Born and bread

Little bottler: Braeden Lord with prize winning milking cow Susan.

Braeden Lord remembers his first experience in franchising well. He was 12 years old and the floors of Bakers Delight’s first bakery in the Melbourne suburb of Hawthorn needed cleaning. Thirty years later he finds himself still entrenched in the sector, albeit as the boss of Aussie Farmers Direct, BRW’s fastest-growing franchise for the second year running.

Lord’s experience in franchising – he has worked in all aspects of retail, from shop floor to baking, as a franchisee and managing director – has taught him a thing or two about what works in business and what is doomed to fail.

Despite his history, Lord says it is a business he is attracted to, not franchising per se. He believes franchising still gets a bad rap and that is something he wants to distance himself from.

“A business really needs to work by itself before franchising can work for a business,” he says. “I don’t think franchising should be the saviour for a business; it should actually be the catalyst for extended growth rather than the way to have a business survive. It tends to be a modus operandi, rather than the business itself.”

Lord’s first experience in business was cleaning up, he claims, after his older sister Stacey, who also worked at the original Bakers Delight outlet in 1982. Over the years he continued to work for the company while completing his secondary and tertiary education. Bakers Delight founders Roger and Lesley Gillespie became “quasi parents” to Lord and his siblings, who had lost their father at a young age. Subsequently Lord learnt the ropes from two of the franchising sector’s most experienced and respected entrepreneurs.

“Bakers Delight was literally Roger and Lesley putting up $100,000 then getting family and friends to put up another $100,000 and open a bakery and pay it back on some inflated interest rate,” he says. “Fortunately that business got to the point where it was profitable and the growth and eventually franchising was totally under their own steam – I witnessed that process.”

After years working for the Gillespies, Lord and his older sister were given the task of starting Bakers Delight’s NSW operations. Later, he became managing director of the company and his final role involved starting Bakers Delight’s Canadian operation, COBS. “To be honest, it was among the hardest years I’d spent with Bakers Delight,” he says. “Establishing something from scratch in North America was incredibly invigorating but very taxing.”

After four years living in Canada, Lord felt his work at Bakers Delight was done. He returned to Australia, parted ways with Bakers Delight and left with the Gillespies’ blessing.

In early 2008, while working as a franchise consultant, Lord was approached and recruited to fast-growing fresh produce home delivery business Aussie Farmers Direct by a friend of a friend, Red Hill executive director Paul Tobin (then AFD chairman). AFD founders, William Scott and Jordan Muir, both in their early 30s, were entrepreneurs who preferred a hands-off approach. They wanted someone with industry experience to lead the company through its next phase of growth.

“They’re very much the young entrepreneurial types who enjoy having an active interest in what is taking place at Aussie Farmers but have no desire to be involved in its day-to-day operations,” he says.

Lord says he immediately saw similarities between AFD and his former employer. Like Bakers Delight, AFD had grown internally and secured a small but loyal customer base before getting into franchising. Having a proven track record before taking the plunge into franchising is crucial to a company’s long-term success.

“Past franchises that haven’t worked see franchising as the mechanism that makes a marginal business successful but it is no magic wand solution,” he says.

For example, Bakers Delight opened company-owned stores in Canada to test the market before taking the franchising route. Likewise, AFD started company-owned milk and grocery rounds in 2005 before turning to franchising.

“It often affords companies the opportunity to say, ‘do we want to franchise, do we want more capital first or do we want to expand our corporate stores?’ The banks then look more closely at funding options,” he says.

While it’s difficult to pinpoint what kind of businesses suit franchising, Lord says those in more labour-intensive industries, such as food, often take the plunge. The human capital involved in franchising suits the long hours and labour-intensive work retail demands, he says.

“The main characteristics for any business owner are that they must be tenacious, strong willed and committed,” Lord says. “Running any business you need to have a full-time goal in mind and franchised businesses are no different. If you think the best way of getting rich is doing it the fast way, then you’re going about it the wrong way.”

Lord stresses the importance of sustainable business growth. After almost three years heading AFD, Lord has expanded it from a small modern-day milkman business to a network of 175 delivery runs. Revenue has increased an average 157.45 per cent for the past three financial years and the company now services most major cities.

His greatest challenge has been finding Australian-owned and operated manufacturers and suppliers to partner in the tightly held grocery market. For example, about 90 per cent of local milk manufacturing is controlled by international companies, going against AFD’s policy of selling Australian-owned and made produce.

“The larger manufacturers are either really great family businesses or they have a very strong reliance on the supermarkets,” Lord says. “We tend to shy away from the latter because if we work with them, it’s unfortunate, but we will always play second fiddle.”

In Victoria, the company has acted to protect its Australian-owned milk supply, buying a dairy in the regional town of Camperdown. The factory employs about 25 locals and produces about one-third of its customers’ milk purchases and AFD plans to expand production this year.

Eventually, Lord says the company will buy more dairies and establish direct lines of production in other key grocery lines. It also works directly with farmers and manufacturers to save on costs and produce Australian-made goods. He hints that bread production might be a logical move for the company, given his past experience in bakeries.

“We used to work on a provedore system with fruit and vegetables and now we are the provedores and we work directly with farmers and markets where need be,” he says.

“Milk was second play for us and we’re reviewing a couple of other areas – bread just might be one of them.”

AFD’s rapid but steady growth and increasing volumes means it is no longer considered a small, niche player in the grocery market, Lord says. As a result, the company is able to negotiate better deals with suppliers and manufacturers.

Educating AFD’s existing franchisees about the company’s commitment to Australian made and owned will dominate much of the company’s time this year, Lord says. It is offering programs to franchisees such as tours of its Camperdown dairy and lessons from butchers about cuts of meat to teach them more about the process.

“We want them to know more about where the products come from and relay that back to customers,” he says. (CUT IF NEED)

Growth during the next 12 months will focus on increasing its customers’ average spend and recruiting new franchisees. AFD potentially could double its number of home-delivery routes, Lord says. It will also consider more deliveries to companies and business parks.

“When you look at our inventory of a couple of hundred vehicles on the road six mornings and three afternoons a week, there’s a great window of opportunity for expansion into other areas,” Lord says.

AFD has a joint venture in New Zealand, The Trusty Delivery Co, with a local independent milk operator and Lord says that while he is considering expanding into other countries, such plans are at least 18 months to two years away.

“It’s about getting it right where we already are, then looking at other markets – which is what we have always done,” he says. “Then we’ll find countries that relate to the concept of the old-fashioned milkman and we will work from there.”

BRW

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