us as we could not possibly afford another move, the expense of another bond and the expense of paying double rent. Gail Buttler said Bakers Delight would cover the cost of this move, we signed a lease on Toowoomba Central and took over on 1st Sept. Bakers Delight reneged on the promise of paying our relocation costs leaving us to pay for everything:
-The broken lease in Jimboomba
-The new bond
-The removal costs
-Relocation of my childrens schooling, the list goes on.
The two moves cost us over $16,000 all they paid was $1,000 for registering our company to lease their Store. To cover the the remaining costs I had borrowed money from my elderly mother (money that had been put aside for her funeral) and Toowoomba Centrals takings. Due to this we were behind with our bills from day one and it did not take long for us to be approached by Trevor Haines the state manager for Queensland concerned of the situation. Regardless of having a 30% increase in sales, the highest in Queensland and a turnaround in profits from negative to a positive I was still told I had 7 days to be up to date with all bills. I had secured the money from a good friend in Sydney who was quite happy to be paid back in installments from the profits and assured me he would have the money in my account before the 7 day. It was only 4 days later when I was awoken during the day by my partner with a message from the sales staff that they were locked out of the store. Shortly after I received a call from Bakers Delight stating that they were reopening the shop with their own staff using the bread that I had produced the night before. To add further insult they kept 2 days banking in the safe and all my ingredients leaving my family broke and dependent on Salvation Army emergency accommodation and food vouchers.
This has placed a great deal of pressure on my family not only financially but also emotionally and I hope that by telling my story if I save just one person from the same fate it was worth it. In retrospect with all the years working for the company and all that I have heard and witnessed Bakers Delight doing to their franchisees I should have seen it coming.
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