Hi my name is Peter Masalski,
My wife and I were franchisees with Bakers Delight(BD) for 18 years and our story goes like this. In 2001 we sold our Canterbury store to BD for another store in Studfield. We were told at the time that if we wanted to expand this was the way to go as the Canterbury and Hawthorn area was already saturated with BD stores. We already had the Tooronga store and lived in Ferntree Gully so it made sense to expand into the area. We were advised at the time by our franchise consultant John Baker that we would have a better chance of expansion in the area if we brought the existing Studfield BD. The store was located half a kilometer from the Knox shopping center. Although the stores were close they serviced completely different customers. From our experience Knox was a regional shopping center that serviced the region where as Studfield was a local shopping area that serviced the local communites. Another consideration was the fact that the store was already 12 months old.
The stores sales rapidly increased from $8,000pw to $11,000pw shortly after we purchased the business. We heard rumors that BD were going to open a store in Wantirna mall another local shopping area about 1.5k away from our store. Most of Studfields customers were from the Wantirna area so we decided that we would apply for this store. We also knew it would take customers from our Studfield store and thought better to be in our pocket than in someone else’s. When we heard that Lyle Turner was going for the same store we were still confident with our application as we complied with all requirements. We also felt confident as it was BD original recommendation that we move to the area so that we could expand. When we heard that Lyle got the store we arranged a meeting to protest the decision. We met with our new consultants Jen Chandler, Regional manager Mark Hooper and Roger Gillispie. We discussed the issue of Lyle,s conflicting interest as the Property Manager for Head Office and his inability to meet all the requirements for purchasing a store. We were given the response that the decision has been made and BD stood by it.
We were still upset about this decision and further insulted by the treatment at a BD forum which my wife attended. My wife broached the subject of losing sales from the Wantirna store. Mark Hooper and Richard Taylor suggested that she stop whining and that the desicion was made. They also suggested that their would be no effect in sales (something they would not substantiate in writing).
The store opened and as we predicted the sales of our store declined to around $8,500pw. We started having difficulty in paying our bills and began laying off staff. We tried everything that we had learnt over the past 18 years nothing was working. We were having more and more trouble with our finances and had to let even more staff go until my wife and I were working 7 days a week We were lucky to hold the sales at $8,500pw. We were then threatened by the new Regional manager Micheal Ermer that BD may not renew the 5 year option on the expiring lease at Studfield. We rang him to find out why they doing this and arranged a meeting with Micheal Ermer and our new consultant Arron Pyne. We received a breech of franchise agreement notice for the reason of having difficulty paying bills and the store apparently not performing as well as it should be. We explained that since the store in Wantirna had opened sales had dropped and my wife and I were working 7 days. We explained that if they did this they would ruin us and we would seek legal advise to recover loss of sales, loss of future sales and the devaluation of the business.
On the 1/5/2005 BD decided to do an audit on both stores to find out what was causing our financial difficulty. Their conclusion was that Tooronga was paying most of the bills and they would get back to us with a solution. After seven months without any response we asked for another meeting. We met Roger & Lesley Gillispie with Micheal Ermer and the person who conducted the audit. They told us we needed to sell Studfield, we laughed because we had already put the store up for sale in early 2005 and found no buyers. They could see we were getting deeper into trouble and by January Michael rang us and said he had a buyer for Studfield. He was a new franchisee so we would have to wait until he finished his training in March. By this time my wife was diagnosed with major depression and was still working 7 days. She was getting worse so we sold Studfield for $250,000 just enough to pay out the loan. We lost $175,000 on the sale and still owed for the Taxation and superannuation. We concentrated on Tooronga and worked on reducing debt.
My wife was approached in May 2006 by Nicole Howlett with an offer of $300,000 for Tooronga. I believe BD asked my wife because of her illness. A week later they withdrew their offer with the excuse that the Tooronga shopping center was due to be demolished and replaced with a new shopping center. It is now August 2007 and the shopping center is still open. While this was all going on the tax office were getting impatient with our accumulating debt of $300.000 and sent us a Directors notice demanding payment within 21days. Obviously we did not have that money so we organised a meeting with Micheal and Nicole. We asked for help hoping that they may put the offer back on the table considering the Tooronga store turns over $1,000.000 a year. The only advice given was to talk to your accountant. The accountant advised us to see BK Taylor who is a liquidator so we went into liquidation our last trading day was on the 6/9/06. Head office broke into Tooronga on the 7/9/06 and started trading a week later. They only offered our liquidator $50,000, not sure what happened with this offer? We now know that BD can legally take over stores in this manner. It’s no wonder they withdrew their offer, they were sitting back waiting for this to happen so they could take the store for nothing. My wife is still unable to work due to the major depression it has now been 11months.
From Peter and Carol Masalski