cobs-bread---franchise-information-package

FranchiseINFORMATION PACKAGE



COTaNbTleENofTS 4 About Us 5 Our Mission 6 Our History – Our Exciting Journey 7 Are we the Right Business for you? 8 Training Provided 9 Support Offered10 General Costs and Fees10 Estimated Initial Investment by Franchisee (NEW LOCATION) 10 Ongoing Fees12 FAQs15 Next Steps 210 - 369 T E R M I N A L AV E N U E VANCOUVER BC V6A 4C4 CANADA

Oven to Table About Us Every day, in every bakery, COBS Bread bakers create a range of traditional and gourmet breads. All products are baked from scratch, fresh daily on the premises. At the end of each day, most unsold products are donated to local charities. COBS Bread bakeries are distinctive in appearance, branding, product quality and customer experience. We are committed to establishing and maintaining mutually beneficial and rewarding relationship with all our business partners – employees, franchisees, suppliers, and customers.4

MiOsusrionReal Bread, Real People, Real DelightThe COBS Bread brand has been built on our commitment to thequality of our product, the development of our people and the delightwhich the combination of these two elements brings to our customers. 5

OOuurrHEisxtcoiryting Journey COBS Bread is part of one of the most successful franchise bakery networks in the world - Bakers Delight. An Australian owned company, Bakers Delight has been in operation for more than 30 years, with more than 700 bakeries across Australia, New Zealand, and Canada. Bakers Delight (trading as COBS Bread in Canada), Australia and New Zealand’s largest retail bakery business was established in 1980 as a single bakery on Glenferrie Road in the Melbourne suburb of Hawthorn. The founders of that baker y, fourth generation baker Roger Gillespie and his wife Lesley have since grown the company into one of Australia’s most successful and celebrated retail operations. COBS Bread was launched in Canada on November 13, 2003, with the first location in Edgemont Village in North Vancouver. The family owned business has since grown to more than 70 bakeries and more than 50 franchisees across three Canadian Provinces.6

Are we the Right Business for you?We see our growth through franchising and are thus seeking the right business partners.Selection of new franchisees is based on criteria established to maintain the COBS Breadstandards of excellence and ensure the right fit for both parties.Qualities we are seeking include: Ask yourself whether you’re ready to:Demonstrated team managementand strong leadership skills Follow the COBS Bread systemCommitment to being hands on Work in a physicallywithin the business demanding environmentAttitude of “doing whatever it takes” Be active in sharing your successto make the business a success and failures to the networkGood business acumen Get involved with your local community 7

Training Provided Potential COBS Bread franchisees undergo training to provide them with the tools to successfully own and operate their business. Dedication and commitment to training is essential to ensure that the franchise owner is familiar with the product, maintains quality and consistency, is an expert in delighting customers as well as managing the business on a day-to-day basis. Training includes: • Baking skills and production management • Product knowledge and handling • Bakery team training and customer service • Marketing and promotions • Purchasing and inventory control • Effective management practices • Bakery staff development The COBS Bread Franchise Training Program is conducted in a bakery environment at designated bakery locations. Training is competency based and designed to be completed over a four month period. The cost of training is broken up into two stages; $2,000 for the initial three weeks, followed by a further $4,500 for the balance of approximately twelve weeks; for a total of $6,500 (plus applicable taxes). During this time, potential franchisees acquire the necessary competencies required to operate a COBS Bread bakery.8

Support OfferedCOBS Bread offers ‘hands-on’ support and proven business procedures and systems toassist in managing your business to success. These systems and policies are continually enhanced to provide franchisees withstreamlined, relevant and timely support in a range of areas.Marketing OperationsStrategic marketing support in the areas of Provide ongoing support and guidanceadvertising, media, design, product pricing, for effective business management.public relations, merchandising, localmarketing and market research. PropertyTraining Locating viable precincts and negotiating leases directly with landlords.Franchisee training program conducted atone of our training bakeries during a 16 Purchasingweek period at a total cost of $6,500 plusapplicable taxes. Additional training and The necessary economies of scale in placedevelopment provided on an ongoing basis to offer group purchasing arrangementswhen the need arises. at superior pricing and service.Finance Point of SaleFinancial assistance including rostering and Cash flow, reporting and customerpayroll systems, disclosure of group reports loyalty programs.and negotiating bakery liability insurancethrough group coverage. IS DepartmentHuman Resources Offer assistance relating to hardware, software, general administrationOur systems drive best practices and and requests.policies, including information in the areasof employee relations and other relevant Networklegislation. At the discretion of the franchiseowner there is an option to take part in the Providing opportunities to network withestablished benefits program. other franchisees and benchmark results provides an invaluable support system. T9

General Costs and Fees Potential franchisees have the opportunity to purchase new and existing bakeries. As we expand across Canada, it is important to match individuals with a suitable location. The pricing of our existing bakeries are determined by their profitability and typically range between $300,000 - $1,000,000. The average outlay to establish a new COBS Bread bakery is outlined below. E stimated Initial Investment by Franchisee (NEW LO CAT IO N) Category Investment Franchise Purchase Fee $25,000 Training Fee $6,500 Training attendance costs $0 - $15,000 Insurance premiums during training $200 - $500 Additional training courses $200 - $400 Bakery Establishment Costs construction of leasehold improvements, fit out, signage $200,000 - $300,000 equipment $180,000 - $220,000 project management fee $7,500 legal and professional fees, including design and architect fees $20,000 - $25,000 Utilities deposits and hook-ups $0 - $45,000 Permits and licences $3,000 - $4,000 Sublease rent $1,500 - $9,000 and security deposit $2,000 - $12,000 Point of Sale System initial cost $10,000 - $17,000 and first month’s license fee $400 Inventory and supplies $4,000 - $7,000 Opening advertising and promotion $4,500 Insurance premiums for first year $2,400 - $2,800 Working capital $15,000 - $20,000 TOTAL $469,800 to $699,400 Ongoing Fees Royalty Payments: 7% Advertising and Marketing Contribution: 3% *Fees are paid weekly and calculated on net sales10

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QFreuqueesnttlyiAosknesd Do I need to be a baker or do I need any previous baking experience? No. Our fully accredited training program covers all aspects of the business including baking. Successful franchisees come from many different career backgrounds. What is the term of the agreement and initial fees? The franchise agreement is a ten year term. Initial fees equate to $25,000 ($2,500 per year for 10 years). Will COBS Bread assist with financing? It is the franchisee’s responsibility to secure financing. We expect all applicants to discuss financing with their financial advisor or financial institution. However, we do have representatives that we have connected with at various financial institutions that have a copy of our disclosure document and may be able to facilitate the loan approval process.12

Am I able to choose What are the typicalmy own location? hours of operations?There are existing as well as potential Store trading hours are typically fromnew opportunities available. It is our 7a.m.-7p.m.; however, because our productsdesire to match each applicant with the are baked from scratch daily, the openingmost appropriate location. To view the shift can start as early as 1a.m.bakeries that are currently for sale, pleasevisit: www.cobsbread.com/Franchising/ Does the Franchise AgreementOpportunities/BakeriesForSale/ include any trade area/territory protection? We are looking to expand across Canada.There are many factors that are considered COBS Bread does not offer any territorywith prospective new sites. COBS Bread protection but it is in our best interest tooffers entry into a turnkey operation. Site ensure that all bakeries are successful.selection, securing the real estate, providing The COBS Bread team will determine theand installing equipment, construction and optimal locations to open new sites.leasehold improvements are all carried outby our experienced team. How does COBS Bread spend the 3% marketing and advertisingCan I purchase multiple fee collected?COBS Bread locations? The marketing and advertising fund isCOBS Bread currently has franchisees that allocated into three categories (examplesown and operate multiple units. Typically, of different initiatives are provided below):following the franchisees first year of a) National – campaign kits, direct mail,operation, ensuring that the initial bakery public relationshas a successful team in place and that the b) Regional – resources that benefit threefranchisee is financially capable, COBS or more bakeries including direct mail,would consider granting an additional bakery. mass sampling, and large events c) Local – an equal dollar amount isWhat is the average size allocated to each bakery to spend onof a COBS Bread retail store? initiatives such as donations, sampling, gourmet tastings, and community events.COBS Bread locations typically rangebetween 900 – 1100 square feet. 13

What are the staffing requirements? Each bakery is typically made up of a Bakery Manager; a Production Manager; a Sales Manager; a sales team and baking team. The number of staff per bakery will range depending on the individual needs and the number of part time and full time employees. How long does the process take? It is our experience that from the time of application to the time that the Franchisee opens their bakery or purchases an existing site usually takes between 6 to 12 months. Please note that this time can vary significantly if suitable real estate is unavailable. Does COBS Bread allow Franchise partnerships? A partnership can only consist of the franchisee and their respective spouse of common law partner. No other partnerships will be a granted. Is COBS Bread a member of the Canadian Franchise Association? Yes, we have been a member since 2008. Additionally, we were awarded the Bronze Award in recognition of excellence in franchisor/franchisee relationships in the category of Traditional Franchises New/ Emerging by the Canadian Franchise Association in 2010 & 2012. We were also awarded the Franchisee Choice Designation in 2011 & 2012 by the Association.14

Next Steps For additional informationExcited to join the COBS Bread Family?... please contact:We are sure that this document will raise a Heather Habibnumber of questions and we are excited aboutworking with you during this due diligence Franchise Managerstage in order to provide the answers neededin order to make an informed decision. 604-296-3515Please visit www.cobsbread.com/Franchising/for further details and to apply online. [email protected] you for your interest and we lookforward to receiving your completedapplication. 15