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 interest, a large problem I am assuming is due to the fact that Bakers Delight controls the sale of shops as all 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 right to lease the shops out. To this day and over 12 months since liquidation Bakers Delight still collects a lease fee from Rozelle on an asset that they dont even own. Avalon was leased for six months and then purchased for exactly half the amount that I purchased the business for. This all seemed extremely unfair and one sided however it is all completely legal and all part of the fine print hidden in the franchise agreement. 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 can’t believe that a large very wealthy company like Bakers Delight Holdings could let me take the fall for their dodgy business and their loyalty towards me after over fifteen years owning and operating shops.
