Becoming a Franchisee
What is Franchising?
Franchising is a system of distributing an established product or delivering a service in return for a fee. The company that originally developed the products and services “the Franchisor” enters into an agreement with a third party “the Franchisee” to use its proven brand, systems, and processes to sell the products or service.
What are the benefits of Franchising?
There are many benefits for Franchisees. Buying a Franchise allows you to acquire an interest in an established business, with a recognised name. Franchisors provide training, purchasing benefits, and support, not normally available to independent small businesses.
What is the importance of the ‘Banjo’s’ name?
The Banjo’s brand, as a franchisee, is clearly one of your most valuable assets. It has high visibility and is synonymous with high quality cafe bakery products. The Banjo’s brand name is protected by trademark registration throughout Australia.
What are some restrictions in a franchised operation?
A Franchise business takes a high degree of personal involvement. The franchisee is subject to the directives of the franchisor in many facets of the operation of the business. The franchisor may define, at their
discretion: opening and closing times, product standards, preferred suppliers, fit out requirements, products that can be sold and service standards.
Who are Banjo’s customers?
Banjo’s is the complete Bakery Cafe experience. Banjo’s is both an outing and part of a persons regular shopping routine. Banjo’s customers include: families purchasing value for money breads and pastries for home, busy lunch time traffic seeking convenient lunches or snacks, and the ever increasing number of consumers, from all walks of life, who just like to sit down in a wholesome, welcoming, contemporary environment to have a quality coffee and other refreshments.
How does Banjo’s know what the customer wants?
Because Banjo’s make it their business to do so. Banjo’s is customer oriented. Communication with Banjo’s customers is achieved through good customer service practices and additional market research. Marketing research is undertaken to monitor the attitudes and opinions of Banjo’s customers and identify opportunities in the marketplace. Banjo’s uses a variety of means including surveys, secret shoppers, focus groups and customer feedback to help them remain ahead of trends and the competition.
How long is the Franchise period?
Fourteen years in total, comprising an initial term of 7 years with a renewal option of 7 years. Franchising is a long-term commitment. The relationship between franchisor and franchisee must be carefully assessed to ascertain whether it will be beneficial in the long run for both parties.
Can I make alterations to the Franchise Agreement?
Banjo’s strongly recommends that you seek independent legal and financial advice as to the meaning and effect of the agreement however, the content, which is standard across the franchise, is generally non-negotiable. The terms and conditions contained in the agreement have been carefully considered, and take into account extensive practical experience. A set standard ensures the protection of all members of the franchise network.
What are the risks?
Any commercial venture is subject to a variety of risks, and a franchised store is no different. Banjo’s has a proven track record of successful franchised stores and relationships, with a commitment to further growth. It’s in Banjo’s best interests to assist you to achieve the best out of your business, however we cannot provide you with any guarantee of success or guarantee against any losses. Ultimately it is for you to assess the risk and returns that can be achieved from a Banjo’s franchise. We strongly recommend you obtain, and maintain independent financial advice throughout this process.
Do I have to work in the Franchised store?
Every Banjo’s store is required to have an operator. Our business experience indicates that this is the most successful model. So a franchisee is able to choose whether to work in the business, partner with an experienced operator or manage the business with an experienced baker and store manager team. In time, if you have a successful track record, you may be approved to open up a second store.
How do I know if I’ll want to further explore becoming a Banjo’s franchisee?
Because Banjo’s encourages you to participate in our ‘Try Before You Buy’ program. Banjo’s place you with an existing franchisee in their store for a week. You get to have hands on experience running a Banjo’s bakery. This means a full time commitment for the term of the placement. In production expect to experience early starts. Most stores start production at 2am. It also means late finishes (around 7.30pm) to gauge the sales side of the business. We recommend that you commence your ‘Try Before You Buy’ in one of our Hobart stores so that you have access to our Resource Centre staff, and have access to a number of our local established and newly opened stores. The ‘Try Before You Buy’ program is also available at designated mainland stores. At the end of the trial period the franchisee will provide Banjo’s with an assessment of your trial.
Do I need any qualifications to become a Banjo’s Franchisee?
No, but it could be beneficial to have a certificate in retail, management, baking or sales.
What training will I get?
You will undertake the Banjo’s franchisee training program at which you will learn about all aspects of the business. The next step towards successfully running the business is putting all that you have learned in training into practice. Banjo’s will provide trainers and mentors who have proven experience in the areas they are training in. You will learn about production, rostering, IT, human resources, training, financial management, occupational health and safety, marketing and administration.
How long does training take?
How long the training takes will depend on the skills and knowledge you already have. A skilled operator would train in our systems for approx. 12 weeks and an inexperienced operator up to 12 months. Banjo’s want to make your training experience as close to the ‘real thing’ as possible. You will train with franchisees and managers; that means early starts, late finishes and long days – but in the end it is all worth it – just ask any of our existing franchisees.
What is the cost of the training?
Generally the cost of training will be $10,000 (+gst) but there could be additional costs depending on your level of training needed.
Can I continue my current employment situation and train to be a franchisee?
No. Training is designed to be a mirror of what you can expect in your future operating store. This means a full time commitment – just as if you were running the business yourself.
The Banjo’s Store
Who leases the property my site will be located on?
This will be determined by Banjo’s on a case by case basis. In some circumstances, Banjo’s will hold the lease directly and grant you a licence to occupy the premises. In other circumstances, you will hold the lease in your name subject to Banjo’s, yourself and the lessor entering into an agreement which has the effect of allowing the lessor to contact Banjo’s and provides rights to re-enter should you in any way breach the lease.
What term is the standard lease?
This can depend on the location of the site and the requirements of the landlord.
How big are the stores?
The optimum floor space is around 250m2. This all depends on location and availability of quality sites at a reasonable rent. The layout and design of each store is individually planned to maximise selling space, to ensure efficiency in the bakery and selling areas, and to allow sufficient seating space within the café.
Are all stores unique?
Yes. Banjo’s create and maintain consistent themes, but do not have identical stores. Because of site location, the store layout must fit in with its environment and consumer demographic. Banjo’s Marketing & Store Development teams determine what type of Banjo’s store to create.
Do I get to choose my own site location?
No, but Banjo’s will ask you for your store location preference. Specific areas may not be suitable for a Banjo’s site due to a variety of strategic, financial and demographic reasons. Banjo’s, where feasible, will place you in or as close to, your preferred areas as the circumstances allow.
How are sites chosen?
Banjo’s use a variety of strategies to assist you in selecting the right site, including: demographics, locating allied traders, and market surveys.
Can I choose what equipment I use in my store?
No. Banjo’s orders the equipment through its suppliers. After successfully baking for three decades Banjo’s knows that the equipment used in the bakery must be of the highest order. Banjo’s never skimp on quality.
Can I choose where I source my ingredients?
All products must be sourced from suppliers approved by Banjo’s to ensure consistency. In any event, Banjo’s group buying power means that you are more likely to be able to source your ingredients consistently at a cheaper price. Banjo’s has a strong relationship with its suppliers, and there are clear benefits to maintaining the relationship.
How much is it to set up a Banjo’s franchise?
The cost is dependent on the size of a site, its location, the extent of the works required and any financial incentives we negotiate with a landlord.
How much capital will I need?
This depends on a variety of factors including size and condition of the site, location and fit out. Capital costs may vary considerably, and we invite you to discuss this issue with us. Your financial statement will provide a basis for us to determine if you have adequate capital available.
Banjo’s strongly recommend that you obtain and maintain independent financial advice throughout this process and indeed in any business venture. Much of the capital required can be borrowed through bank provided business finance. We recommend that you seek loan approval in principle now so that you have an idea of your capacity. The franchisor has had their franchise business operations accredited by financiers who will assess finance for a Banjo’s store with favourable terms and conditions. Details are available by contacting the franchisor.
How much money can I make?
Profitability is the bottom line of any business and is contingent on a wide variety of factors including but not limited to: system compliance, debt levels, demographics, location, competitors, training, customer preferences, commitment, occupancy costs, expenditure, and other miscellaneous items. Because every individual circumstance is different, no representations as to the profitability or otherwise of a Banjo’s franchise can be given. Banjo’s can only rely on its current track record.
How much are Royalties?
There is an ongoing royalties fee of 10% of gross sales, payable weekly. The royalty is in consideration of the use of our brand, systems, new product development and Resource Centre support. Please note there are other fees contained in the Franchise Agreement, these can be further explored on the provision of the Disclosure Document.
Can I sell my store?
Yes. However, any sale is subject to the approval of Banjo’s and a fee is payable to Banjo’s of 5% of the sale price in accordance with the Franchise Agreement.
In franchising, as in any business, unexpected expenses may arise. You need to have a business plan that takes into account such occurances when working out funds you will need for the future.
What support will I get when the store is being constructed?
Throughout the construction of your store you’ll liaise with Banjo’s Store Development team who will project manage all aspects of the works from plumbing and electrical, to fridges. Banjo’s sets stores up to a point where they are ready to open. Whilst all care is taken to ensure that the construction is as smooth as possible, delays can and do occur. Given the nature of construction Banjo’s will consult you on any significant alterations or delays in the plans.
What support will I get to initially staff my store?
At Banjo’s we recognise that it’s all about people. A Banjo’s consultant will assist you in the initial recruitment for your store. We require you to participate in selecting your staff. This enables you to see Banjo’s best practice methods in action. From then on you are responsible for recruitment. Of course advice contained in the comprehensive operating manuals and advice over the phone is always available.
Do I need to hire any current Banjo’s staff to open a new store?
Yes. Opening a new store is a very busy period. As a new franchisee, with new staff, you are likely to find the whole experience, despite your extensive training, a little daunting. Having a few ‘old hands’ on board not only relieves the pressure of opening day, but provides invaluable assistance in training and maintaining momentum after the opening team (see below) departs, given that the first 100 days are the most important days in the life of the business.
What support will I get to open my store?
Banjo’s will provide, as part of the set up costs, an ‘Opening Team’. The Opening Team is made up of specialist consultants experienced and skilled in opening Banjo’s bakeries. The Opening Team is responsible for providing, with your assistance, the initial training of new recruits and the initial set up of processes, systems and equipment. The Opening Team will arrive approximately one week before opening and remain for at least the first week of trading.
What level of marketing can I expect?
Banjo’s places an emphasis on point of sale marketing and having a strong visual merchandising presence. Banjo’s capitalises on its already strong brand by promoting the store through a variety of in-store and community based marketing strategies. Of course during peak periods such as Easter and Christmas we will provide additional promotional activity and where necessary training on how to make and promote new products.
What if I need more intensive operational assistance?
Banjo’s Operations team is able to provide specialist advice on all operational aspects of the business and will make routine visits to your store to provide advice and guidance.
Can I sell wholesale as well as retail?
Yes. Banjo’s is primarily a retail operation, but some stores do produce wholesale orders for restaurants, mixed shops and caterers. Before entering into the wholesale market, franchisees are invited to investigate with Banjo’s the potential pitfalls and opportunities of the wholesale market.
Can I change aspects of the Banjo’s brand or Banjo’s systems?
Absolutely not. Customers always know what to expect in a franchised store and that is why Banjo’s uses a consistent approach to marketing the Banjo’s brand. In store advertising and promotional materials are available to all franchisees across Australia.
Can I introduce new product lines to my Banjo’s site?
No. As a franchisee you must produce Banjo’s list of mandatory products. However, Banjo’s understands that not all tastes are the same. For this reason you have the freedom to choose any combination of products from our optional list. Banjo’s is consistently developing and testing new products. Franchisees are encouraged to provide the Resource Centre with ideas or feedback.
Understanding the franchise relationship
Two important features of franchising are:
– a The franchisor has established the business system you are using and;
– a That Banjo’s franchise system relys on each franchise maintaining consistency.
For those reasons, franchisees are required to adhere to the franchise system operating procedures set down by the franchisor. As a result you are limited to the changes you can make to the franchise system without the agreement of the franchisor.
You will be bound by confidentiality obligations, this includes limited rights to use the franchisor’s intellectual property or business system outside the franchise.
As most businesses adjust to meet changes in the market, the franchisor may make changes to the franchise system at any time but does not have to discuss them with all franchisees.
Franchise Code of Conduct
Banjo’s Corporation is a member of the Franchise Council of Australia and complies with the Franchising Code of Conduct which is administered and enforced by the Australian Competition and Consumer