Former Baker Seeks Enquiry

"So here we are today, with four young children, our business lost to liquidation, our family home lost and now officially bankrupt to boot, not to mention the mental stress and strain on our marriage and our family.'' Mr. Purtell said Bakers Delight had installed a new franchisee within weeks of the business going into liquidation.

The Sunday Times Perth
May 14, 2007

Former Baker Seeks Enquiry

Denise Rice

FOUR former Perth Bakers Delight franchise-holders have joined the call for an investigation into how the world's largest bakery franchise treats franchisees.

Bakers Delight was accused of improper conduct in Federal Parliament in March. New South Wales MP Joanna Gash alleged fraud, collusion, physical and financial intimidation and threats by Bakers Delight in relation to its treatment of a NSW franchisee, who Ms Gash said was the victim of an "orchestrated robbery''. Bakers Delight strenuously denied the allegations. Ms Gash said she believed the allegations she raised in parliament were just the tip of the iceberg and has referred them to the Australian Competition and Consumer Commission for investigation. WA franchisees have accused Bakers Delight of acting unconscionably.

John Purtell, of Winthrop, thought owning a Bakers Delight store would create a secure future for his family. But his business was liquidated and he is bankrupt. He had to sell the family home and his wife had a nervous breakdown. Mr. Purtell bought an established franchise in Bull Creek in 2001 for $295,000. It went into liquidation in 2004. He claims a Bakers Delight representative told him he could expect the store to turn over $10,000 a week. He said that even by following the "Bakers Delight system'' to the letter, he was unable to make his store profitable." When we opened the store at the end of 2001 we were doing $6000 a week and when we left the store in 2004 we had managed to get weekly turnover to about $7200,'' Mr. Purtell said. "So here we are today, with four young children, our business lost to liquidation, our family home lost and now officially bankrupt to boot, not to mention the mental stress and strain on our marriage and our family.'' Mr. Purtell said Bakers Delight had installed a new franchisee within weeks of the business going into liquidation.

Chief financial officer for Bakers Delight Richard Taylor refuted any suggestion that Bakers Delight had anything to do with Mr. Purtell's financial problems. "The Purtells purchased the business from an existing franchisee and would have relied on the profitability and turnover figures of the vendor franchisees,'' he said. Mr. Taylor said the Purtells' franchise agreement was terminated after they "abandoned'' the store. "When the business was sold by us subsequent to the Purtells' termination, we passed all proceeds - no deduction for an assignment fee - through to the secured creditor, Westpac,'' he said. Mr. Taylor supplied a copy of an email sent to the Purtells by Bakers Delight's WA manager in January 2004 advising them they were in breach of their franchise agreement and that meetings with "interested purchasers'' for the Purtells' franchise had been arranged. The email said in part: "As your current financial situation appears to be getting no better, I would encourage you to proactively explore any discussions with prospective purchasers.''

David Bombara, of Spearwood, bought an established Bakers Delight store in Cottesloe in 2001 for $290,000. He said that within six weeks of opening he was informed that another Bakers Delight store would open within his 5km demographic target area. After three years of what Mr. Bombara said were "disastrous trading figures'', he sought legal advice which triggered a private mediation meeting. Mr. Bombara agreed to an ex- gratia payment from Bakers Delight and the debadging of his store. "I was in severe financial distress and Bakers Delight were issuing me with breach notices and fining me for non-payment of royalties,'' Mr. Bombara said. "The whole exercise, including legal fees, would have cost me hundreds of thousands of dollars.'' Mr. Bombara now operates his business as an independent bakery.

Kingsley couple Graeme and Anne Brown, with their son, bought a North Perth Bakers Delight franchise in 2001 for $392,000 and say the store never showed a profit. They sold it in 2004 to a new franchisee, whom they say was introduced to them by Bakers Delight, for $260,000. Mr. Bombara, Mr. Purtell and Mr. Brown said they were told by Bakers Delight that they could expect their businesses to be cash positive from their first day of trading. Former franchisee Narelle Walters is awaiting a mediation hearing with Bakers Delight over termination of franchise agreements she had on shops in Karrinyup and Belridge. Mrs Walters referred her complaints to the ACCC and said she was aware of eight complaints from WA to the ACCC about Bakers Delight.


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Risks: Conspiracy to commit fraud, Fraud, Bankruptcy, Mental health destroyed, Health consequences, Misrepresentations, False earnings claims, Lost homes, Independence, Encroachment (too many outlets put in territory), Mediation, Buying an existing outlet even r, Australia, 20070514 Former Baker

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