An innovative marketing promotions system, using printed chocolate, has found a solid international market by franchising.
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Entrepreneur: John Taylor, Managing Director
Company: Chocolate Graphics
Business type: Franchise licensing
Founded: Acquired 1999
Employees: Six staff, 10 licensees
Turnover: $3 million
Head office: Gold Coast, Queensland
Contact details: (07) 5528 1400
The Chocolate Graphics Story
John Taylor began his career as a plumber, following in his plumber father’s footsteps. He says his move into sales and marketing was the best decision of his life. At 16, Taylor realised he wanted a new direction. He attended night school and improved his education. His first job in sales was selling hardware to plumbers.
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Key learning points:
- Networks - A good network can rapidly expand a business; do not neglect its importance.
- Mistake resolution - Do not be paralysed by your mistakes. Quickly rectify them and move on.
- Persist - Be consistently persistent. Never give up.
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Taylor has since been involved in a succession of sales and management ventures, in which has learnt to kick-start new operations or re-ignite those that were flagging. He spent five years in Japan as president and a director for the Australian company, Nutrimetics.
Taylor has developed a keen eye for new business opportunities. In 1999, several years after returning to Australia, he saw one. He acquired the Gold Coast company, Chocolate Graphics, which had registered a patent for printing chocolate directly onto chocolate.
Taylor says: “When I bought the business, it was very much a cottage industry. I purchased it from the original inventors, who were trying to manage the business as well. They weren’t succeeding.”
Taylor’s plan was to improve on the original patents and place the business on a solid commercial footing by using franchises to expand nationally and internationally. He decided to align this with a direct marketing/distribution system, relying strongly on e-commerce and telecommunications.
The franchise model was a logical one for Taylor to choose. “For the franchisor, it’s obviously a cost-effective way of expanding a network,” he says. “One doesn’t have to become a national giant to get coverage. For a self-made person like myself, I don’t want to risk millions of dollars, so it’s a very good way of steadily and profitably expanding. And naturally, it gives the franchisees a great opportunity to get into their own business.”
Franchisees pay $100,000 for a license and $50,000 for a self-contained manufacturing kitchen unit (MKU), which can be flat-packed for shipping. The MKU is designed to be quickly self-assembled, with a manual kitchen able to produce about 12,000 pieces of chocolate a day. As their business grows, franchises can choose to buy from the company - at a cost of $300,000-$400,000 - specially designed equipment that automates the production process. An automated kitchen can produce about 250,000 pieces a day.
People skills are essential in franchising. Taylor says: “We obviously look at whether the people we take on board have the necessary funds and their past management experience. But it is also important that they are temperamentally the right sort of people to be in a people’s business, square pegs for square holes. No one wants to have a failed licensee.”
Taylor says choosing the wrong people as licensees is always a risk for franchisors. “In any business, if you put the wrong person into a key position, it costs you a lot of money,” he says. “You can’t totally avoid it. You’ve got to rely on your gut feeling with people.” The company has a five-point training program for licensees, backed by detailed training manuals.
Chocolate Graphics is expanding its network. It has sold its first Australian license (on the Gold Coast) and, internationally, has sold Master Licenses for its technology in Germany, Belgium, the Netherlands, Ireland, Britain, Malaysia, Hong Kong and Singapore. Taylor says that many of the overseas recruitment successes have come from networking at functions such as seminars.
The biggest target market for the company’s products is companies, but others include hotels, restaurants, clubs, and weddings. Products can range from chocolate business cards and menus to thank you notes to customers.
The company relies heavily on word-of-mouth advertising and repeat sales. Its multi-channel, direct-marketing approach uses e-commerce and other telecommunication technologies to create its database and control costs. Taylor says: “In business to business, the internet hasn’t even scratched the surface in its potential. For example, you can email us your company logo and we just take that straight into our processing room.