Frequently Asked Questions
What is franchising?
Franchising is a method of doing business by which a company (the "franchisor") grants to a person (the "franchisee") the right to use the trade-marks, proven operating system, the company's know-how, techniques and procedures in order to advertise, offer, sell or distribute the goods or services for which the franchisor is known and for which it has developed a market awareness and customer acceptance.
What are Royalties?
Royalties are ongoing fees paid to the franchisor by the franchisee on a regular basis, and are calculated as a percentage of sales. Royalties compensate the franchisor for providing ongoing support and research and development as well as incurring corporate office expenses. The franchisor has a good reason to work with each franchisee to make his/her business as successful as possible, as each party benefits from this success.
What is a Franchise Agreement?
The Franchise Agreement is a legal contract which reflects the agreement between the two parties in regards to the franchise program that is offered by the franchisor. The Franchise Agreement contains sections such as an outline of the concept and the business being awarded to the franchisee, terms and conditions, fees and payments, and a description of the rights being granted, including the licence to use the trade-marks, logos and other proprietary rights of the franchisor.
As well, there are sections that cover the responsibilities of the franchisor and the obligations of the franchisee. As the franchisor is risking its name and reputation on the performance of each franchisee, a large portion of the agreement covers a whole range of "what if's" such as situations where the franchisee decides not to follow the proven system, defaults on any of its payments to the franchisor, wishes to retire and sell the franchised business, is unable to operate the business due to a medical situation, etc.
What is the usual term of a Bulk Barn Franchise Agreement?
The Franchise Agreement has an initial term to operate a Bulk Barn store at the premises for a period equal to the lesser of ten (10) years or the term of the head-lease (excluding renewals) for the premises. Subject to the franchisee satisfying certain conditions as outlined in the Franchise Agreement, there is an option to renew for an additional term equal to the lesser of ten (10) years or the term of the head-lease extension/renewal for the premises. At the time of renewal, the franchisee is required to pay a franchise renewal fee as outlined in the Franchise Agreement.
Do I have to incorporate a company and can I have other shareholders?
Yes, an incorporated company is required to operate the Bulk Barn store. One individual must hold at least 2/3 of all of the issued shares (voting and non-voting) of your corporation. This individual will be the franchisee named on the Franchise Agreement, and is required to provide on-site supervision in the store with accountability to BBFL for compliance with all requirements under the Franchise Agreement. No other individuals can be party to the Franchise Agreement. Other individuals can, however, hold the remaining 1/3 of the issued shares of your corporation.
What is the cost of acquiring the franchise rights for a Bulk Barn store?
There is a non-refundable initial franchisee fee which is disclosed in the Franchise Agreement and is payable upon execution of the agreement.
What is the cost of a turnkey Bulk Barn franchise?
The turnkey cost for a store that is approximately 5,000 square feet in size starts at a minimum of $750,000 plus applicable taxes, which includes the initial franchise fee. This cost will be higher for certain markets, and depending on the size of the store. Approximately one-third of the cost must be unencumbered (cash or liquid assets). The remaining amount may be financed through various lending programs offered by the chartered banks. Additional working capital of $25,000 (unencumbered) is also recommended for start-up costs.
What is included in the cost of the franchise?
The turnkey arrangement and cost include the following:
An initial franchise fee, granting to the franchisee the right to operate a Bulk Barn franchise at the franchised location for the term of the Franchise Agreement, and to use the trade-marks, trade names and systems in doing business;
- All leaseholds, fixtures, equipment and signage;
- Initial inventory of products and supplies;
- Pre-opening and opening support and assistance, as determined by BBFL, to be provided during the initial stages of operation;
- The use of all confidential Bulk Barn manuals;
- An initial training program conducted in-store and/or such other location as may be specified by BBFL (all expenses related to travel, such as transportation, lodging and meals, are the responsibility of the franchisee).
Any deposits required for setting up of accounts for hydro, gas, telephone, etc., are extra and the responsibility of the franchisee.
Will BBFL provide financial assistance?
In the normal course of its business, BBFL does not offer, directly or indirectly, any financing arrangements, nor does it guarantee the obligations of its franchisees.
What types of qualifications does BBFL seek in a franchise candidate?
The selection of new Bulk Barn franchisees is a rigorous process, involving extensive interviews and approvals. Not everyone who applies for a franchise will meet our stringent standards and criteria. Candidates must portray qualities such as pride in ownership, willingness and ability to follow a prescribed system, attention to detail, management skills, effective people skills, personal commitment, and of course financial stability, all of which are critical to the success of our system.
Will BBFL select the location and build the store for me?
Yes, site selection and the build-out of the store are carried out solely by BBFL, and the end result is a turnkey operation being handed over to the franchisee. BBFL is always on the lookout for prime locations. In arrangements with landlords, BBFL will hold title to the head-lease and the franchisee will sublet the premises from BBFL by way of a Sublease Agreement. All lease negotiations are carried out by BBFL to ensure that the most advantageous lease terms are obtained.
How does BBFL evaluate a potential new store location?
BBFL analyzes information in many different ways. These usually include demographic profiles, population statistics, projected growth trends, trade area analyses, retail shopping patterns and other appropriate factors.
What is the size of an average Bulk Barn store?
Bulk Barn stores are typically 5,000 square feet, although certain stores may be less than or greater than this size.
Where and how do I purchase the product to be offered for sale at my store?
The majority of products for sale in the store are ordered from and supplied by BBFL’s Corporate Office where orders are placed, filled and shipped to the franchisee from our warehouse facilities. There are a few products that are ordered directly by the franchisee from approved suppliers and shipped directly to the premises from those suppliers.
Can I purchase product from any other suppliers?
No. In order to maintain a predictable shopping experience for our customers, we must keep uniformity in our Bulk Barn stores and we must be able to supply the same product in all of our stores. The merchandising department at BBFL’s Corporate Office is continuously evaluating our existing products, as well as sourcing new products to add to our mix. This is done with a view to ensuring that we always have products of the type and quality that our customers have come to expect.
Does BBFL require the franchisee to be actively involved in operating the store?
Yes. The Bulk Barn business requires and responds successfully to the personal input and attention of an involved franchisee. It is essential that the franchisee become involved in all facets of the business. You can expect to work many long hours, particularly at the beginning of your franchise term and during the seasonal peak periods. You should be knowledgeable about all of the products offered for sale in your store, how to perform sales transactions, and other functions required of you on a daily basis. The demands on you can be minimized by your ability to attract, motivate and retain capable trained employees. A Bulk Barn franchisee is required to spend a minimum of 40 hours per week at the store.
Can a Bulk Barn franchise owner operate more than one Bulk Barn store?
Yes. Provided that you are in good standing with BBFL and have demonstrated success in all areas of the business, including financial success, additional locations can be applied for.
What training and store opening assistance is provided?
BBFL will provide a complete training program. Initial training is provided in-store and/or such other location as may be specified by BBFL. Pre-opening and opening assistance, as determined by Bulk Barn Foods Limited, will occur throughout the opening stages of your operation. Bulk Barn also provides access to an E-Learning training program for store employees (currently available in all provinces other than Quebec).
Is there an advertising fee?
Yes, there is an "Advertising Fund" contribution, based on a percentage of sales, which is payable on a weekly basis.
What type of return can I expect?
We do not provide projected earnings statements. Once an approved applicant has been matched with a site, a Franchise Disclosure Document, as required under the particular province's franchise legislation, is provided. This document contains information to assist the applicant in building his/her own business plan. For applicants in provinces that do not have franchise legislation, we provide an Ontario disclosure document on a voluntary basis, which meets the requirements of the Arthur Wishart Act (Franchise Disclosure), 2000.
How long does the application process take?
Candidates are generally advised within 4 to 6 weeks of receipt of their fully completed application whether or not they qualify to start the formal interview process. Incomplete application forms will not be accepted.
Once I have been identified as a suitable candidate for a Bulk Barn franchise, what is the waiting period for a franchise and how do I know what number I am on the list?
We do not rank applicants by order in which they apply. Therefore, we are unable to provide specific timeframes or guarantee a franchise to approved applicants. When a franchise opportunity arises, all qualified applicants who have shown a preference for that location will be considered. The candidate deemed most suitable to BBFL will be awarded the franchise.
How secure is my personal information provided by way of the Franchise Application Form?
Can I sell my franchise?
Yes, you are free to sell your franchise in the open marketplace whenever you wish, subject to BBFL’s approval of the prospective buyer. There are a number of conditions that must be met upon such a transfer, as contained in the Franchise Agreement, including the payment of a transfer fee to BBFL.
Where do we go from here?
i. Complete the Confidential Application Form in full, with all information pertinent to yourself and any other individuals who would be shareholders of your corporation. Sign and mail to:
Bulk Barn Foods Limited
320 Don Hillock Drive
ii. Qualified prospective franchisees will be contacted within 4 to 6 weeks and will be invited to BBFL’s Corporate Office for an interview.
iii. Once you have completed all stages of the interview process and we have secured a location for a Bulk Barn store that is suitable to you, we will supply you with a copy of our Franchise Disclosure Document for review by yourself and your solicitor.
iv. Once you have decided to proceed, you will be required to incorporate a company and to arrange financing. Once this has been done, we would execute the Franchise Agreement and other related franchise documents. Please note that, pursuant to Ontario legislation (and under similar legislation in other provinces that have franchise legislation), a period of at least fourteen (14) days must pass between delivery of the Disclosure Document and execution of the Franchise Agreement. Your initial franchise fee would be due and payable to BBFL at this time.
v. Once the Franchise Agreement and other related franchise documents has been executed and the location has been finalized, we will set up a mutually convenient time for training and store opening procedures will begin.