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Bakers Delight: A Decade of Destruction

Bakers DelightUnder current Australian law the Australian Competition and Consumer Commission ability to act against rogue franchising is severely limited. With a 2013 federal election due there is little likelihood that the 2009 promise to review the Franchising Code of Conduct will be kept.

Bakers Delight Holdings continues to churn franchisees. This was first reported to the ACCC in 2004 and first reported at Blue MauMau in 2007

The financial difficulties started when I bought the Shell Harbour store. The store was not profitable but Bakers Delight promised me support and that my business consultant would work very closely with me to turn this store around to reach its full potential" says Deanne. But it never did, it never even got close.

Despite running two profitable stores, less than one year after purchasing the third, Deanne's agreements for all three were terminated. "To me it showed that the conduct was intentional, they were waiting for Shell Harbour to drag my other twos stores and myself down.  7Perth

Today the process of franchisee abuse and opportunism persists in churning hard working Australians, like recently locked out franchisee Giuseppe Celi

Many franchisees are completely unaware of the imbalance of power that exists in the franchise relationship and the existence of rogue franchisors before they sign a franchise contract.

Today at least something vaguely resembling adequate warnings are out there. But for many decades the franchising industry successfully ensured reports of opportunism went unreported.

Franchisees at Bakers Delight have long complained that the franchisor abusively interprets the contract, abuses Code conflict resolution processes while regularly demonstrating its power to terminate franchisees out of the system for engineered or induced breach of the agreement.

Considering the Bakers Delight network is close to 700 stores, the 180 sites listed and growing on BDL’s Hall of Shame,and apparently turned over at least three times suggests sooner or later the pyramid will collapse. The location pictured is said to have had five franchisees in the last four years going under again some ten days ago. A new franchisee is set to begin his journey in a few days.

Most franchisees do not realise they are so very vulnerable or understand their actual level of risk exposure. It is a lot more than the average $300,000 key. 

In some cases franchisees report that Bakers Delight Holdings has become so arrogant and sure of its unrestricted ability to gouge and terminate franchisees that it does not even bother to go through with the inconvenience of issuing formal breach notices as per Code requirements.

There is not even an appearance of engaging in due process in Giuseppe’s case.  

When the difficulties began he made approaches to Bakers Delight to debadge the business but instead the franchisor took control of the asset with Giuseppe receiving nothing for his business or the good will generated over 11 years as a Bakers delight franchisee. Bakers Delight will churn his franchise as soon as another fool is found.

According to financial statements for 2011 and 2012, bakers delight has built its business using not much more than its “key business strategy” of “buying and selling bakeries”.

The company’s main source of income is reliant on its ability to churn the same business units in a continuous and premeditated cycle. Bakers Delight knows the franchisee financial model is brittle at best but any remedy for franchisees would undermine its churn strategy.

Bakers Delight is now famous for its decade of destruction.  

Submitted on behalf of Narelle Walter.


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