From the ground up: The key to a thriving franchise network

In 1996, Kenton and Rachel Campbell saw an opportunity to get ahead of the specialty coffee wave. With some industry knowledge, Kenton began roasting coffee and established Zarraffa’s Coffee. From there, the business adapted and transformed into a franchise with 74 stores.

For Kenton, the decision to set up a franchise model followed 20 years of hard work running two stores and a small roastery on the Gold Coast. With the help of a $9,000 personal loan, the first franchised store opened in Brisbane in 2001.

Kenton and Rachel began by opening stores in shopping centres, then broke out into high-footfall locations across Queensland. Drive-through sites came later, all helping the business to drive higher trading volumes.

Kenton says that looking back, that decision to launch Zarraffa’s Franchising “changed everything”. “With franchising, you divide and conquer with partners who work for themselves to improve their lives. That motivates us to better ourselves and the brand.”

“We’re big on helping franchisees generate higher profits, which can help us and owners reinvest in growth. It’s one of the reasons we have a high ratio of multi-store owners,” Kenton adds.

Creating a flourishing community

Kenton explains that Zarraffa’s Coffee is focused on ensuring the brand provides the right marketing support, good site selection, training and development and ensures franchisee partners are well supported.

According to Kenton, a vital aspect of a good franchisor-franchisee relationship is rewarding franchisees for their hard work. Kenton says, “We essentially have two-thirds of the profit go to franchisees and a third to Zarraffa’s. We have a very level playing field and know they do the heavy lifting, so deserve more. That financial exchange can help them grow.”

Kenton says that being franchisee-driven helps deliver mutual benefits and that relies on a consultative approach. “One of our franchisees said they couldn’t remember the last time a decision was made without serious consultation, and I think that’s where many brands get it wrong.”

“It’s not us and them. It’s us period. If we divide the responsibilities that help avoid duplication, and we empower people then get out of their way, the business will always perform better.”

Kenton says that recent pricing decisions are a good example, as the business planned its response to rising interest rates and overheads. “We considered raising prices at the checkout to recover more costs. However, we ended up siding with the franchisees who decided against the full increase to ensure pricing remained competitive.”

Another is ensuring the brand is always growing and working for the franchisees. Through Zarraffa’s Power of the Brand initiative, the team can monitor and identify the impact of its central marketing efforts.

“We can see by store how they are performing, so if a group of franchisees are following the brand system, but it’s still not working for them, we get together and look for new ways of doing things. We’re always looking from the bottom-up.”

Harnessing the supply chain

Kenton says that as Zarraffa’s franchisee community and financial strength grew, its challenges have changed. He says the focus is less on the store-level issues and more on factors like staffing and effectively managing an expanding supply chain.

“When we were small, we were more worried about things like pricing, but now we have more buying power and warehousing space, so we can make better decisions. We can have massive amounts of green coffee and packaging ready to go in case something happens, and we saw the benefit during COVID.

Kenton stresses that he focuses on what the business can control. “You can’t roast air or speculation, but you can roast coffee,” he says. This includes maintaining strong relationships with suppliers, which can help the business be more responsive.

He says this extends to the funding that Zaraffa’s Coffee and its franchisees need, where the business works with CommBank to acquire commercial property, secure financing, and equipment leasing.

“We spend a lot of time building supplier relationships, and we see banks as no different to the vendors who provide our coffee machines. My view is if you take them for the ride and build an understanding of the business and its future, there are no surprises.”

“I realised the importance of open communication when CommBank’s Head of Risk came out to discuss our plans at head office. I had all the financials ready, and it was clear that he got what we were trying to do.”

“As an entrepreneur, I used to paint a big picture verbally. Now it’s about the detail because you want banks to be beside you before you sign deals or leases.”

Kenton added, “The first personal loan I took out to start Zaraffa’s was with CommBank, and they’ve invested considerably in our brand ever since. Those types of relationships are crucial to our future.”

From here, Zarraffa’s vision is to have a network of up to 200 drive-through sites by the time the Brisbane Olympics arrives in 2032. Kenton says the brand has more capacity than that but favours strong, steady growth.

“We’ve been building the brand for 30 years, but the good part is it feels like we’re just getting started. Our opportunity is huge, and very few competitors can catch up to us,” he concluded.

Want to know more?

To get in touch with our industry specialists email franchising.general@cba.com.au

To learn more, go to commbank.com.au/franchising