Franchising

Step 1 - Why Franchise?

This business format represents an opportunity to own and operate a proven business with reduction in financial risk. Here follows the four key risk reducing advantages that are commonly quoted by advocates of franchising.

Access to Established Business Systems

A franchise system provides immediate access to an established and proven business system.

Developed Products and Services

There is no need to spend time or money developing products or services for your business.  A range of products and the means to produce them are immediately available to you. The ongoing research and development of product is also taken care of.

Training and Business Advice

As training and business advice are readily available in a franchise system, a strong understanding of this particular style of business is not imperative.

Group Advertising and Marketing

A franchise system gives you the benefit of being part of a larger organization, increasing credibility in the consumer environment. Also advertising and marketing activities can be undertaken on a group basis, allowing the business to increase its exposure to the target market in a more cost effective manner.

These advantages by themselves will not guarantee success, however they are attractive compared to the risks associated with starting a new non-franchise business.

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Step 2 - Introduction to Muffin Break

Muffin Break is a unique  specialty bakery/cafe retail system, that operates throughout Australasia and is growing rapidly in the UK. Muffin Break is able to negotiate prominent positions in these markets best known shopping and retail centres. Muffin Break has a very active new store development plan.

The Muffin Break system is ultimately owned by Foodco Group Pty Ltd, an Australian company. Foodco New Zealand Ltd operates the Muffin Break concept in New Zealand as licensee of Foodco Group. Foodco UK Ltd is a UK joint venture operated by Foodco Group Pty Ltd and Foodco New Zealand Ltd.

Muffin Break’s Unique Products

Muffin Breaks unique sales proposition is that all food is prepared and baked on the premises daily using, whenever possible, natural ingredients, free from preservatives. These important points distinguish Muffin Break products from all other bakery cafes in this niche.

Muffin Break sells its own exclusive blend of coffee that complements the other high quality products on offer.

Muffin Break’s Valued Customers

The unique product that Muffin Break offers appeals to a wide range of customers. Predominately, the Muffin Break customer is female, spends considerable time in shopping centres and is looking to reward herself with a break.

Muffin Break’s Comfortable Environment

The position and presentation of Muffin Break shops provides a great environment for customers to enjoy Muffin Break’s delicious products and ensures exposure and access to a large number of potential customers.

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Step 3 - Why Franchise with Muffin Break?

Here are some of reasons why you should consider a Muffin Break bakery café.

Established Business System

You benefit from Muffin Break’s established intellectual property (comprising trademarks, imagery, manuals, techniques and recipes) that Muffin Break makes available to its franchisees.

Muffin Break is experienced in selecting prime sites and has significant credibility with the retail property industry.  Once the site is selected, Muffin Break will negotiate and enter into a lease of the site.

When Muffin Break has reached agreement with the lessor, Muffin Break’s development team designs and supervises the fitout of the café to Muffin Break’s specifications.  Muffin Break obtains competitive quotes from approved, independent contractors and has negotiated national supplier contracts.

Developed Products and Services

Muffin Break has developed numerous product recipes since its introduction and continues to innovate with product.  Muffin Break offers a wide range of muffins including fruit based muffins, low fat and high fibre muffins, bran and savoury muffins. Muffin Break also has a wide range of cookies, cakes, pastries, savouries, quiche and sandwiches to complement the muffin range.

Muffin Break has an exclusive blend of freshly roasted and freshly ground coffee.  Our baristi are highly trained individuals, committed to delivering a top class espresso coffee to the cup every time.  In addition to this, Muffin Break sells a selected range of whole coffee beans for those wanting to enjoy a Muffin Break coffee freshly made in their homes.

Foodco’s coffee expertise and purchasing power ensures the high quality of Muffin Break’s coffee, and the competitiveness of coffee pricing. This group purchasing power is highly beneficial to franchisees in terms of value and consistency of specification.

Muffin Break also offers a wide choice of herbal and regular teas, in addition to many hot and cold coffee beverages and other specialty drinks from the many recipes available.

Muffin Break also takes on the responsibility of developing and trialing new products to constantly improve the Muffin Break range.

Training and Business Advice

Muffin Break provides extensive training to franchisees. On-site training is conducted prior to store opening and for an initial opening period.

On-going training and advice is provided to franchisees through regular visitations by highly trained Muffin Break representatives appointed to assist each café.

Muffin Break has developed nationally recognized training programs for shop staff and franchisees that result in nationally accredited certificates in food retail. This is achieved through the administration of specific development programs and in-store training at our nominated training stores.

Group Advertising and Marketing

Muffin Break employs a marketing department to develop and implement marketing and advertising strategies. The marketing department communicates regularly with franchisees regarding in-store promotions and national initiatives.

Muffin Break has an established brand due to previous marketing and promotional activities.  The marketing department will continue to build on the established and trusted name of Muffin Break for the benefit of all Muffin Break cafés.

All of these reasons reduce the risk to you of proceeding with a Muffin Break cafe, compared with embarking on a similar business venture on your own account.

Whilst Muffin Break’s concept is a proven and established business system of developed products and services, on-going training, business advice and group advertising and marketing, your success will also depend on your enthusiasm, attitude, capacity for hard work, people skills and entrepreneurial spirit.

Foundations for success

Muffin Break has found that its most successful franchisees have the following attributes;

• Enthusiasm, ambition, integrity and a strong work ethic.
• Strong communication and people skills.
• A commitment to and belief in Foodco's product quality standards.
• Personal day-to-day involvement in the management of the café.
• Financial security and the financial capacity to open and operate the café as well as supporting any borrowing costs associated with the business.
• A willingness to adhere to established concept guidelines and procedures.
• An attitude of success.

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Step 4 - Initial and On-going Costs

Typical Initial Costs	Kiosk	Sit in Cafe
Leasehold improvements and fixtures	$125,000	$160,000
Equipment	$70,000	$70,000
Inventory/ Working Capital	$7,500	$7,500
Opening Promotion	$3,000	$3,000
Initial Franchise Fee	$50,000	$50,000
Training Fee	$4,000	$4,000
Project Design & Management	$7,000	$7,000
Legal Fees	$2,000	$2,000
Total	$268,500	$303,500

PLEASE NOTE
The purpose of the information above is to provide a general idea of cost and that;
- costs will vary according to location,
- detailed cost budgets are prepared by Muffin Break for each specific location,
- costs outlined above are exclusive of GST,
- allowances must be made for insurance, rental bonds and bank guarantees.

Ongoing costs

Muffin Break franchisees are responsible for all café-related operating expenses.  In addition to this franchisees are required to pay;

• an ongoing royalty fee of 6% of gross sales,
• an advertising fee of 2.0% of gross sales,
• a license fee to Muffin Break which is the same as the gross rent and other occupancy expenses payable under the lease, including outgoings, common area maintenance, promotion fees, rates, taxes and other levies and expenses relating to the tenancy, and
• an annual management fee of of 5% of gross annual rent (capped at $3,500 per annum) is payable after the first year of operation.

Royalty Fee

The royalty fee is payment for the continued use of the Muffin Break trademarks, design, manuals and recipes.

Advertising Fee

The advertising fee is accumulated and expended on advertising and marketing activities to promote the Muffin Break brand and products.

Licence Fee

The licence fee is the same as the rent and outgoings payable to the lessor by Muffin Break, plus the management fee. Technically, franchisees are required to pay the licence fee to Muffin Break and Muffin Break pays the same sum to the lessor as rental. However, from a practical point of view, in most cases Muffin Break arranges for its franchisees to pay such monies less the management fee directly to the lessor.

Management Fee

The management fee reimburses Muffin Break for its expenses in maintaining the lease. This fee does not apply in the first 12 months of a new site.

Documentation

Muffin Break shows it’s commitment to the site by entering into the lease of the café itself.

Muffin Break franchisees are required to enter into the following documents;

• a confidentiality agreement,
• a franchise agreement dealing with the franchise relationship, and
• a licence agreement dealing with the occupancy of the café.

The franchise documentation clearly sets out the obligations of the parties and is necessary to protect the integrity of the Muffin Break concept for the mutual benefit of Muffin Break and Muffin Break franchisees.

In some cases, prior to entering into the franchise and licence agreements, it is necessary to enter into a preliminary document called an agreement to take a franchise and licence to occupy.

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Step 5 - Frequently Asked Questions

“Could I learn to operate a Muffin Break café?”

Muffin Break requires that the person purchasing a Muffin Break franchise has the qualities mentioned previously. If you have the necessary qualities we would like to discuss the Muffin Break concept with you.

Previous experience in the food industry is not necessary, but basic management capabilities are a pre­requisite for any retail venture.

“Where do I purchase my supplies?”

Most required materials will be delivered to you by local suppliers organised by Muffin Break. Muffin Break has made arrangements with various suppliers to ensure that shops receive a continuing supply of high quality materials at an agreed national price.

“Is there a standardised procedure that I am required to follow?”

Yes, however the procedures are simple. Muffin Break’s systems for diversified matters such as reporting, insurance, accounting practices, purchasing, hiring and training new staff, cost control, advertising, merchandising and other essential functions contribute to the efficient operation of your café.

“What if I decide to sell my café after a period of time?”

Should you wish to sell the café, you may do so to a prospective buyer who meets Muffin Break’s requirements for franchisees and agrees to comply with all required procedures and current agreements then in force. Muffin Break has no objection to the transfer of your franchise under these conditions, however a transfer fee is payable to Muffin Break to cover the cost of evaluating and supervising the training of the new franchisee.

“Should I seek independent advice before entering Muffin Break’s franchise system?”

Muffin Break requires that its franchisees obtain competent legal advice before entering into the franchise documentation to ensure that franchisees fully understand their obligations.

In addition it is recommended by Muffin Break that franchisees retain the services of a competent accountant.

“Is investing in a franchise risk free?”

The risk involved in participating in any reputable franchise system should be significantly less than the risk involved in proceeding in a similar business on your own account. In any retail business, risk exists and Muffin Break cannot guarantee the turnover of a particular café or its profitability.

“Why do you charge an initial franchise fee and a training and project management fee?”

The initial franchise and training fee is in consideration of Muffin Break establishing the business and in particular compensates for;

• the selection of a location, probably on terms and in a location otherwise unobtainable by the franchisee alone,
• the supervision by Muffin Break of the complete design, construction and equipping of the café,
• the provision of training and assistance prior to and at the initial opening of the cafe, and
• the initial right to use Muffin Break ’s intellectual property.

“What services do the ongoing franchise fees cover?”

These fees entitle you to continue to be part of the Muffin Break system, as well as benefiting from the following services;

• supplier selection,
• merchandising program,
• volume buying arrangements,
• standardised accounting and reporting,
• research of new and varied products,
• staff training and management assistance.

“What happens at the end of the franchise term?”

Muffin Break has, what is in effect, a conditional option of renewal. Subject to renewal of the shop lease and you meeting certain requirements (one of which is paying the then current "further term" fee), Muffin Break will grant you a new term.

If you are unable to meet these requirements Muffin Break allows you to sell the shop to someone who can.

“What are the benefits of an advertising fee?”

Co-operative advertising will provide a chain-shop benefit to each individual franchisee.

The pooling of these fees also enables Muffin Break to procure advertising of a quality that a franchisee would not otherwise obtain.

“How do I obtain financing?”

If required, Muffin Break will assist you in submitting an application to a lending institution. It is estimated that a minimum collateral of 50% of the purchase price is required. In certain cases franchisees with less cash may be able to make special arrangements.

“What operating results can be expected?”

Experience has demonstrated that a properly operated café with experienced and well managed staff should attain a gross profit of approximately 51% (after food/beverage, labour and packaging costs have been deducted).

Muffin Break’s combined food, beverage and packaging costs may vary between 24% to 28% of sales.

Net operating profits depend on sales levels achieved, but before debt service and tax may approximate 25% of gross sales (this is dependent on product mix sold), subject to the cafe being well managed by the franchisee and managed in accordance with Muffin Break’s normal standards.

Details and discussion of these percentages will be provided during your interview.

Muffin Break cannot make any sales forecasts or projections.

If you have any questions relating to any aspect of the Muffin Break concept, please contact Muffin Break at your earliest convenience.

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Step 6 - What's Next?

Now that you have read what is involved in owning and operating a Muffin Break café, you need to decide if Muffin Break is right for you.

What you need to do;

• Complete the questionnaire and return it to Muffin Break.
• Contact your financial advisor.
• Contact your legal advisor.

What we need to do;

• Review your questionnaire and consider your potential suitability.
• Contact you to clear up any missing details or questions.
• Arrange an interview with you.

Timing and Expectations

Following receipt of your questionnaire, Muffin Break will carry out a number of activities, as listed above.

A Muffin Break representative will be in contact with you as soon as possible following receipt of your questionnaire.

The process of locating a site (if not already available) and the design and fitout of the café to be ready for opening can take from three to four months. If a new site is not available there may be an existing business available at the time of enquiry.  In this circumstance Muffin Break will direct you accordingly.

If you would like any further clarification on timing, please raise these queries with the Muffin Break representative who contacts you.

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Step 7 - Application Form

You have the following options for sending an enquiry or application to us.

• Call 64 9 377 1901 or Email enquiries@muffinbreak.co.nz to request that an application form be posted to you or alternatively, you can download the application form (Adobe Acrobat format) and post it to Muffin Break Franchisee Application.
• PO Box 137-228
  Parnell, Auckland 1151
  New Zealand.
• or fax it to 64 9 377 1908

For enquiries on any other locations or existing stores for sale please contact the office.

Foodco Management also franchise Jamaica Blue, a quality coffee shop experience. With 45 stores around Australia Jamaica Blue is poised for rapid growth with many major centres available for lease.

For further information on Jamaica Blue please visit their web site at www.jamaicablue.com.au or contact our office on +61 2 9302 2200 or email info@jamaicablue.com.au.

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