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Bakers delight franchisees are assessing their financial health and as we have been reporting for a number of years things are not looking good. BDH has been on the slippery slope for a long time and have finally woken up, gotten off their backsides and are suddenly worried about bakery profitability. Margins have become smaller year in year out. So much so that more stores are vulnerable to closure. At this rate within a very short time a tipping point will be reached and half the network
with fall over.

According to a number of our sources- BDH is so concerned about the health of the network, that franchisees are being ordered to go the Head Office for meetings with their business consultants. They have been instructed to bring the book keeper and passwords for all ATO and Super Accounts. What will be the punishment for non-compliance ?

As reported late last week this comes as one of the longest serving Franchisee's also has one of the highest debt levels. We are told by one source that the level of debt this franchisee has is "staggering" and that it sent "shock waves" through the head office. Despite years in the business,we are told by another source that this franchisee has paid "nothing" off the business loans and his bakeries are "worthless".

Changes to the franchising code will be a major blow to BDH who have recently separated the royalty and marketing weekly debits and we are told that the (BDH) team are busily retrospectively accounting for the marketing fund. After all they cannot be seen as double dipping and franchisees are entitled to demand audited copies of disbursements.

It appears that the "churn and burn" business model that has been relied upon by a number of big name franchisors including bakers delight will be their undoing. Changes must be made NOW....Meanwhile franchisees wait with baited breath for their franchisor to stop smiling for the cameras and do something productive for a change.

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Bakers Delight - USA Assault !

AUSTRALIA’S biggest self proclaimed bakery chain, Bakers Delight is preparing an assault on the US market once AGAIN. This is despite its dismal failure in the US market less than a decade ago. The company plans to open its first franchise outlet this time around in the east coast state of Connecticut in April.

This latest stunt comes against a backdrop of controversy, multiple bankrupted franchisees in Australia and a network of current franchisees who claim they are struggling to survive and lost faith in the founding CEO's long ago. The New Zealand venture is in complete chaos, we have been told that there are only 2 viable stores in the NZ network and that the Ponsonby store closed permanently a few weeks before Christmas. Canada is not without its problems either.

The founders and joint chief executives of Baker Delight, Roger and Lesley Gillespie, claim they have a solid foothold in Canada. This is not what Canadian (COBS Bread) franchisees are telling us, while the franchisor is growing the individual franchisees are flailing

Leslie Gillespie told Business Daily, the group planned add another 10 bakeries to its 78 store network across Canada this year. The business has 700, mainly franchise operated bakeries, in Australia, New Zealand and Canada. The days of 1000 bakeries have long gone and the network appears to be shrinking particularly in Australia.

Bakers delight celebrates its 35th anniversary since it set up the first outlet in Melbourne. 35 years of destruction, franchise churn, failure, bankruptcy and suicide is nothing to be proud of. It will be interesting to see how long the USA abides Bakers Delights Assault given the countries far stricter franchise laws and low tolerance level for franchise churn as a business model.

Franchisee Successfully De-badges ~ Enter 8 Artisan Bakers. has warned franchisees to de-badge their bakeries or perish. We have long reported that the franchise has not evolved and is still producing the same boring bread based products it started with over 30 years ago.

The bread market is a tough one and with a lack of innovation and questionable business practises franchisees Australia wide are scratching their heads and are increasingly frustrated. It appears this franchisor has simply run out of ideas to build the business so that all stakeholders prosper and has instead resorted to buying and selling the same businesses over and over again as a solution to its declining growth.

Franchisees must take a stand and follow Former bakers delight
franchisee and owner of the Burwood heights bakery Chris
Orlando, who made a stand, de-badged his business and
is finally free from his franchise nightmare.

This follows years of struggle to make the business a
success while continuously being smacked down by
stupid decisions made at Bakers Delight head office. The
first of head office’s major malfunctions was opening another
bakery, just one kilometre from the Burwood heights business.
So then, instead of having one struggling bakery they had 2, and
neither could afford to pay royalties.

It is evident that the brainiacs at head office once again forgot to
negotiate a lease and left themselves wide open for the debadge
to take place and the land lord to negotiate a deal direct to
the former franchisee.

Of course Bakers delight didn’t like being out smarted and got all hot under the collar, posturing and tried to renege on the deal to de-badge and threatened they would sue the land lord.

We are not aware of the final negotiations relating to the de-badge, and don’t know if the obligatory confidentiality agreement was forced on the franchisee. Nevertheless the new business has commenced trading and another baker is free to get on with his craft without the “know how” and constraints of a franchise.

We wish 8 ARTISAN Bakers located at shop 8 corner Middleborough road East Burwood a profitable new year.

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Request for Information

We sincerely hope that the subject matter below does not offend or unnecessarily upset anyone.

Recently we have been contacted by a Professor of Commercial law at an international University; he is conducting academic research on franchisee suicides.

He is particularly interested in statistics from Hungry Jacks, Quiznos
Midas and Bakers Delight/COBS. Although, he would appreciate information relating to other franchises as well.

It’s not a pleasant topic, however we want to assist him in this undertaking because we believe that participation in this research may lead to change in the business of franchising in the future. Moreover, we know of many franchisees that now have ongoing mental health issues as a result of their foray into franchising and, that there have been several preventable suicides in these networks in recent years. We want to ensure with respect that we present an accurate and full picture spanning at least the last 15 years. We therefore ask franchisees former and current from all networks to provide information about known suicides in franchising. Any information including your name and contact details will of course be kept confidential.

The professor has asked for the following information (e.g. 1. the names of (confidential) the franchisee who committed suicide; 2. the year in which the suicides were committed; 3. the antecedents of the suicides and;4. Which franchise system.

Any person wishing to provide information can do so by emailing or directly (the source will be kept confidential) if you wish for us to telephone you please let us know. If you prefer to correspond with the professor directly we can arrange that.

The U.S. Federal Bureau of Investigations...Are they Uneducated?

If you are to believe the Franchise Councils former representative, Richard Evans, “churning is a term used by uneducated people who have no idea about the franchise sector”

Franchise Fraud (or ‘Franchise Churning’ is defined, by the U.S. Federal Bureau of Investigation as a pyramid scheme. According to Wikipedia-The FBI website states:

“pyramid schemes :—also referred to as franchise fraud or marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses”.

The ACCC is only now cracking down on rogue operators and attempting to audit franchisors. While complaints to the regulator continue to escalate rising to 454 complaints last year.

The U.S. Federal Bureau of Investigations takes the issue of franchise churn/fraud seriously, the question must be why aren’t Australian regulators interested in franchise fraud. With bakers delights long history of serious complaints affecting hundreds of franchisees, why isn't the regulator looking into all parts of bakers delights key business strategy. More importantly, why are Australian franchisees continually being thrown to the wall? It seems the FBI gets it, yet the FCA and ACCC don't.

Bakers Deight image - another business

Facebook and Website Popular with Franchisees

Over the last 12 months has received emails from around the country from franchisees that are frightened and concerned about the future and tell us they are being bullied by the franchisor.

Our website and now a facebook page are seen as an avenue for both former and current franchisees to vent and to get advice, advice that should be available from the franchisor if they were willing to work with their franchisees. Surprisingly we have a tremendous amount of support from within the Bakers Delight network, as one franchisee stated recently;

“I am part of a small group of established franchisees who are desperately unhappy with the behaviour of BDH. Believe me when I tell you that your site has much support from within the network” and from another;

“please help us, we don’t know what to do, we are going to lose everything” but there is more,

“What will happen if we just walk away” and our all-time favourite,

“Do you know any good lawyers?”

At bakerdlies we encounter people who are in a desperate situation, they don’t know where to go to get help and BDH management appears to lack the will or ability to help. It appears that bakers delights strategy to deal with struggling franchisees is to churn and thus bankrupt them.

“Many problems lie ahead as the price of bakeries has dropped dramatically. Only a couple of years ago bakeries were changing hands for $400000+ and these franchisees are unable to live and pay off their loans. BDH recently got their Business Consultants (BDH Stormtroopers) to establish the amount owed on each bakery. They are even asking for the balances on personal credit cards. Also, one supplier told me that BDH are getting written reports on each bakery in arrears. (Current franchisee)

This is the third time an existing franchisee has written to us stating that bakers delight is seeking personal financial information and that breaches of confidentiality and private material is being exchanged. History tells us that these are the bakeries Bakers Delight Holdings microscope and prepare to churn.

To further distress franchisees Bakers Delight uses the “breach” mechanism, a breach can be real or induced and is totally discretionary and open to abuse, a franchisee can lose their business for the late payment of a bill or a cracked tile. The “breach” mechanism is used to eject struggling and unwanted franchisees, and to extract a few more dollars from them on their way out of the system. The writer has experienced the abuse of the breach mechanism along with induced breach and the outrageous fines imposed-and therefore has no problem believing the quote from the email below,

“A fellow franchisee of Bakers Delight has been issued with a breach notification and $1400 fine for something outside their control”.

The franchisee would like to challenge this breach but we have warned him this will only inflame the situation.
Many of the breaches are picked up during Bakers Delights 5 star audit process; this is a highly subjective assessment that franchisees consistently report is abused by the franchisor. We have been told that in NSW and WA over 10% of the network received pre-breach notifications. “There are some very unhappy franchisees out there”.

WA news:
North Perth and Mt Hawthorne have closed and the franchisees have left the country.

This is another sad story where the franchisee had mounting debt and facing bankruptcy was rendered mentally and physically exhausted and spent a number of weeks in hospital.

Bakersdlies has been told the franchisee purchased the North Perth bakery a number of years ago for an absolute song when the previous owner exited the business having lost a lot of money.

We understand that a monumental effort by the franchisee to build the North Perth business resulted in outstanding sales. Several sources have told us that he was popular and well respected by his peers. All indications are that this franchisee was well ahead of the game.

Unfortunately three years ago, the start of his eventual downfall was being engineered in the management halls of Bakers Delight's regional office when they approached the franchisee to take on his second business.

Enter Bakers Delight Mt Hawthorne, a business started in 2002 and that NEVER performed, with a string of failures and bankruptcy to its name. The franchisee took this business on and it has been a major part of his down- fall. The Question is why does Bakers Delight keep flogging a dead horse and how many times does the business have to fail before common sense prevails, the negligence ends and they close the doors permanently.

Recently a source told bakersdlies that the young couple who are working long hours at the Karrinyup bakery just to survive have taken on Mt Hawthorne. Bakersdlies will be watching this latest development closely and hope that in three years we are not reporting the bankruptcy of this wide eyed young couple.

In the back ground; rumour is that bakers delight has fallen out with a key supplier due to their downward pressure on pricing. At the same time the bread giant wants to increase its mark up on delivered goods. Average profits at well under 15% and flour prices have increased by 20%. There are too many franchisees taking work outside their business or sending their spouse back to work just to balance the books and to survive.

Things are not looking good for franchisees and the network is showing the strain, with margins decreasing and hostility growing across the network. The franchisor continues to blame franchisees and wield the big stick, the management team are responding to direction from the top with Gillespie leading the charge. Bakers Delight has the potential to be a great business again, but only if Gillespie respects the customer base enough to respond to their needs with innovation and courage.

Any franchisee looking to get a second bakery in this climate has surely got rocks in their head.

Phoenix Bakery – Still a Lemon

Bakers Delight Phoenix Park has been forced into receivership for the 3rd time in 4 years, and the latest owner now faces the devastation of bankruptcy.

Bdlies has extensively reported the history of this particular bakery and labelled it, a “lemon” years ago. However, bakers delight holdings appears to view the Phoenix Park business as gold mine, and is prepared to unconscionably sacrifice franchisees as it churns them through the business at an alarming rate.

A little over 2 years ago we bought you the story of the latest bankrupted franchisee. At the same time, we reported that bakers delight had recruited a new young couple to take over the failed business, wide eyed and willing to go on the bakers delight train to nowhere; they mortgaged their home, refurbished the bakery and of course paid bakers delight for their PROVEN business model and ongoing support. Just over 12 months later Bakers Delight terminated the contract and sent the business into receivership and the young couple into a life of financial devastation.

A few weeks later, bakers delight with another new franchisee in hand reopened. The new franchisee sold his house to raise the money to buy into Bakers Delights PROVEN system, he refurbished (second time in two years) the business and commenced trading. The business struggled from day one, by the second month
the business was in trouble and could not meet its commitments.

Sources from within the shopping centre told bdlies this morning that
Bakers Delight terminated the contract last week and the franchisee
has left the business. Reports to bdlies suggest a new franchisee
has already been lined up and will commence trading on Monday.
As unintended consequence this new franchisee assisted bakers
delight to complete the churn.


 LODES of Integrity!!!!

This correspondance was received via email by one of our affiliates.

Interestingly, Bakers Delight is looking for franchisees who have drive and a high level of integrity. Its Ironic that the company demands high standards of its franchisees, yet so many of its senior management operate with an extremely low moral compass and the company has no visible ethical framework.

Bdlies responded to LODE directing them to Bakers Delights 'Hall of Shame' .

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Image taken from:

What is Bakers Delights Ethical Culture?

Real Bread, Real People, No Delight...

To have a strong reputation with franchisees and within the franchising sector, it is important that franchisors establish an ethical framework by which to operate. Adherence to an ethical framework builds trust between franchising participants and shapes ethical culture within the organisation.

Ethical culture within the franchise system is developed and controlled by the franchisor (Stewart 2009). The ethical culture of Bakers Delight Holdings is set and controlled by the senior executive that is: Roger Gillespie, Leslie Gillespie, Barry Brown-John and a number of other non- executive Directors.

Being in small business is hard work and franchising certainly is no exception. It has its own unique challenges largely due to the unequal division of power in the franchise relationship. Small business operators have multiple issues to deal with on a daily basis, the last thing a franchisee needs is to deal with an unscrupulous or unethical franchisor.

What constitutes unethical conduct is mostly subjective. One person’s idea of what is ethical and for the greater good may be completely different from another’s. A major problem for Bakers Delight franchisees is that ethical conduct is self- regulated by the executive and is unpredictable.

If a franchise is not run ethically then this will cause major problems for existing franchisees (Stewart 2009). We know that Bakers Delight is big business and that the executive appear to show all the trappings of private financial success. However that success has come at a huge cost to hundreds of small business families who have been lead into financial and emotional ruin by the executive.

It is important that potential franchisees and indeed current franchisees examine what ethical framework Bakers Delight Holdings and its management executive are operating from. Are they operating from an ethical framework that is mutually beneficial and for the greater good of franchisees or is their ethical culture accurately reflected in the Hall of shame.

The health and long term growth of the company and ALL its stakeholders going forward is at the peril of its culture.

Oh the Irony: Gillespie is in Health.

In recent weeks BDLIES has been contacted by several Bakers Delight franchisees, all claim that they are the latest casualties of Bakers Delights opportunistic churn strategy.

In each instance the reality of their situation has left the franchisees demoralised and vulnerable. Some are in a highly distressed emotional state or completely broken. In all cases they face total financial destruction at the hands of Bakers Delight.

In two of the cases the franchisees have come to the end of their franchise agreement, Bakers Delight have reacquired or taken control the business, and the franchisee has been offered less than 40k for their business, that is the written down value of their equipment as dictated by Bakers Delight Holdings.

The question is how is the write down value of these assets reflected on Bakers Delight Holdings balance sheet and how are they reported to the Australian Taxation Office?

In both cases the franchisees claim they are under serious economic duress and are required to sign non- disparagement clauses and confidentiality agreements to get the settlement.

Three franchisees are close to the end of their franchise agreement and state that they are being compelled to carry out expensive shop refits that they cannot afford. Two of them have been refused a new franchise agreement unless they provide an undertaking to commit to an immediate re-fit.

This is nothing new, like so many others in this all too familiar story; the franchisees complied to the best of their ability with the franchise agreement. None were making huge money from their business investment nevertheless they were surviving. In all cases they claim they are being bullied, pressured and coerced by Bakers Delight representatives to obtain compliance and or accept a low value for their business.

Although unable to confirm whether the information provided by the franchisees is a true account. We do know that in 3 recent franchise inquiries, Bakers Delight Holdings as the dominant party in the contractual relationship was over represented by aggrieved franchisees complaining of similar conduct issues. In comparison other franchise systems barely rated a mention.

A common theme throughout the inquiries, were well documented allegations of harassment, collusion, bullying and intimidation to sign documents. As a result reports of high blood pressure, anxiety, depression and nervous breakdown featured in submissions.

 Incongruously Bakers Delight franchisees are turning to a website like BDLIESs for emotional support. Simply because Australia’s biggest bakery chain is hell bent on wielding its power and has a stubborn refusal to provide adequate and fair dispute resolution to its franchisees. Bakers Delight it appears has morphed into nothing more than a Ponzi scheme

Ironically, Bakers Delights Chief Executive Officer and founder Roger Gillespie has made his foray into the health sector, recently opening Epichealth, a new chain of health Clinics situated in and around Melbourne. It seems Gillespie is interested in people’s health and wellbeing unless of course, they are one of his 700 franchisees.

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Go Harvey Go!

Australian Franchisors are not known for their generosity or exercising responsible duty of care where their franchise networks are concerned.

Several state and federal inquiries support the idea that some franchisors, like Bakers Delight Holdings have a preference for franchise opportunism; that is sustaining their own business by working against and cannibalising their franchisees. The result is usually catastrophic and culminates in untold financial and emotional damage, when it suits the agenda.

The tragedy of franchise opportunism is carefully obscured by smoke and mirrors, hidden agendas and by intellectual slight of hand. Unfortunately, its more prevalent when a franchisor encounters year-on-year drop in profits and is an easier option for lazy franchisors void of innovation.

Fortunately it seems not all franchisors are prepared to fleece their franchisees. Harvey Norman Holdings recently posted third quarter sales results showing a 25% year-on-year drop in profit.

Yet Harvey Norman may be seen by some as visionary, by going to extraordinary lengths to secure the interests of franchisees. Norman in a tactical response to aggressive competitor activity reduced rents and royalties while increasing advertising support for the network.

Company secretary Chris Mentis told the group’s franchisees had been working hard to maintain market share and that they were in a good position to capitalise on any upturn in the market and that the measures put in place by the company were to “ease pressure on franchisees” .

Mentis said, “Management emphasised again today its intention to use the franchisors balance sheet
to support franchisees through their working capital requirements”.

Though Harvey Norman posted a 25% year-on-year profit drop owner Gerry Harvey won’t be heading
for the poor house any time soon with an estimated profit of $202.5M.

Perhaps financially stressed Bakers Delight franchisees can expect a similar show of support from
chief executive officer Roger Gillespie.

Will the company use its balance sheet to assist the failing franchise system, or will Bakers Delight
Holdings continue the same pattern of franchise fraud and abuse. Blaming franchisees,terminating
contracts and intentionally throwing franchisees under the bus.

Gerry Harvey

Gerry Harvey

What about Corporate Responsibilities??

The word from the Landlord of a popular shopping complex is that Bakers Delight Holdings does not pay its bills and is in apparent decline.

To prevent embarrassment to the current franchisees the complex has not been named.

The story from the landlord is that the business has had an extremely high attrition rate with about 9 different franchisees/leasees in recent years. The franchisees have all been financially destroyed and some leasees have simply walked away.

The landlord asserts that he has not received rent from the last 3 franchisees spanning some 18 months. He claims that Bakers Delight holdings and its representatives have failed to reply to written correspondence and refuse to return phone calls (nothing new here).

The Landlord says he is loath to continue to re- write the lease, lose his rent and watch another franchisee lose the lot.

One cannot blame the landlord when the holder of the head lease (Bakers Delight Holdings) has an obligation to adhere to strict corporate responsibilities and the evidence is compelling to suggest that it is morally and ethically void.

Come In Spinner !!!

Bakers Delights CEO Leslie Gillespie has used Sydney Morning Herald (29 Dec 2011) to push her product and spin the merits of her franchise model. The article says that Bakers delight hopes to expand the company and hook 100 franchisees this financial year, with Gillespie adding that the company has welcomed 35 new franchisee’s in the first 6months since June 30 2011.
In a statement Gillespie said "In FY11 we took on 50 per cent more franchisees than in previous years - in FY12 we've already exceeded expectations,"

Gillespie does not mention how many of the 35 ‘new’ franchisees were recruited to take over from terminated/failed franchisees or how many have entered the system fully funded via the company’s management training scheme. No mention either on how many will be trading in competition with fellow franchisees in an already saturated market. To further expand inside Australia would be absolute madness.

The article tells us that Bakers delight was established 31 years ago and currently has over 700 bakeries across Australia, New Zealand and Canada. It continues to hold a modest a 13.8 per cent share of the Australian bread market.

The company has been dogged by bad publicity relating to its treatment of franchisees. Allegations of unconscionable conduct and the number of individual failed franchisees in Australia are catastrophic and can’t be overlooked. Bakers Delights failed expansion into Seattle, and its largely unsuccessful foray into New Zealand and Canada cannot be understated.

Gillespie is simply trying to add positive spin to an ailing company and to sell Bakers Delight as a successful, safe investment- rolling out the usual growth indicators i.e. increased franchisee numbers, increasing sales, increased market share and yet another grandiose expansion plan. These growth indicators never show the true net position of the franchisees and cannot be relied on by potential franchisees looking for profitability.

The fact is that Bakers Delight has not improved its market share, it maintains a modest 13.8 per cent and the company has just managed to keep its head above water. However the same cannot be said for the vast majority of franchisees who been bankrupted or are struggling to hold on to their investment.

Bakers Delight Franchise owner Simon Baker said in the article his business has survived hard times and that he manages to “get by”. This hardly a glowing endorsement, most franchisees expect a much greater return on investment than to just “get by”.
The company expects global sales turnover of $587 million in the 2011/12 financial year, an improvement on $571 million in 2010/11. Although Gillespie does not indicate how the company expects to achieve that.

Australia Post, Australia's Shame

By Ray Borradale

It has been an institution across Australia since long before the First World War. Now it is the largest franchise in Australia with more than 3,000 franchisees and licensed post offices regulated under a deficient federal Franchising Code of Conduct.

In early 2009 I began receiving contact from angry, fearful and frustrated Australia Post franchisees.

The fears relate to dwindling profits and the franchisor’s remodelling which is claimed to include a major downsize of the network sending at least many of these mum and dad operators to the gutter. eCommerce has made Parcel Delivery the future.
The Australian federal government is the sole franchisor of Australia Post where licensees provide their own premises, set-up and staff, and are paid commissions, fees and receive discounts for work performed.

Many Australia Post operators have been servicing their communities for decades and many Post Offices have been handed down through the generations. For most AP operators the business was their retirement fund. A fund now feared to be under threat of a substantial hit if not a total wipe-out.

Since early 2010 the AP franchisor has been in competition with franchisees with its massive online services and product capability. Online is a commercial reality but it seems franchisees were the last to realize the potential size of the challenge to their viability and AP seems not interested in that impact. Disgruntled franchisees claim the power abuse gradually began almost a decade earlier.

There are now reports claiming the franchisor has delayed payments, reduces others and altogether denies some payments. Franchisees say AP has threatened outspoken franchisees with criminal penalty and potentially jail time if a selected franchisee is found to have made any typographical errors pertaining to offshore services.

‘Many Licensees have been subjected to security raids by AP, for breaches of the agreement. AP has clearly breached the agreement, yet feels justified in home invasions, and office raids, completely in breach of the stated terms of our agreement. Anonymous AP franchisee’’

Amongst the many claims are the repeated allegations that AP withholds stock to drive business to corporate centres while poaching key account customers.

Franchises assert a long list of contract breaches including that Australia Post has introduced new services for which franchisees receive no payment. They also suggest that franchisee support has either been reduced or removed. Franchisees have not been made privy to the long term plans behind the remodelling of Australia Post.

The Australia Post franchisor appears to have somehow claimed special federal protection from any franchisee challenge and its abuse seems out of reach of any media criticism. Official complaints through normal channels have produced no response and the media shies away from any damage to AP’s advertising dollars.

There are numerous reports that the Australian Broadcasting Commission television spent many weeks interviewing franchisees and preparing for a LateLine exposé. As one franchisee reports; ‘all of a sudden overnight they dropped us like hot coals’. Franchisees suspect the national broadcaster was subject to political influence.

Australia Post comes under Senator Conroy’s Broadband, Communications and the Digital Economy portfolio. When contacted with the AP franchisee allegations questioning the future for the network the Senator’s office responded that it was merely responsible for policy.

Franchisees claim the franchisor is deliberately destroying the viability of the Australia Post franchises in a cost cutting move that will send them to the wall. There is no word on what Australia Post or Senator Conroy now sees as the optimal size of the future AP network.

Note: Australia Post has Australia’s largest ‘franchisee association’, POAAL, however, given its non-existent performance regarding complaints it is suspected that either it is financially dependent on the franchisor or its administration feels similarly threatened.

The Franchising Charade Continues.

'The law is pathetically weak...I am in an incredibly strong position, where the legal process is so cumbersome and expensive, that franchisees, especially in service industries like ours, can't afford to fight, as they get buried under the costs'..... Jim Penman (Jim's group)

It’s hard to know whether this statement is a franchisor boasting about his powerful position within the franchising relationship or highlighting the pitiful position of Australian franchisees. Nevertheless the comment made by franchisor Jim Penman certainly highlights the reality and what Australian franchisees are up against.

The 2013 Review of the Franchising Code of Conduct has commenced and will focus on all aspects of the code including amendments made in 2008 and 2010, the review will consider “Good Faith” and address the plight of Australian franchisees end of term. This latest review appears to be yet another example of a franchising charade. Controversy surrounding the review started with the appointment of Alan Wein, this was in light of his pro- franchisor history which rang ‘alarm bells’ for franchisee advocates. Since then the “Wein” inquiry has received 73 submissions, and the controversy continues.

Of the 73 submissions received by the department of Innovation and industry, 13 were kept confidential at the request of the submitter, 60 submissions were published in their entirety. Interestingly, last week without notice about 10 submissions were blocked from public access, all were pro- franchisee and pro- reform and included submissions from politicians, lawyers and former franchisees- blocked submissions listed below;

Peter Abetz (WA MP very strongly on the side of franchise reform)
Ray Borradale (active franchisee advocate for years)
Competitive Foods Australia Pty Ltd (Jack Cowin, an active franchisee campaigner)
Scott Cooper (I believe he is a former franchisee who was poorly treated by his franchisor, and has contributed to previous franchising enquiries)
Colin Dorrian (former franchisee who recently won a court case against his former franchisor James Home Services for breach of contract for more than half a million dollars, now practicing as lawyer for franchisees)
Franchise Advisory Centre and Asia-Pacific Centre for Franchising Excellence, Griffith University (Joint submission)
Stephen Hansen (not sure who he is)
Lottery Agents Association of Tasmania / Australian Newsagents Federation, SA (Joint submission)
Lottery Agents Association of Victoria (I presume bodies representing lottery agents)
Post Office Agents Association Ltd (I presume a body representing licensed post office owners - essentially franchisees of Australia Post, who I know are not happy)
Aleks Trajcevski ( a Pie Face franchisee suing his franchisor)
Narelle Walter (an active franchisee advocate, former Bakers Delight franchisee)

There appeared to be an obvious pattern with submissions questioning the effectiveness of the Code being deliberately 'blocked' from public access. Concerns were raised by the writer and several other submitters to the secretariat questioning the Reviewers independence and attitude toward the whole review process and an official response requested. Within days almost all submissions were returned for public review with the exception of long term fair franchising advocate Ray Borradale’s and the LPO group. We don’t know why these two submissions remain blocked to public access. We can only conclude that the submissions not yet returned to public access must have received complaint or contain statements that the Department considers litigious.

There have been suggestions that the code review process is simply “window dressing” to give the appearance that the government cares about franchisees. This smacks of corruption, so much for the democratic process!

Franchising Websites Triumph.

We are back on line continuing to convey the truth about franchising. The truth, that Australian franchisors and their minions don’t want you to know.

It appears that some franchisors are prepared to go to great lengths to protect their money making scams and hide the truth about their unscrupulous and abusive treatment of franchisees. Last month highlights the true character of some franchisors and exposes franchising’s underbelly. Websites that have been operating for years to warn prospective franchisees about rogue franchisor conduct were subject to coordinated attacks throughout last month.

Hackings and illegal interruptions to websites were executed on,, Australian franchising scams, jim penman the, American website and highly successful website The attacks designed to ridicule and intimidate were not confined to websites, and included the systematic targeting of a number of outspoken fair franchising advocates, including a franchise lawyer who received, among other things, a get well card and balloon with an unsavory message sent to his place of employment.

The current spate of hacking came with a very juvenile string of fake facebook pages and email addresses, bogus and nuisance emails, ads placed at Gumtree using franchisee contact details, fake facebook pages made up in franchisees advocates names with demands for cash sent out. Webpages were also set up targeting individuals and their families. We have learned that some of these attacks were generated in Melbourne and from overseas. phoned Bakers delight CEO Roger Gillespie as soon as our website went down, he returned the call less than 1 hour later ensuring his brother in law/ lawyer Philip Colman was present and predictably denied any knowledge. Not long after bakers delights IT department contacted to get information- we declined. Later that afternoon a fake facebook page was born “FORALL franchisors” it placed a statement on Giuseppe Celi’s face book page “bakers delight stole my business” following that multiple fair franchising websites were shut down. It appears to be a coordinated effort. But who would stoop so low? We continue to treat these threats with the contempt that they deserve.

All facebook pages, websites and content have been restored following a process of confirming identities and appeal on the basis that the content is true and accurate, on record, in the public interest and is not in breach of community standards or anyone's copyright.


Bakers Delight South Fremantle recently reopended with yet another wide eyed franchisee, as we have reported before there has been at least 6 failed/bankrupted franchisees in this business. Notice the new look? The big question now is how long will they last.

Bee beep

Franchise Review Complete

The franchising sector makes up a significant part of small business and contributes over $130 billion to the Australian economy. The review into the franchising code of conduct has been finalized and Alan Wein’s report has been released.

The report makes 18 recommendations including:

• strengthening the obligations of parties to act in good faith in a franchise;

• a stronger enforcement regime including financial penalties for code breaches;

• improving disclosure on issues such as online trading; and

• Better dispute resolution mechanisms including regulating attribution of costs to franchisees.

Although most of the 18 recommendations go some way to improving the plight of franchisees and are a good compromise, it remains to be seen whether the Government is committed to providing certainty and confidence in the franchising sector, by implementing all of the recommendations.

The recommendations from the fourth major review of franchising and the Franchising Code at the Commonwealth level since 2006 fulfills the Government's 2009 commitment to review the code in 2013.


A few months back reported that Roger Gillespie moved from bread to health when he became a director and major shareholder of Epichealth, a small integrated health care business operating out of Melbourne.

The story questioned what the future holds for Gillespie’s latest venture and what type of culture would be established at epichealth. considered whether baker’s delights widely reported history of unethical behaviour, and its firmly entrenched culture of bullying and unconscionable conduct would be reflected at epichealth.

Well it seems that the leopard has not changed his spots, and the infamous management style that plagued both Bakers delight franchisees and employees has indeed infiltrated Epichealth.

Readers may remember that former Bakers delight corporate staff who gave huge chunks of their working lives to BDH, told us they were too embarrassed “to put their time at BDH on the resume” it seems the same is now being said of epichealh.

Recently bakersdlies has been contacted by epichealth employees about the company “modus operandi” these are smart people Doctors, Nurses and administration staff. These employees state that they too were subject to bullying and intimidation similar to that experienced by Bakers delight franchisees and staff.

One epichealth employee a doctor claims the "practising motto is; No care for Doctors, no care for nurses and other employees and no care for patients." Allegations of bullying coercion etc. are becoming frequent.

Some of Epic health's former employees have told us that Epic health is “not paying superannuation entitlements”, and that the correct and on time payment of wages remains a problem. This is concerning particularly as we have been told that Epichealth is about to be franchised.

Allegations relating to Medicare are most concerning. Employees have written that they are being coerced into assisting Epic health’s key business strategy which they say is to “milk Medicare”, particularly in relation to the Nurse Model Strategy. Further, staff claim to have been bullied and then sacked for raising the issue, for non-compliance and interrupting Epichealth's trajectory. is in no position to verify these allegations nevertheless we can identify with them.

Another One Bites the Dust...

Wendy’s, like Bakers Delight is business model to avoid. Current and former Wendy’s franchisees have publically exposed contract and conduct issues relating to their underperforming franchisor, with some claiming struggling franchisees have been brought to their knees through the high cost of supplies and equipment purchases.

Bakersdlies was recently provided with several pieces of correspondence between the Wendy’s Operations Manager and franchisees, these were provided for authenticity purposes, these internal documents show a company in damage control “internal restructuring” and “other structural changes” including the recent closure of the Sydney office, reducing Business consultant territories and rendering 1 Category Manager and 4 business consultants redundant (1 VIC, 2 NSW and 1 QLD).

This sharply contrasts to the rhetoric and the 2010 appointment of CEO Rob Mackay, who took the helm with the aim of significantly increasing the number of personnel to work directly with franchisees and drive effectiveness of the organisation. Franchisees remain unconvinced as another Sydney based franchisee has gone under

……and another QLD franchisee bites the dust !! It takes a few rings but the recorded message below is worth the wait.
Listen to the attachment below or call (07) 54793644

We just love gutsy franchisees!

More on Wendy’s later.


Wendy’s franchisees have long complained about the franchise from poor business management and, bullying to a non-viable business model. Like Bakers Delight franchisees, Wendy’s franchisees are like lambs to the slaughter, they are losing money hand over fist albeit on a much smaller scale.

Below is a phone conversation that took place last week between two Wendy’s franchisees. The conversation highlights the scam that is the Wendy’s business model and indicative of franchising scams generally.
Went something like this:

Me: hi mate, how are you?

Good news: yeah, great I sold my store.

Me: fantastic, glad to hear it. How much did you sell for ?

Good news: I got $50,000

Me: hey, that’s alright.

Bad news: Wendy’s made me renew machinery otherwise they wouldn’t approve sale. Paid $30,000 for new equipment, so I ended up with $20,000

Me: that sucks, how much did you pay for the store?

Bad news: same as you mate ($250,000)

Me: how long was left on your lease?

Good news: I renewed 6 months ago.

Me: so, 6 months ago you paid Franchise renewal fees of $25,000 or so

Bad news: yeah, paid $25,000 to get $20,000

Me: doesn’t make sense does it?

Bad news: don’t remind me of the figures, but nobody understands until the end when it’s time to get out.


Taking it to the Streets

GIUSEPPE CELI gave Bakers Delights dispute resolution process the flick from the day he commenced protesting outside his Wetherill Park bakery in NSW.

Giuseppe alleged that Bakers Delight holdings (BDH) acted unconscionably and stole his business, when the company headed by Roger and Leslie Gillespie moved in with a new franchisee and failed to negotiate a settlement. No known fair or equitable form of dispute resolution was undertaken by BDH.

Bakers Delights actions forced Giuseppe and his family out of their home and left them without wages/income just weeks before Christmas.

Over the last decade franchisees like Giuseppe and numbering in their hundreds, have trodden a well-worn and frustrating path trying to achieve resolution of their disputes, or fair settlement outcomes from the bread Giant. A company and board of directors whom it appears have made a habit and a lot of money out of churning businesses for profit, with scant regard for the devastation they leave in their wake.

According to bakers delight legal counsel, Philip Coleman (brother of Leslie
Gillespie) of Mason Siers and Turnbull law firm, all franchisee disputes are
handled in house.

Phil Coleman stated in a letter to the co-owner of BDLIES;

“any persons within the BDH network are welcome to raise their concerns with
appropriate personnel at BDH which, in most instances, is the relevant
RegionalManager” and

“Whether the matter is escalated to the directors of BDH or me as its legal
adviser, will be dependant of the nature of those concerns”

Phil Coleman espouses baker’s delights in house dispute resolution as a
strategy to deal with franchisees who complain. How does this work? At
what point did baker’s delights in house dispute resolution process work
for Giuseppe Celi. He was thrown out of his business and the business
was on sold to another franchisee without due process and before he went
to mediation.

Franchisees like Giuseppe have nowhere to go before their businesses
are stolen. It’s time that ASIC as the corporate watch-dog looked into
bakers delight holdings, to ensure bakers delights directors are discharging their duties in accordance with the corporations act.

Protest Propaganda

AMA Victoria Warning to Doctors:

Our readers will remember that Epic health is another of Roger Gillespie’s money making projects. Bakersdlies has long warned of complaints from epichealth’s doctors and staff. Now it seems that the Australian Medical Association has their own warning about these opportunists, and placed the following extract on their Victorian website.

Alert to GP members.

We advise members that doctors thinking about engaging with Epichealth as an independent contractor or employee should seek advice from AMA Victoria before proceeding to make any commitment. You can contact our Workplace and Advocacy Unit on (03) 9280 8722.

Franchising Back in the Media

Radio2GB's Glen Wheeler has taken up the franchising debate again interiewing the National Franchisee Coalitions Chairman, Peter Coventry. Problems in franchising continue and a dedicated group of fomer franchisees are not going to allow them to be swept under the carpet.

Many of our readers will remember Glen Wheelers disciplined approach to exposing franchise fraud and opportunism, when he interiewed former bakers delight, lenards and a host of other franchisees in his regular timeslot over a 6 week period in 2008.

Glen was stunned when he was inundated with franchise disasters from Perth to Queensland. It is understood that at the time Glen was also threatened and bullied by a well known franchisor, and a franchisee who was to be interiewed on his program was also subject to a good measure of special treatment by another franchisor.

One thing is for certain with the Abbott Govt indicating it will act on the WEIN review 2014 is shaping up to keep Rogue franchising in the spot light.

Is your business failing - Don’t worry Roger will bail you out?

A recent blog on this site about franchisee Lyle Turner sparked our interest. He apparently operated 3 of the most successful bakeries in Australia. According to the writer of the blog this franchisee was put up on a pedestal at conferences etc, to highlight his success and as the messiah, to be revered by all.

Apparently this once successful operator has joined bakers delights long list of failures; and in its wisdom the franchisor has purchased all of the businesses back from the franchisee and allowed him to lease 2 businesses back for a monthly fee.
This is an interesting development, because as a general rule Bakers delight throws its franchisees under the bus and bankrupts them. So the question must be, why was Lyle provided special treatment?

Looking into Lyle’s background may shed some light. It appears this former head office employee was the General Manager of Property at Bakers Delight Holdings Ltd and in Retail Leasing at Jones Lang Wootton working in Melbourne.
Could it be that Bakers delights CEO Roger Gillespie has turned over a new leaf and is actually working with his franchisees for a change or perhaps this is a new way of hiding failed businesses?

One thing is clear, now a precedent has been set all franchisees can expect that bakers delight holdings will bail them out and write them a fat cheque when they fail.

The failure of key businesses speaks volumes about the health of the franchise. Baker’s delights business model is flawed, and no one is immune; Pin up franchisees are failing, it’s company owned stores have been haemorrhaging for years and similarly its own professionals can’t make it work. Lyle joins a number of other former employees and so called business experts, including technical bakers and franchisee consultants who have failed.

The writing is on the wall. This franchise model is doomed.

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