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Bakers Delight Misappropriation and Hacking Allegations

Bakers Delight Australia franchisees are more than a little disgruntled following the release of an internally leaked Australian marketing fund statement. Bakers Delight Holding’s outrageous reaction points to an admission of at least misappropriation of millions. The internal source of the leaked document suggests it is clear evidence of misappropriation.

The Bakers Delight franchise has been making damaging headlines over franchisee abuse since 2003 however franchisors Roger and Lesley Gillespie have managed to avoid any official fallout albeit there has been consistent reporting of an abusive system of supplier kickbacks to the franchisor for more than a decade.

I was recently contacted by Bakers Delight Holdings franchisees with allegations that the franchisor had been siphoning $Millions from the marketing fund annually and over a period of at least 8 years.  The Bakers Delight network in Australia is reported to consist of around 590 franchisee outlets and approximately 60 company owned units. Bakers Delight also franchises as COBS Bread in Canada.

Under the mandatory Australian Franchising Code of Conduct Section 15 a franchisor operating in Australia has an obligation to provide annual audit reporting unless 75% of franchisees indicate that such advice is unnecessary and neither has happened. Bakers Delight Holdings are said to be in breach of Section 15 for at least 8 years so naturally franchisees have concluded that the lack of transparency indicates misappropriation of funds for at least that period.

The leaked Australian marketing fund statement year ending June 2014 indicates wages of $1,096,000 for the fund with franchisees claiming that for 2 or 3 employees at most who can legitimately be costed to the marketing department something is amiss.  The annual rent listed for those 2 or 3 employees is just over $190,000 which is said to be something akin to the cost of housing them in a luxury resort.

One franchisee reported confronting franchisor Lesley Gillespie some years back over the suggestion that $700,000 had been costed against the marketing fund for ‘flights’. That figure was apparently not denied. While franchisees have dissected the 2014 statement line by line and consider wrong doing at almost every entry the major indications of wrong doing are the wages, rent and the reported gross national franchisee contributions.

Based on the figures noted in the Australian Bakers Delight marketing fund statement franchisees claim gross advertising contributions from franchisees are either understated or, based on calculated averages, at least a few hundred franchisees are struggling to survive. If the conclusions by franchisees are correct they indicate potential misappropriation of Bakers Delight marketing fund monies amounting to $millions annually and the franchisees, not unreasonably, want an independent audit.

As one franchisee suggested, “I don’t think half the franchisees are in trouble, probably a hundred or hundred and fifty or something like that but no one knows. BDH won’t tolerate franchisees getting together.”

The Australian Competition and Consumer Commission has the authority to perform compliance audits of franchisors and an official complaint requesting an audit is in the process of being lodged.

Personally I’m now convinced Bakers Delight are guilty of criminal acts. When I contacted Bakers Delight for a response to the franchisee allegations the BDH reaction was to set their lawyer, Phil Colman, onto me and then hack and take control of my email accounts after I had explained why any attempts to intimidate me would fail. I am not at liberty to divulge how I can prove that allegation as it is now a critical element to a complaint lodged with the Australian Federal Police. Had Bakers Delight not been guilty of wrong doing and seemingly been intent on protecting what appears to be the continued misappropriation of marketing fund monies I would have expected a different response.

Franchisees report that hacking of Bakers Delight franchisee email accounts is not uncommon. The current and third version of BakersDelightlies website continues after previous versions are said to have been hacked. Bakers Delight Stole My Business on facebook is onto its second version.

For Bakers Delight franchisees they will now need to wait for the ACCC and the AFP should they follow through. Under Rod Sims, now Chairman of the ACCC, they are hopeful of a better outcome than with his widely criticized predecessor Graeme Samuel, however white collar crime in Australia has a very poor record of exposure or effective deterrents. As I pointed out to franchisees, there is no alternative but to be patient, persistent and determined. As one pointed out to me, “12 years so far is a long time and a lot of franchisees have been churned in the process”.

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About Ray Borradale

Ray Borradale's picture

Public Profile

Over forty years experience in Small Business and more than twenty-five years in franchising operations as a franchisee and employed by three franchisors, mostly in operations.

I have dedicated more than ten years and over 15,000 hours in the pursuit of quality franchising and exposing franchisor abuse of franchisees while advocating for the introduction of franchise relationship Law and the levelling of the dispute processes between bigger business and small business.

Contact: rayborradale@yahoo.com.au

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Franchise Operations