Q:
What are you looking for in a Great Harvest
franchisee?
A: We are looking
for franchisees who share our commitment to opening
strong and exciting bakeries. We are looking for
people that embrace our Freedom Franchise concept
and will be active participants in our Learning
Community. Strong candidates should be able to meet
our financial requirements, have a track record of
success, and a history of community involvement. The
best part: no previous baking experience required!
Q: If I send in an application,
does it commit me to anything?
A: Absolutely not!
And, better yet, there is no application fee.
Submitting your application simply allows us to get
to know you better. It gives us the chance to review
your financial picture as well as your area(s) of
interest. Your application is completely
confidential. We will not share your information
with anyone outside of Great Harvest without your
permission.
If you have any questions while filling out your
application, feel free to give us a call. Once we
receive your application, you can expect to hear
back from us within five business days.
Q: How long does the
application process take?
A: The selection
process can be completed in as little as 30 days,
but generally takes 60-90 days. This allows you
enough time to complete the telephone interviews,
review the Franchise Disclosure Document (FDD),
visit with some of our existing bakery owners, as
well as come to Dillon, Montana, for your Discovery
Day. A lot of it will depend on how quickly you
want the process to move.
Q: What do you mean by a
Discovery Day?
A: Your Discovery
Day is typically the last step in the interview
process, and a way for you to continue to get to
know us. This is your day to come to Dillon,
Montana, and meet the Great Harvest franchise team
in person. You will spend time with a representative
from each department and learn about the different
services we provide to our franchisees. In the
afternoon, you'll participate in a panel interview
with your selection team. The next business day,
someone from the franchise office will contact you
with our decision. If all systems are "go", we'll
send out the franchise agreement.
Q:
Can you give me an idea of how much it will cost to
open a bakery?
A: The average
total cost to open a bakery is $247,054, with a
range of $107,608 - $476,350. The start-up costs
include the franchise fee, location hunt, site
build-out and renovation, equipment, computer, and
your initial inventory of ingredients and supplies.
$35,000 is the franchise fee. $22,000 of it is paid
when you sign your franchise agreement. The
remaining $13,000 is paid three weeks before you
open your bakery. This fee covers the cost of
training (excluding your travel expenses) and
getting you up and running.
Q: How much is the royalty?
A: The royalty is our
license fee for the use of any and all Great Harvest
systems, recipes, techniques, and other information.
The monthly royalty rate you pay decreases over
time, if you are in compliance with your Franchise
Agreement and renew it at the end of your term. The
rate starts at 7% of your gross sales for the first
five years, then can fall to 6% for the next five
years and 5% after renewal. The final drop to 4% may
occur at fifteen years if you meet the criteria
outlined in your Franchise Agreement. The oldest
Great Harvest bakeries have royalty rates below 4%.
Q: How much money do I need to
have in order to open a bakery?
A: When we review
the Financial Information Section of your
application, we look for at least 30% ($70,000 -
$75,000) of the average total cost of opening a
bakery (about $247,054) to be available as liquid,
unencumbered cash. This is determined in the "Cash,
Checking, and Savings & Securities" sections of your
application. We do not consider retirement accounts
to be liquid assets. In addition to the liquid
unencumbered cash, you will also need to have the
resources and/or ability to borrow the balance that
will be needed to open the bakery. For example, if
you have $250,000 of equity in your home, we will
assume a bank will lend up to 80% of that amount
(depending on your other liabilities, of course).
Our actual investment ranges from $107,608 -
$476,350. If you are receiving outside financial
help, perhaps from family members or financial
investors, please explain in your application how
they will be involved and the payment plan you have
in mind.
In addition, you will want to take into
consideration personal living expenses if you quit
your job to move or complete the start-up work. On
opening day, you should still have at least $10,000
in cash reserves as a cushion for the first few
months. Keep in mind, that budget is tight.
People are often unrealistic about where the
start-up money, plus personal expenses, will come
from. A substantial portion should be your own cash.
After signing a franchise agreement, we can help you
develop a business plan for a bank, but we don't
like starting bakeries where the bank is carrying a
major share.
We do not currently offer financing, but we have
established a relationship with the Small Business
Association (SBA) which helps expedite and
streamline the SBA loan processing. Log on to
www.franchiseregistry.com for more information.
Q: Why would I want to start a
business in this economic climate?
A: We are bombarded
with bad economic news in the national media. You
could easily come to the conclusion that in today’s
economy you would be crazy to open your own small
business. What the media forgets to mention,
however, are all the ‘right’ reasons for opening a
business in today’s economy. Lower Interest
Rates: The prime rate is at a 10-year low.
Bakery owners with good credit histories can find
excellent interest rates as the U.S. government
maintains a low fed funds rate in an attempt to
boost the economy. Favorable Lease
Arrangements: Landlords are ready to
negotiate favorable terms when it comes to opening
new businesses.
Franchising is Viewed as a Favorable Option:
One of the main reasons you are considering a
franchise opportunity is to reduce your risks. You
want to become part of a system with a proven track
record. Banks also consider franchising as a safer
investment. They know franchisors have a well-tested
business model, provide initial training, and offer
continuous support to their franchisees.
Qualified Employees: The current job market
is very competitive. People are experiencing layoffs
or downsizing. As you look for people to fill your
open positions, more than likely you’ll find more
highly qualified workers to choose from.
Controlling Your Own Destiny: When is a
better time to take control of your next career
move? Instead of living with the unknowns of
corporate America, take control of your future. Be
your own boss and become a part of a franchise
system that provides a great deal of support and
knowledge to its franchise owners.
Q: How much money can I make?
A: This will
probably be your biggest question, and we can't
blame you. However, because every town and every
owner is different, we'll never be able to tell you
how much money YOU can make. We can only provide you
with information on how our existing bakeries have
done in the past. This historical information can
only be provided through regulated disclosures in
our Franchise Disclosure Document (FDD). These
disclosures include gross sales information and
average operating results from most of our bakeries.
Q: When can I review the
Franchise Disclosure Document (FDD)?
A: After we review
your application, we'll provide our FDD to all
qualified candidates. This will take place prior to
the first phone interview. Qualified applicants may
choose to receive a paper copy of the FDD or
download a pdf version (you’ll need Internet access
and Adobe Acrobat in order to read the pdf file.)
Q:
How close can I place a bakery to an existing
bakery?
A: We place bakeries
a healthy distance apart and our territory
definitions are larger than your typical franchise.
Once an owner has signed a lease, we use the bakery
as the center point (generally speaking) and draw a
circle to encompass the smaller of approximately
300,000 people or a 10-mile radius. That is known as
the “hard line territory”. We cannot place a new
bakery within an existing bakery’s hard line
territory. Also, territories cannot intersect, and
each bakery must be placed within the inner
two-thirds of its territory definition. As a general
rule, a neighborhood that is at least 15 miles from
another bakery is more than likely available for new
development. Our territories are large, and we
believe this is a benefit to our owners.
Q: If there is already a Great
Harvest bakery in my area, how will I know if my
area is available?
A: If your area is
within 15 miles of another GHBC, please email us at
sallym@greatharvest.com with up to three
intersections with corresponding zip codes (ex:
Idaho St. and Glendale St., 59725) which represent
retail areas in your town. These intersections are
just geographic points for us to plot on a map, and
do not need to correlate with locations that are
available for lease. We'll get to the location
hunting process later.
Q: How will I know if my
community can support a Great Harvest bakery?
A: Your community
should have at least 40,000 people within a 5-mile
radius. Success is not necessarily driven by
demographic factors. We have seen bakery owners that
execute the fundamentals well and have strong
community ties overcome some demographic challenges.
Q: Do
you have any existing bakeries for sale?
A: Periodically,
Great Harvest Bread Co. owners decide to sell their
bakeries. Those are both sad and happy times for us
here at the franchise office. Though it's sad to see
a member of our family go, we love the energy and
excitement new owners bring to our system and to
their bakery.
If you are interested in purchasing an existing
bakery, you can e-mail Sally Munday at
sallym@greatharvest.com with a list of states
you are interested in considering. She will provide
you with the contact information for the sellers.
Since our franchises are independently owned and
operated, any discussions on the price need to occur
between you and the owner.
Our role (the franchisor) in the transfer process is
to bring you through the application and approval
process. This process is similar to applicants for a
first location as far as completing a series of
telephone interviews, receiving our Franchise
Disclosure Document (FDD), visiting with some of our
existing bakery owners, and coming to Dillon for
your Discovery Day.
Q: What are the advantages and
disadvantages in buying an existing franchise,
versus starting one from scratch?
A: Just like
anything, there are pros and cons to buying an
existing store instead of opening a new store.
With an existing store, there is an established
customer base and a track record of financial
statements to help a new owner estimate future
performance. The initial fee for a transfer is lower
than a new bakery and you assume the royalty (though
not the timeline for future royalty reductions) of
the existing bakery. There are also employees who
are already trained. On the flip side, a new owner
will need to handle employee transition issues and
sometimes that can be difficult.
With a new bakery, you are involved in all the
start-up decisions and the bakery is essential
yours. Your personality is reflected in your
bakery, you build your team of employees, and you
are the one to introduce Great Harvest to your
community. As we get further into the application
process, we will encourage you to talk to some of
our existing bakery owners to hear their point of
view.
Q: What training will I receive
if I purchase an existing bakery?
A: You will be
assigned a tracker from our Bakery Operations
department. Your tracker is like your personal
coach, helping you step-by-step with all the aspects
of taking over and running the bakery. As with
opening a new Great Harvest bakery, each person
signing the Franchise Agreement must attend Dillon
Learning Week. The remaining training, which is
required by a minimum of one person on the Franchise
Agreement, includes ten days of hands-on production
training (5 days at a designated “host bakery”
training site and 5 days of Bread Week in Dillon,
MT) and a minimum of five days of seller training in
the bakery being purchased. In addition, after the
transfer of ownership has taken place, we will send
a trainer to spend two to seven days with you at the
purchased bakery.
Dillon Learning Week consists of five full days at
the franchise headquarters in Dillon, Montana. The
purpose of this week is to provide you with an
overview of your bakery operations. You will be
joined with a group of new franchisees just like
yourself, building many long-term friendships by the
week's end. You will learn more about accounting,
wheat, our group buying program, marketing
strategies, and how to hire great people in your
bakery. At the end of the week, you will help the
franchise staff with a bake day fundraiser to
benefit a non-profit organization in the Dillon
community.
Your "Host Bread Company Training," consists of five
full days of hard physical work in an established
Great Harvest bread company we select (five
consecutive days.) This portion of the training is
for learning the pace of production, style at the
counter, general bakery systems, and promotion. At
this time, you will also make observations that will
be helpful during start-up, especially noting
differences in locations, equipment, and layout.
Bread Week, also located in Dillon, MT, consists of
five full days of production focused training. You
will spend one-on-on e time with one of our
experienced bakers. The purpose of this training is
to become proficient in bread-making and
sweet-making skills. By the end of the week, you
will be a pro and ready to step into the baking
role!
And finally, you will train for at least one week in
the bakery you are purchasing. We want you and the
owner to focus on many of the administrative aspects
of the business. We will provide the owner with an
outline of the issues we feel are pertinent for you
to know in operating that bakery.
During your first month as new owner of your bakery,
we will send a trainer from our headquarters to help
you with the transition from the seller. You and the
trainer will determine the areas you would like to
focus on while visiting your bakery. Our training
goal is to help you implement all the fundamentals
necessary to operating a successful bakery.
Because the transfer fee is lower than the $35,000
initial fee for opening a new bakery, the laptop
computer is not included when you purchase an
existing bakery. If you'd like to purchase the same
computer we provide to owners of new stores, please
let us know.
Q:
What assistance will I receive in getting my bakery
open?
A: After you have
signed your franchise agreement, you will be
assigned a tracker from our Start-Up department.
Your tracker is like your personal coach, helping
you step-by-step with all the aspects of opening
your own bakery.
You also will be assigned a location hunter to help
you work through the location hunting process. After
you have completed the preliminary work, your
location hunter will come to your community and will
evaluate the locations you have selected. He will
provide you with feedback on the pros and cons of
each location and prepare a financial analysis.
You will complete three weeks of training prior to
opening your bakery. You will attend two different
weeks (Monday through Friday) of training in Dillon,
MT; one for Dillon Learning Week and another for
Bread Week. In addition to this training, you will
complete one week of training in a host bakery of
our choice.
The purpose of Dillon Learning Week is to provide
you with an overview of your bakery operations. You
will be joined with a group of new franchisees just
like yourself, building many long-term friendships
by the week's end. You will learn more about
accounting, wheat, our group buying program,
marketing strategies, and how to hire great people
in your bakery. At the end of the week, you will
help the franchise staff with a bake day fundraiser
to benefit a non-profit organization in the Dillon
community.
Bread Week, on the other hand, is one-on-one with an
experienced baker from the Dillon staff. The purpose
of this training is to become proficient in
bread-making and sweet-making skills. By the end of
the week, you will be a pro and ready to train your
new staff.
Your week of Host Bakery training (also five
consecutive days) is a great time to see the
“action” within the bakery environment. You will see
first-hand what it takes to manage a staff, ordering
inventory, marketing your business, and running a
retail operation.
And then, the day every owner waits for - opening
day. After you and your tracker have agreed
everything is in place, we will send an opening
training team to help you get your bakery open.
Generally, the team will consist of a two trainers
from the Dillon office as well as an existing bakery
owner.
Q: Can I choose the products I
want to open with?
A: You will work
closely with your tracker to help you determine an
appropriate opening product line. Typical opening
menus feature diverse, but limited, offerings. This
allows you to concentrate your efforts on quality,
consistency, and perfecting your systems during the
critical start-up phase.
Once strong fundamentals are in place, bakeries can
begin to look at expanding their product lines.
Recent partnerships and research & development
efforts allow us to offer training in three
complementary product line extensions: a full coffee
and espresso program; a signature sandwich and
panini program; and a hard crust bread program.
Q:
Does Great Harvest offer health insurance to your
franchisees?
A: Unfortunately,
no. We continue to research different policies that
will allow us to benefit from a group rate. Because
our bakeries are franchised units instead of company
owned stores, we don't qualify for a typical group
plan. However, there are some options for small
business owners. Please ask us for more information.
Q: At what point can I apply to
open an additional location?
A: We don't have a
set timeline. What we look at is the health of your
current bakery. It's important that your original
bakery is running successfully before starting
another one.
Keep in mind that while expansion is right for some
owners, it's not right for everyone. In fact, most
of Great Harvest owners own and operate just one
bakery.
Q: Do most bakery owners hire a
manager or manage the bakery themselves?
A: Think of the last
time you walked into a business and the owner called
you by name. Doesn't happen very often, does it? But
when it does, it sure makes you feel good. It
probably made you think, "Hey, I'm important here!"
or "This place rocks—I should stop in here more
often!"
Owner presence is a key to success in this business.
Owners lead by example. They build a team. They set
the pace. They connect with their community. And
they have a good time doing it!
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