TRUE STORY FROM EX-BASKIN ROBBINS FRANCHISEE - PERTH----------------------
How could things that are meant to be so good; could ever go so wrong?
Baskin 31 Robbins name is so synonymous with worldwide brand, famous, superior quality, happiness, fun, magical, adventurous or whatever you feel like associating it, every time you unite your taste buds with one of those extensive burst, heavenly exploding rich flavour of ice cream. We have to admit, the quality of ice cream it produces and the “31derful” selection is number one. We’ve seen too so many success stories and glamour which BR is capable of fabricating, especially in Japan and Korea. From customers’ perspective, all things seem cosy and enjoyable except for those coins or notes you have to hand in for the exchange of the short term delightful moments.
Being on the opposite side of the cashier counter is something totally different. Most of the time, doing business and enjoying ice cream don’t mix. As one of the ex-franchisees of Australian Baskin Robbins, I would not brag nor do I have the option of reaping profits from the shop I used to run. Profitable (read: healthy consistent profit margin) Baskin Robbins shops are obsolete in Australia. This phenomenon proves difficult for loyal BR followers to digest. How could things that are meant to be so good; could ever go so wrong? To try to explain whose fault is it will be prejudicial, yet the problems may remain, regardless of ‘he thinks she thinks’ syndrome or finger pointing cycle. We are talking about franchise’s reputation; particularly Baskin Robbins is hanging on the balance.
When you ask for operations assistance from Allied Brands, the blame is always on us - We have to check for our own mistakes, it is our faults that the business is not doing well, the scooping is too big, too many staff, not spending enough money for in-store marketing, spread more freebies to bring more customers, print more free stuff promotions, give away birthday or charities free ice creams, ridiculous more “buy one get one” discounts, calendars full of free and free and free and free and all the free ice creams in the world. If the product is so good, why are franchisees always told the best marketing is to give it away free?
3. Ruthless Fixed & Variable Expenses
Whether we made $1 or $1 million, there are some fixed expenses that need to be paid such as rent, electricity, royalty & ad fund, accountancy, staff wages & superannuation, cost of goods, insurance, etc. You still have to leave a budget for unforeseen stuff such as repair for the freezer, hot water system, in-store marketing, new uniforms, etc. The list can go on, in fact, when your business is not doing well, the expenses feel more burdening to bear. Western Power, Water Corporation, Westfield Group, Allied Brands, City Council, Federal Government, your accountant & lawyer, your staff, your relevant bank, all of them don’t feel sorry whether you make $1 for the whole year as long as you pay their fees. Once you put a clause that you have to be profitable enough as a condition of payment then they would go crazy. Allied Brands select my site and they say they have "big experience" at picking terrific locations. My site was at dead end in bad shopping mall, with rent 30% higher than Wendys shop with great location. Allied Brands in business to sell shops, not as partner with franchisees. They frankly don't give a shit about anyone.
4. No other Assistance
When you’re doing business, basically you are on your own. No such thing as a lifeline; ala Business 101. There is a Retailers Association as a country wide and also a state wide for retailers’ representation for legal and resolution matters also a government body called ACCC though just in case we stumble, but both bodies don't have any power. Cases like misleading, unconscionable conduct on the Trade Practices Act are impossible for small business owner and very money consuming because of the legal infrastructure to file a court session, hire solicitors, and pay red tapes. Justice is not free and could be very expensive in Australia. Unless it is plain and clear written in the contract then it is buyers beware.
Baskin 31 Robbins name is so synonymous with worldwide brand, famous, superior quality, happiness, fun, magical, adventurous or whatever you feel like associating it, every time you unite your taste buds with one of those extensive burst, heavenly exploding rich flavour of ice cream. We have to admit, the quality of ice cream it produces and the “31derful” selection is number one. We’ve seen too so many success stories and glamour which BR is capable of fabricating, especially in Japan and Korea. From customers’ perspective, all things seem cosy and enjoyable except for those coins or notes you have to hand in for the exchange of the short term delightful moments.
Being on the opposite side of the cashier counter is something totally different. Most of the time, doing business and enjoying ice cream don’t mix. As one of the ex-franchisees of Australian Baskin Robbins, I would not brag nor do I have the option of reaping profits from the shop I used to run. Profitable (read: healthy consistent profit margin) Baskin Robbins shops are obsolete in Australia. This phenomenon proves difficult for loyal BR followers to digest. How could things that are meant to be so good; could ever go so wrong? To try to explain whose fault is it will be prejudicial, yet the problems may remain, regardless of ‘he thinks she thinks’ syndrome or finger pointing cycle. We are talking about franchise’s reputation; particularly Baskin Robbins is hanging on the balance.
If I may discuss for the purpose of this article, there are several factors which contribute to the success/failure of a franchise business, in this case, strictly only for Australian Baskin Robbins and their corrupt parent, Allied Brands. (ABQ)
Let’s break down the factors that contribute to the failures:
1. Inexperienced Newcomers
The demographics for newcomers are usually but not limited to these traits: young, ambitious, new players in the market/industry, inattentive to details, and may have access to quite large sum of fund. Since they are inexperienced, their arsenals of weapons are theories from educational institutions, limited information from the franchisor, and some advices from the lawyers and accountants. Theories are good for trial and error in our case study or assignment in college or university, but in real life practices it is not mathematically correct; it is not always A + B = C. Just because you spent a quarter million buying the so called global brand doesn’t make you an instant millionaire. The cost of owning a brand new Baskin Robbins would equal to from $250,000 to $500,000. Yet most of the second hand store that are on sale usually much less - recently a BR shop here sold for less than $40K after the first owner paid over $300K! The number sometimes speaks for itself. It tells you how the business sort of going.
2. Indifferent Franchisor
It is harsh enough for franchisees to feel the sting of paying initial set up cost with 6 digits figure coming from the bank, on a loan or their lifetime savings. On top of that, 10% of hard earned, blood and sweat breaking turnover money goes straight to the franchisor pocket. The least a franchisee could or ought to anticipate from its franchisor if a genuine help is not an option, then a well spent advertising fund is minimum. Over the years, Allied Brands’ mismanagement, wrongful spending, and wastage are well documented and quite blatant. This is not something that new franchisees are expecting. Even though the overall business of all the franchisees is not performing well, the franchisor decided to go public in 2004 nevertheless. The cry for help from most of the franchisees are heard as whinging, immature, trouble maker, superficial, and what not. So much stories from past franchisees for investing the time and money which they never ever seen them back. From the beginning, they hardly want to do what’s best for the franchisees, instead, take a short cut in any way they could. The management never look in franchisees best interest when negotiating the rent with the landlord, choosing the site, doing research on customer’s response and feedback first as a potential new business in a new sites, new suburbs and new surroundings. Training is done in a manner of rushing (only one 3 days, in the USA the training is THREE WEEKS?), more on theories of the “Legend of Baskin Robbins” and how to pay royalty and ad fund correctly, and less on how to become successful franchisees and managing the shop and variety of challenges. It has been suppressed communication between franchisees for sharing of knowledge for fear of everyone finding the truth about Allied Brands mismanagement and ineffective & inefficient ways of proliferating Baskin Robbins franchise in Australia.
Let’s break down the factors that contribute to the failures:
1. Inexperienced Newcomers
The demographics for newcomers are usually but not limited to these traits: young, ambitious, new players in the market/industry, inattentive to details, and may have access to quite large sum of fund. Since they are inexperienced, their arsenals of weapons are theories from educational institutions, limited information from the franchisor, and some advices from the lawyers and accountants. Theories are good for trial and error in our case study or assignment in college or university, but in real life practices it is not mathematically correct; it is not always A + B = C. Just because you spent a quarter million buying the so called global brand doesn’t make you an instant millionaire. The cost of owning a brand new Baskin Robbins would equal to from $250,000 to $500,000. Yet most of the second hand store that are on sale usually much less - recently a BR shop here sold for less than $40K after the first owner paid over $300K! The number sometimes speaks for itself. It tells you how the business sort of going.
2. Indifferent Franchisor
It is harsh enough for franchisees to feel the sting of paying initial set up cost with 6 digits figure coming from the bank, on a loan or their lifetime savings. On top of that, 10% of hard earned, blood and sweat breaking turnover money goes straight to the franchisor pocket. The least a franchisee could or ought to anticipate from its franchisor if a genuine help is not an option, then a well spent advertising fund is minimum. Over the years, Allied Brands’ mismanagement, wrongful spending, and wastage are well documented and quite blatant. This is not something that new franchisees are expecting. Even though the overall business of all the franchisees is not performing well, the franchisor decided to go public in 2004 nevertheless. The cry for help from most of the franchisees are heard as whinging, immature, trouble maker, superficial, and what not. So much stories from past franchisees for investing the time and money which they never ever seen them back. From the beginning, they hardly want to do what’s best for the franchisees, instead, take a short cut in any way they could. The management never look in franchisees best interest when negotiating the rent with the landlord, choosing the site, doing research on customer’s response and feedback first as a potential new business in a new sites, new suburbs and new surroundings. Training is done in a manner of rushing (only one 3 days, in the USA the training is THREE WEEKS?), more on theories of the “Legend of Baskin Robbins” and how to pay royalty and ad fund correctly, and less on how to become successful franchisees and managing the shop and variety of challenges. It has been suppressed communication between franchisees for sharing of knowledge for fear of everyone finding the truth about Allied Brands mismanagement and ineffective & inefficient ways of proliferating Baskin Robbins franchise in Australia.
Our Franchise Business Manager changes often, I have several different ones every year. None have any idea how to run shop, their job is like collection agency asking where my payment to Baskin Robbins are coming and why I don't make them faster. They don't even know how to make a scoop of ice cream. Of course they don't stay as Franchise Business "Manager" very long because they see all failing Baskin Robbins shops all day and get many angry people in their face. It is a shameful job.
When you ask for operations assistance from Allied Brands, the blame is always on us - We have to check for our own mistakes, it is our faults that the business is not doing well, the scooping is too big, too many staff, not spending enough money for in-store marketing, spread more freebies to bring more customers, print more free stuff promotions, give away birthday or charities free ice creams, ridiculous more “buy one get one” discounts, calendars full of free and free and free and free and all the free ice creams in the world. If the product is so good, why are franchisees always told the best marketing is to give it away free?
3. Ruthless Fixed & Variable Expenses
Whether we made $1 or $1 million, there are some fixed expenses that need to be paid such as rent, electricity, royalty & ad fund, accountancy, staff wages & superannuation, cost of goods, insurance, etc. You still have to leave a budget for unforeseen stuff such as repair for the freezer, hot water system, in-store marketing, new uniforms, etc. The list can go on, in fact, when your business is not doing well, the expenses feel more burdening to bear. Western Power, Water Corporation, Westfield Group, Allied Brands, City Council, Federal Government, your accountant & lawyer, your staff, your relevant bank, all of them don’t feel sorry whether you make $1 for the whole year as long as you pay their fees. Once you put a clause that you have to be profitable enough as a condition of payment then they would go crazy. Allied Brands select my site and they say they have "big experience" at picking terrific locations. My site was at dead end in bad shopping mall, with rent 30% higher than Wendys shop with great location. Allied Brands in business to sell shops, not as partner with franchisees. They frankly don't give a shit about anyone.
4. No other Assistance
When you’re doing business, basically you are on your own. No such thing as a lifeline; ala Business 101. There is a Retailers Association as a country wide and also a state wide for retailers’ representation for legal and resolution matters also a government body called ACCC though just in case we stumble, but both bodies don't have any power. Cases like misleading, unconscionable conduct on the Trade Practices Act are impossible for small business owner and very money consuming because of the legal infrastructure to file a court session, hire solicitors, and pay red tapes. Justice is not free and could be very expensive in Australia. Unless it is plain and clear written in the contract then it is buyers beware.
My shop is gone. I have lost over $500k and several years of hard work trying to make a success with this brand. Maybe I did something wrong, but Allied Brands and Baskin Robbins can't ever explain what it is. They're now preparing to sell my shop again to some other poor migrant sucker.
How can this be allowed in modern country like Australia?
