Becoming a bakery franchisor: steps to profitability

The boulangerie is more than just a business in France, it's an institution. Every day, 12 million customers visit a boulangerie to buy their bread. Not surprising, given that 95% of them eat bread every day. And every year, no fewer than 6 billion baguettes leave the bakeries. 

And yet, this sector is in the midst of a period of rapid change, between tradition and modernity. Numerous bakery chains are shaking things up and proposing new strategies in line with consumer trends. Let's take a look at the 7 steps to becoming a bakery franchisor.

The rise of bakery chains: a hybrid model

What is a bakery chain?

The term "bakery" is used to designate shops that combine on-site production with an industrial business model. Ready-made preparations, centralized bulk purchasing and the sale of frozen products are all elements that define these new-generation bakeries. Their managers are seasoned retailer-entrepreneurs who keep a close eye on changing consumer trends.

Understanding consumer behavior is essential for these entrepreneurs. They know that many people are often on the move and frequently eat away from home. 

In response to these trends, they have developed strategies based on efficiency, quality and competitive pricing. They gather extensive strategic information before setting up shop, to maximize profits (catchment area, traffic survey, standard of living, unemployment rate).

These chains manage to combine quality and low prices, two objectives often considered incompatible, thanks to : 

• Optimized volume management.
• Centralized, automated production.
• A growing number of stores.
• An aggressive marketing strategy.

With their unbeatable offers, these bakery chains are trying to win market share from hot-spots and supermarkets, which are also developing their offerings.

BVP in 2024

The bakery-viennoiserie-pâtisserie (BVP) landscape in France is marked by the presence of 500 bakery chains in Europe, including around 70 in France. These chains represent almost 5,300 stores in France, and generated sales of over 3.6 billion euros in 2020. These market leaders include Marie Blachère, Paul, Ange, Feuillette, Louise, l'Atelier Papilles, Land&Monkeys and La Mie Câline, as well as numerous small and medium-sized regional chains.

Competition in this sector is fierce. Artisanal bakers compete with BVP chains, sandwich shops, and even major retailers seeking to position themselves in the snacking segment. Bakery catering already accounts for between 25% and 40% of their business.

Why open a bakery franchise in 2024?

The year 2024 is a good time to launch a bakery catering franchise. The factors for success are many and varied, and include : 

• The atmosphere of the store.
• Product range.
• Value for money.
• Service.
• Communication.
• Store size.
• Supply chains.
• Geographical location.

Bakery franchising is a business model that has been expanding steadily since 2000-2010. Initially, it enjoyed strong growth in suburban shopping areas. Today, this trend continues, often in collaboration with other well-established brands. Examples include the collaboration between Marie Blachère and Grand Frais, or the association between Boulangerie Louise and the InVivo group (owner of Pomme de Pain, Jardiland, Gamm Vert, etc.). At the same time, food kiosks is being set up in supermarkets.

In the wake of the COVID-19 health crisis, new opportunities have arisen, particularly in suburban residential areas. Town centers have also shown signs of revitalization, offering additional potential for the deployment of bakery franchises.

Bakery franchises are distinguished by their unique business model. Unlike most other chains, they integrate bread-making directly into their stores. This practice is particularly widespread in France, but also in countries such as the Netherlands and Denmark.

Some started out as artisans before transforming into industries as they grew, opening central production workshops. Their production remains artisanal and represents direct competition for independent bakers. 

Thanks to their centralized sourcing, they benefit from pricing conditions that independent bakers struggle to achieve. However, the latter still have a card to play by capitalizing on proximity, tradition, locality and differentiation.

The year 2024 looks set to be a good one for bakery franchising, thanks to several strategies for adaptation and innovation:

• The development of new services (loyalty, click & collect, drives, etc.).
• Range diversification and renewal.
• The strategic location of stores.
• Careful communication (highlighting artisanal quality, raw materials, etc.).
• Careful design of stores (visible bakery, product display, etc.).
• Adapting to changing food demands (healthy, environmentally-friendly products).

The importance of a proven, replicable business model

Before becoming a franchisor, a company must have a solid, attractive concept with a proven track record and significant national potential. This concept must not only be profitable, but also duplicable and backed by a strong brand. Validating the concept requires a field test, through an initial branch. This phase enables us to identify and overcome any challenges, and to understand the key factors for success, so that we can replicate them.

Opening other stores in different areas is highly recommended to test the reliability of the model and make any necessary adjustments. Franchising will enable your concept to expand rapidly in strategic cities, thanks to entrepreneurs who are well established locally.

Let's take a look at the 7 essential steps to becoming a bakery franchisor.

1. Becoming a bakery franchisor: the business plan

Drawing up a business plan when you want to become a bakery franchisor is a step not to be neglected. It will give you a clear understanding of the financial and operational aspects of your future network. It should therefore include at least : 

• Initial investments.
• Network expansion costs.
• Communication costs.
• Animation costs.
• Ratios.
• Recruitment and training costs.

A franchise network can only be built on the basis of transparency. To make a success of this partnership, you need to set out an honest projection of the business, and precisely define the entry fees and royalties. So don't neglect your business plan, and include everything to do with HR management, the business model, products, financial forecasts and so on.

2. Produce a complete operating manual

As a franchisor, it helps to convey your methods and know-how clearly and concisely. This process goes beyond simply renting out your brand; it requires setting up a solid learning system for future franchisees. You'll need to have :

• A precise, documented view of your business.
• Protection of your methods and brand through patents and licenses.
• A well-defined training program to pass on essential information to franchisees.

All these elements must be documented in an operating manual, a sort of "Bible" for your franchise. This comprehensive, accessible document should cover every aspect of your concept: the layout of the outlet, management, sales and manufacturing methods, customer relationship management, the business model, the software used, and so on.

Passed on to each franchisee, the operating manual ensures that every member of the network knows exactly how to apply your concept and operate your brand on a daily basis.

3. Drafting the DIP and franchise agreement

Once you've developed your concept and defined your financial objectives, it's time to present it to potential franchisees. You'll need to formalize the operation of your future network in a Pre-contractual Information Document (DIP), in accordance with the Doubin law. 

The DIP covers topics such as :

• Your company's history and identity.
• Annual financial statements for the last two years.
• Market analysis and development prospects.
• A list of current and recent franchisees.
• Contract conditions (duration, renewal, termination, exclusivity).
• Financial conditions (royalties, entry fees, necessary expenses and investments).

Once the DIP has been drawn up, you will draw up a franchise agreement. You will be responsible for complying with the conditions set out in these documents. But your success as a franchisor will depend not only on your legal obligations, but also on your communication, particularly during the recruitment phase, which is crucial to the vitality of the network. The choice of your first franchisees can make or break your business. So it's essential to find the right partners from the outset.

4. Setting up a management team at head office

It's essential to build a strong team within the network head office, right from the start. As a franchisor, you'll have to :

• Manage your businesses.
• Promote your brand to customers and prospective franchisees.
• Meet and discuss with prospective franchisees.
• Participate in trade shows.
• Provide initial training for your franchisees.
• Supervise compliance with the concept and brand.
• Answer your franchisees' technical, legal and operational questions.

Being a franchisor meanslearning to delegate. This means having the right people on your side. In addition to experts (who may be external service providers), you'll need at least one person dedicated tonetwork management. This key position, in the field, will enable you to act as a link between the head of your network and its subsidiaries. The network coordinator will enable you to circulate information and check that your sales strategy is being properly applied.

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5. Choose your bakery POS system

In a sector as competitive as bakery franchising, having a multi-site cash register is an advantage. Operations management is centralized and data synchronized. As a result, franchisors have a real-time view of the sales, inventory and performance of each bakery. This makes it easier to take the right decisions.

Franchisees also benefit from POS system . They can : 

• Access simplified transaction management.
• Accurately track their inventory.
• Manage their loyalty programs.
• Tools to improve their point-of-sale performance (VAT management, invoicing, order taking, collection, etc.).

This type of tool is therefore an effective ally in supporting the rapid growth of your franchise network, while maintaining the consistency of your brand.

6. Choosing your bakery inventory management software

Digitizing inventory management, especially after adopting a connected cash register, is crucial to helping your franchisees achieve their profitability targets. Inventory management software like Inpulse offers several advantages.

The benefits of inventory management software for franchisees

Having a centralized inventory management tool is an asset for franchisees. It enables them to : 

• Accurately calculate the cost of each product, enabling appropriate pricing and better margin management. 
• Monitor product stock in real time, optimizing operational efficiency and minimizing the risk of stock-outs.
• Order just enough to avoid losses, stock-outs and unnecessary capital expenditure, thus improving financial efficiency.
• Simplify inventories from incoming inspection to credit claims, reducing the time and effort spent on these tasks.
• Identify margin losses by analyzing theoretical and actual inventory discrepancies, to improve profitability.

A centralized inventory management tool therefore optimizes the operational and financial efficiency of their franchise. They can accurately calculate costs, avoid overstocking and out-of-stock situations, and identify discrepancies that can undermine profitability.

The benefits of inventory management software for franchisors

Inventory management software offers franchisors a range of benefits, including the ability to distinguish themselves by supporting their franchisees inachieving their profitability targets (optimizing margins and reducing losses). The software also gives them access to a global view that can be used to negotiate volume purchases more effectively.

Another advantage is that automated inventory management makes it easy to share recipe sheets with each sales outlet. This ensures uniform quality and cost throughout the chain. The software also enables real-timeanalysis of the cost of each raw material, enabling sales prices to be adjusted.

"We were looking for a tool that works on margin at all stages of the supply chain. With Inpulse, we have ordering, inventory, centralized purchasing, loss identification, incoming inspection and analysis." Sébastien Billières, Operations Manager, L'atelier Papilles.

7. Recruit your first franchisees

The final stage in becoming a bakery franchisor: recruitment. This is a step that requires a strategic approach. To begin with, you need to communicate transparently about your expectations, responsibilities and the benefits of joining your bakery network. This can be done by organizing information meetings or taking part in franchise fairs. Don't forget to update your website and include a detailed franchise section. 

Next, your franchisee selection process must include an assessment of each individual's skills, as well as verification of management experience, financial capacity and ease of integration into your network's culture. Finally, once you've made your selection, recruitment doesn't stop there. Regular follow-up and assistance are necessary to ensure the success of your franchisees, and therefore of your network.

Becoming a bakery franchisor involves a number of steps, from drawing up a business plan to adopting effective technical tools. The booming bakery sector is an ideal playground for setting up new franchises, provided you establish an effective, replicable model. By taking the time to prepare these steps, you'll have everything you need to succeed as a bakery franchisor.