Pie Face Franchise System Profile

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Pie Face Franchise System Profile WBC.409.002.0326 Westpac Banking Corporation ABN 33 007 457 141 Franchise System Profile Name Pie Face IDNCode Date july 2011 Last Update New accreditation Owner Pie Face Franchising Pty Ltd Business Activity Pie Face is a fully integrated retail micro bakery cafe chain specialising in coffee, pies and other baked goods (including sandwiches, pastries, quiches and cakes). Pie Face is a unique offer in that it owns its supply chain including the manufacture of almost all of its products from scratch utilising a frozen, national distribution model in markets outside of Sydney. The Pie Face group comprises the Pie Face brand and the Dinky Di brand, effectively distributing the same product and managed under the same structure. Contents; Quick Links SYSTEM AND CONTACT INFORMATION.................................................. 2 WESTPAC DEDICATED MANAGER DETAILS............................................ 2 FRANCHISE AGREEMENT......................... ................................................ 6 FRANCHISE / BUSINESS HISTORY........................................................... 7 FRANCHISEE TRADING RESULTS AND PROJECTIONS.......................... 8 FRANCHISEE SET-UP COST....................................................................... 9 SELECTION CRITERIA AND LEASE........................................................... 10 ! FRANCHISOR SUPPORT............................................................................. 12 INDUSTRY PROFILE.................................................................................... 14 PRODUCT..................................................................................................... 15 SUPPLIERS.................. ............................................................. .................. 15 MARKET ENVIRONMENT................................................................. .......... 17 INDIVIDUAL SITE FACTORS................................. ..................................... 18 PORTFOLIO QUALITY AND ANALYSIS............................ .......................... 18 FRANCHISE SALES HISTORY..................................................................... 18 MAXIMUM BORROWING................................................. ........................... 19 FRANCHISOR PERFORMANCE AND MANAGEMENT OF FRANCHISEES 20 GENERAL COMMENTS............................................................................... 21 WARNING: For Westpac staff reference ONLY. Circulation outside Westpac is PROHIBITED %iiMfii#.westpac.com.au WBC.409.002.0327 System and Contact Information Key Contact Wayne Homschek Position CEO Telephone Website www.pieface.com.au Facsimile: email Westpac Matthew Whyte Phone Contact (fdm) Trading 27 Cadogan Street, Address Marrickville, NSW 2204 Bank Westpac Manager Era Dhiri - Senior Relationship Manager Name L31,275 Kent St, Sydney Location Professional Support Accountants Andrew Panos - Cowell Watts Panos 70 Crown St, Sydney NSW 2000 _____________ Solicitors Matthew Rowe - Coleman & Grieg Level 9 The McNamara Centre 100 George St, Parramatta NSW 2150 ___________________________________________ Directors Name Shareholding Responsibility Wayne Homschek 19.3% (with Betty Fong) CEO and Co-Founder Angus Scott Geddes 22.6% Director Adam Benjamin Davis 4.8% Director Betty Fong 19.3% (with Wayne COO and co-Founder Homschek)______ Westpac Dedicated Manager Details (Where applicable) Manager Name Era Dhiri (SRM) address telephone email WARNING: For Westpac staff reference ONLY. Circulation outside Westpac is PROHIBITED WBC.409.002.0328 General Year Established in Australia 2003 Year first franchised in ^ 2008 Australia .......... Number of Franchisees 18 Number of Franchised Outlets 18 Number of Company Outlets 10 Number with Westpac Dinky Di/Pie Face__________ 5/5 Do we have access to Yes is the disclosure document Yes Franchisors Financial details including solvency certificate from Registered Auditor Attached ______ __________ Mortgage Debenture allowed Yes Will the Franchisor execute our Tripartite Agreement WARNING: For Westpac staff reference ONLY. Circulation outside Westpac is PROHIBITED WBC.409.002.0329 Operational Plans Management Discuss the Franchisors Pie Face has established a strong management team focused on growth and expansion of management and operational the business. This is supported with a capable shareholder register that provides invaluable plans for the business: advice. o Management • Wayne Homscheck, CEO - ex Citibank Investment Banker o Operational • Betty Fong, COO - ex Paablo Nevada Founder/Designer and ex Retail Interior o Expansion Designer o Changes over last 3 • Francois Cointrel, Head of Central Kitchen Facility - Qualified pastry chef and years o Changes planned founder of Dinky Di’s pie chain over next 3 years • Ben McPherson, Chief Marketing Officer - executive and board experience with publicly listed companies • Alun Evans, Corporate Affair - ex investment banker • Bob Ozdemir, Franchise Manager - Franchise industry veteran with experience in franchise development within the retail food sector with Michel’s Patisserie, Sumo Salad and Mrs Fields Cookies. • Angus Geddes, Director - founder and CEO of Fatprophets, a well known independent stock market research house. The corporate structure is well placed for future growth plans and has the executive and distribution experience and expertise to successfully manage sustained and measured growth. Operational Dinky Di brand in 2007 (5 stores). Currently company owned stores with view to franchise and included in overall ‘Pie Face’ store numbers of 28 Sell the same products as a Pie Face franchise (Dinky Di does sell some additional cakes and ‘patissiere’ products) All products for both brands are produced at the Central Kitchen Facility (CKF). Due to the substantial length of tenure (20 years), prime locations and loyal customer base of the Dinky Di stores, the decision was made NOT to retire the brand on purchase and allow them to continue trading under the Dinky Di brand All management and reporting are the same for both. Store size and fit out requirements are the same for both stores, therefore store sales of Dinky Di stores are expected to in line with Pie Face store. Operationally, Pie Face will continue to invest in it’s CKF to ensure it’s key point of difference to competitors (fully integrated and owned end to end value chain). The facility located in Marrickville has been purchased with expansion in mind, with just over half of the premises currently in use and the remaining area fill as business and stores grow. The executive/directors deemed this a more appropriate strategy to cope with growth. Continue operating model of 24/7 trading opportunity. Only other competitor in this space is McDonalds. Expansion of high street model allows for morning/lunch/dinner/evening/late trading which increases revenue opportunity. Expansion 2011 2012 2013 2014 Store no. 56 90 140 200 EBITDA $2.07m $6.18m $12.86m $23.17m • 14 stores under development (offers accepted) • Franchise sales transaction rate of 2-3 per month and accelerating • Continue using website as key recruitment portal - Average of 120 leads generated per month • 25+ applications per month over last 6 months • Continue to open corporate stores in key locations with aim to franchise. Current strategy has worked well Changes over last 3 years • July 2006 Pie Face commissioned a central kitchen facility in Marrickville which supplies the whole store network. • The following year it acquired the Dinki Di Pies & Pastries brand. • First franchisee joined in February 2008 and franchising program was launched in April 2009. • By the end of 2009 we had 9 franchisees signed. • Currently 28 stores with 18 of those franchised • Geographic spread - Sydney (17) Melb (4), ACT (1), Brisbane (1) * $12m raised in start up/private capital ataff reference ONLY. Circulatien-eutsidc Wcstpao io PROHIBITED----------------- WBC.409.002.0330 Plans over next 3 years Grow to 140 stores by 2013 • Possible IPO in 2012 Maintain Dinky Di numbers, grow Pie Face numbers ' # ' Increase in high margin products contribution to product mix (sandwiches, hot drinks) : ... Key drivers of sustainable growth in QSR chains Chain Dayparts Occasion Format am hjnch pm dimer felts nig hi eat in anaytake cetorirt] mall high dmra Name snack snack street that # Build cost esl Urn i kSO.viO , O • O ooo ■VcO-x.i-u-.k O ooo-o e-cO OOG GO oooo o o oo :o o o ooo o o o '•SZt-.A -tC-f; ?-100.'O0 ooo OO :OGO o o 'm iftHV.t.COu Pw- KOCf) i'fi'i) ;«:x'aO ooo oo o o oooo ©© ©© © © ©©©:© ©©© © ©©'i -'-! ■Pr F'iU: "t‘“k't cli ihi-tx-."?-" icyfriinc: vi-iWtV;' :=c3i->b!i>Y n OF Rang! h ,mc,m rtlordni-l? then of it-:- i-fimpoiiiors. WARNING: For Westpac staff reference ONLY. Circulation outside Westpac is PROHIBITED WBC.409.002.0331 Franchise Agreement Discuss the provisions of the Franchise agreement in respect of these attributes Annual Review Date: / / Has there been changes? If YES details to be provided. Franchise Term 5 years □ Yes □ No f Renewal Options 5 years □ Yes □ No Initial Franchise Fee $30,000 (+gst) □ Yes □ No Renewal Fee 1) the cost of Pie Face investigating the status of □ Yes franchisee/guarantors; 2) all Pie Face’s costs of documenting the franchise □ No 3) all other costs and expenses Royalty 5.0% of gross revenue □ Yes □ No Advertising Levy 2.5% of gross revenue □ Yes □ No Legal Fees $5,000 □ Yes □ No Other Fees $5,000 (training) □ Yes □ No Assignment Fee Y1 - $35,000; Y2 - $30,000; Y3 - $25,000; Y4 - □ Yes $20,000; Y5; $15,000; Y6 onwards
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