Size: 137 franchised bakeries; franchisor has 28 employees
Financial Summary:
- Sales systemwide: $60 million
- Average sales of Great Harvest bakeries: $450,000
- Franchisor sales (from royalties and new-franchise fees): $3.5 million
- Average profits of bakeries: 17% before taxes and owner's compensation
- Franchisor's profits: 19% before taxes
Management: Pete and Laura Wakeman, 48 and 47, respectively, cofounders and copresidents; Tom McMakin, 39, chief operating officer
Founded: 1976
First Franchise Sold: 1978
Capitalization: 97% owned by the Wakeman family, 3% by the management team (with no outside equity investments)
Strategy: Sacrifice the advantages of franchise uniformity in order to offer people the chance to run their own businesses, bolstered by coaching and ideas from the Great Harvest "learning community"
Competition:
- For customers: grocery-store bakeries, independent bread shops, and bagel shops, which proliferated in the 1990s
- For potential franchisees: a handful of smaller whole-wheat-bakery franchises
The Founders
A long-running play
In 1975, Pete and Laura Wakeman -- newly married and fresh out of Cornell University, where they'd sold homemade bread to pay for their tuition -- spent a final summer vacation walking from Yellowstone National Park to Glacier National Park, which is to say the entire north-south length of Montana. They never left.
Not permanently, anyway. They moved to Great Falls, found work (Laura as a nutritionist, Pete driving wheat combines), and in early 1976 turned a failing bakery into the first Great Harvest. It worked well enough that by 1978 they had begun selling franchises to people who asked for them unsolicited.
They did leave Montana temporarily -- and regularly. From the start, the couple have typically spent three months away from the business every year to travel and pursue other interests. They consider the habit a secret to their success. "After 24 years, we're still fresh -- we still love our business," says Laura Wakeman. "How many owners can say that?"
And the sheer longevity of their stewardship may be secret #2, made possible only because they've prevented the company from being all consuming. "After you've been in a business a long time," says Pete, "sometimes you discover mastery you didn't know you had." The secret is "staying with one thing, staying committed. That way you figure things out without even realizing that that's what you're doing. It just accumulates.
"And then a day comes along when for a moment an amazing thing happens," he says quietly. "You feel like you can do magic. Sort of a business magic. It doesn't last, but you realize you'd never have gotten there at all if you hadn't stayed committed so long."
In effect, all the structures now in place to ensure that franchisees learn from one another are outgrowths of the Wakemans' personal need to share not only their own growing expertise but also the mastery they saw in others. From the beginning, they showed franchisees the financials from their Great Falls bakery to provide early benchmarks, and after visiting bakeries in the system, they wrote letters to the rest of the franchisees describing what they'd seen and learned. Out of that sensibility and those simple practices, their idea of a learning community was born.
Best Practices
Balancing work and life
"We believe strongly that a business is in service to our lives, not the other way around," says COO Tom McMakin. The Wakemans established that philosophy from the start and reaffirm it by their own annual travel and periods of reduced weekly hours. In Great Harvest's headquarters, all employees are salaried but are prohibited from working more than 40 hours a week. "We ask people to work hard when they're here," says Laura Wakeman, "but hard is not the same as long."
"Sweet spots"
"We think there are sweet spots in business," says McMakin, "collectively-arrived-at practices that you can usually put a number on and that keep everything in a kind of running harmony." He names three: the thickness of the bread slices given away as samples to everyone who walks into a Great Harvest bakery (one inch, not more or less), the number of hours employees and bakery owners work (about 40), and the pretax net margins a healthy income statement should reveal (17% or 18%; anything lower or higher could signal problems).
Picking great harvest franchisees
By year-end, Great Harvest will have received more than 5,000 inquiries about buying a franchise and more than 150 formal applications for ownership. The company will sell franchises to only 5 or 6.
"We're a community," McMakin says. "Of course, we want people who we think can run a business, but maybe more than that we want people who will make our learning community stronger, who'll bring new skills that the rest of us don't have, and who'll be eager to share them. But most of all we want people we really, really want to work with, who more than anything else are generous. We want people who are nice."
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