FRANCHISE INFORMATION PACKAGE

Table of CONTENTS

4 About Us 5 Our Mission 6 Our History – Our Exciting Journey 7 Are we the Right Business for you? 8 KEY MILESTONES 9 TRAINING PROVIDED 10 SUPPORT OFFERED 11 APPROXIMATE INVESTMENT AND FEES 12 FAQs 15 Next Steps Oven to Table About Us Every day, in every , COBS bakers create a range of traditional and gourmet . All products are baked from scratch, fresh daily on the premises. At the end of each day, most unsold products are donated to local charities. COBS Bread are distinctive in appearance, branding, product quality and customer experience. We are committed to establishing and maintaining mutually beneficial and rewarding relationships with all our business partners – employees, franchisees, suppliers, and customers.

4 About Us

Our Mission

Real Bread, Real People, Real Delight The COBS Bread brand has been built on our commitment to the quality of our product, the development of our people and the delight the combination of these two elements brings to our customers.

5 Our History Our Exciting Journey

COBS Bread is part of one of the most successful franchise bakery networks in the world - Bakers Delight. An Australian owned company, Bakers Delight has been in operation for more than 30 years, with more than 700 bakeries across , New Zealand, and Canada. Bakers Delight (trading as COBS Bread in Canada), Australia and New Zealand’s largest retail bakery business was established in 1980 as a single bakery on Glenferrie Road in the suburb of Hawthorn. The founders of that bakery, fourth generation baker Roger Gillespie and his wife Lesley have since grown the company into one of Australia’s most successful and celebrated retail operations. COBS Bread was launched in Canada on November 13, 2003, with the first location in Edgemont Village in North Vancouver. The family owned business has since grown close to 80 locations over four provinces.

6 Are we the Right Business for you?

We see our growth through and are thus seeking the right business partners. Selection of new franchisees is based on criteria established to maintain the COBS Bread standards of excellence and ensure the right fit for both parties.

Ask yourself whether Qualities we are seeking include: you’re ready to:

Demonstrated team management Follow the COBS Bread system and strong leadership skills

Commitment to being hands on Work in a physically within the business demanding environment

Attitude of “doing whatever it takes” Be active in sharing your success to make the business a success and failures to the network

Good business acumen Get involved with your local community

7 Key Milestones The COBS Bread recruitment process is designed to assess your suitability for becoming a Franchise Operator and it is also your opportunity to determine if we are the right fit for you. It involves the following:

• Submitting an online inquiry • Speaking with our Franchise Manager • Attend a Skype interview with our Franchise Manager • If pre-approved, attend a face-to-face interview with one of our Area Managers • If a possible fit is determined, attend a 2 day Bakery and Sales Orientation at a local bakery • Conduct your own due diligence with existing franchisees • Review of candidates qualifications and demonstration of talent during Orientation will be conducted

If you have been successful with the recruitment process and you are excited and eager to move forward, you will be “approved for training” and the next step is to commence the training program

• Successfully complete the training program • Purchase your bakery (see Approximate Investment and Fees)

8 Training Provided The COBS Bread training program is designed to provide Franchise Operators the tools to operate their business successfully. It is competency based and generally takes 12-16 weeks to complete.

The program introduces you to all aspects of running a bakery and covers:

• Operational management – including baking skills, product knowledge and handling and production management. • Financial management – including purchasing and inventory control • Business management – including marketing and promotions • People management – including bakery staff development, team training and customer service

The program is completed on-the-job within an allocated training bakery and includes online training modules, focused one-on-one training sessions and dedicated courses. Training bakeries are selected from the existing network based on the location of the trainee. You will receive training as well as ongoing mentoring and support from a current bakery franchisee.

Trainees are required to financially support themselves during the training program.

The training program is overseen by a COBS Bread training consultant who is available for additional support throughout the entire program.

9 Category Investment Support Offered Franchise Purchase Fee $25,000 COBS Bread offers ‘hands-on’ support and proven business procedures and systems to Training Fee $6,500 assist in managing your business to success. Training attendance costs $0 - $15,000 These systems and policies are continually enhanced to provide franchisees with streamlined, relevant and timely support in a range of areas. Insurance premiums during training $200 - $500 Additional training courses $200 - $400 Marketing Operations Bakery Establishment Costs Strategic marketing support in the areas of Provide ongoing support and guidance advertising, media, design, product pricing, for effective business management. construction of leasehold improvements, fit out, signage $200,000 - $300,000 public relations, merchandising, local equipment $180,000 - $220,000 marketing and market research. Property project management fee $7,500 Locating viable precincts and negotiating legal and professional fees, including design and architect fees $20,000 - $25,000 Training leases directly with landlords. Utilities deposits and hook-ups $0 - $45,000 Franchisee training program conducted at one of our training bakeries during a Purchasing Permits and licences $3,000 - $4,000 16 week period. Additional training and The necessary economies of scale in place Sublease rent $1,500 - $9,000 development provided on an ongoing basis to offer group purchasing arrangements and security deposit $2,000 - $12,000 when the need arises. at superior pricing and service. Point of Sale System initial cost $10,000 - $17,000 Finance Point of Sale and first month’s license fee $400 Financial assistance including rostering and Cash flow, reporting and customer Inventory and supplies $4,000 - $7,000 payroll systems, disclosure of group reports loyalty programs. Opening advertising and promotion $4,500 and negotiating bakery liability insurance through group coverage. Insurance premiums for first year $2,400 - $2,800 IT Department Offer assistance relating to hardware, Working capital $15,000 - $20,000 Human Resources software, general administration TOTAL $469,800 to $699,400 Our systems drive best practices and and requests. policies, including information in the areas Ongoing Fees of employee relations and other relevant Network legislation. At the discretion of the franchise Royalty Payments: 7% Providing opportunities to network with owner there is an option to take part in the other franchisees and benchmark results Advertising and Marketing Contribution: 3% established benefits program. provides an invaluable support system.

10 Approximate Investment and Fees When a candidate has been “approved for training”, a decision is required on the bakery to be purchased. There are opportunities to purchase new bakeries or existing bakeries. The key will be to match Franchise Operators with a suitable location. COBS Bread will provide assistance in identifying a suitable bakery, outline the purchase process and commence the legal settlement process.

The following outlines the approximate investment costs:

New

Franchise Purchase Fee $25,000 Training Fee $6,500 Bakery Establishment Costs $475,000 - $595,000

Existing

Training Fee $6,500 Approximate Purchase Price $300,000 - $1,000,000

on-going fees

Royalty Fees 7% Advertising and marketing 3%

11 Frequently Asked Questions

Do I need to be a baker or do I need any previous baking experience? No. Our training program covers all aspects of the business including baking. Successful franchisees come from many different career backgrounds.

What is the term of the agreement and initial fees? The franchise agreement is a ten year term. Initial fees equate to $25,000 (equivalent to $2,500 per year).

Will COBS Bread assist with financing? It is the franchisee’s responsibility to secure financing. We expect all applicants to discuss financing with their financial advisor or financial institution. However, we have established franchise financial packages with several major Canadian banks.

12 Am I able to choose What are the typical my own location? hours of operations? There are new and existing location Store trading hours are typically from opportunities available for purchase and it 7am-7pm; however, because our products is our goal to match the Franchise Operator are baked from scratch daily, the opening with the most appropriate location. shift can start as early as 1am. As we expand across Canada, our experienced brand development team Does the Franchise Agreement continues to provide new location opportunities. They undertake the site include any trade area/territory selection process, secure the real estate, protection? provide and install equipment and COBS Bread does not offer any territory carry out the construction and leasehold protection but it is in our best interest to improvements on all new locations. ensure that all bakeries are successful. The COBS Bread team will determine the Can I purchase multiple optimal locations to open new sites. COBS Bread locations? COBS Bread currently has Franchise How does COBS Bread spend the Operators who own and operate multiple 3% marketing and advertising locations. Typically, following the franchisees fee collected? first year of operation, ensuring that the initial The marketing and advertising fund is bakery has a successful team in place and that allocated into three categories (examples the franchisee is financially capable, COBS of different initiatives are provided below): would consider granting an additional bakery. a) National – campaign kits, direct mail, public relations What is the average size b) Regional – resources that benefit three of a COBS Bread retail store? or more bakeries including direct mail, COBS Bread locations typically range mass sampling, and large events between 900 – 1100 square feet. c) Local – an equal dollar amount is allocated to each bakery to spend on initiatives such as donations, sampling, gourmet tastings, and community events.

13 What are the staffing requirements? Each bakery is typically made up of a Franchise Operator, Production Leader, Sales Leader and baking team. The number of staff per bakery will range depending on the individual needs and the number of part time and full time employees.

How long does the process take? It is our experience that from the time of application to the time that the Franchise Operator opens their bakery or purchases an existing site; the process usually takes between 4 to 6 month – which includes the 16 week training program. Please note that this time can vary significantly if suitable real estate is unavailable.

Does COBS Bread allow Franchise partnerships or Outside Investors? A partnership can only consist of the franchisee and their respective spouse or common law partner. No other partnerships will be granted.

Is COBS Bread a member of the Canadian Franchise Association? Yes, we have been a member since 2008. Additionally, we were awarded the Bronze Award in recognition of excellence in franchisor/franchisee relationships in the category of Traditional Franchises New/ Emerging by the Canadian Franchise Association in 2010 & 2012. We were also awarded the Franchisee Choice Designation in 2011, 2012, 2013 and 2014 by the Association.

14 Next Steps Excited to join the COBS Bread Family?... For additional We are sure that this document will raise a information number of questions and we are excited about working with you during this due diligence please contact: stage in order to provide the answers needed for you to make an informed decision. Linda Kawasaki Please visit www.cobsbread.com/Franchising/ Franchise Manager for further details and to apply online. 844-838-2627 Thank you for your interest and we look [email protected] forward to receiving your completed application.

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