NBN Principles
July 7, 2010
Identifying 6 important Franchisee needs to improve the success and profitability of the Canada Bread franchised system.
1. Health and Safety
This is a 24/7 business. Maintaining a balance is difficult and the NBN has created the “Healthy Balance Model” (under the “What Really Matters” tab) to illustrate how we believe that by working with Maple Leaf, we can create a healthier lifestyle for Franchisees. This stability leads to higher productivity and will generate a greater ROI for Franchisees and investors.
2. 90 Day clause removal
Within the Franchise Agreement, Canada Bread has the ability to change Franchisee compensation percentages, return rates, and customer classifications by giving 90 days Notice. This clause has been used several times since 2005, resulting in an average $18,000 scaled compensation decrease per year. Franchisee investments, mortgages and standard of living are affected by these changes.
3. 3 year contracts
Until 2007, Franchisees signed 5 year Franchise Agreements with Canada Bread. Agreement terms are now only 3 year contracts with renewal options. We would like to see the Agreements reverted back to 5 years terms. The short-term Agreements create added difficulties for Franchisees to obtain business loans and are also a deterrent for any quality entrepreneurs wanting to invest in the system.
4. Multi-route*
In 2009 there was an average of 1.07 routes per Franchisee. Our goal is to see an average of 2.5 routes per Franchisee by 2015. This system is not optimizing profitability by working under an “Owner/Operator” business model. Franchisee health and safety concerns are primarily related to the current operating standards within the system and the ability to incorporate infrastructure within the franchised business reduces these concerns. A/C Nielson data shows that commercial bakery growth is flat and a franchised system with larger franchised owners will generate a +4% unit growth for Canada Bread.
*As classified in today’s standard definition of what constitutes a route.
5. Fair Compensation
As this system evolves, Franchisee businesses are becoming more complex. The intensity of daily operations has increased, the number of products carried has doubled, and the customer relations responsibility has shifted to Franchisees. We want Franchisee routes to be sustainable businesses that provide sufficient revenue to operate with full-time working staff, providing Franchisees the ability to manage their businesses. This patient capital investment will provide sustainable returns for long-term investors in Maple Leaf.
6. Food Safety
The NBN expects all stakeholders in the system to be conscientious of Food Safety at all times. We support ongoing quality improvements to products and we request increased consultation with NBN Members and support staff to elicit higher quality standards within our system.
