Is Blaq Sheep a Black Sheep in the Coffee Industry?

Is Blaq Sheep a Black Sheep in the Coffee Industry?

A new player seems to be entering the Vancouver coffee market – Blaq Sheep Fine Coffee.  Although they have a website, it does not do any justice to the actual brand experience which indicates further that something is bubbling under the surface.  For example, on the day of this post, you can go through most pages of their website and not come across their very cool logo of the sheep.  Yet, a quick search the image section of a major search engine will reveal a more accurate display of their shops, signage, and branding in general.

So what is a black sheep?  Turning to the never-failing and always true Wikipedia we read that  a black sheep is usually a negative term of someone who doesn’t fit in or has gone wayward.  Essentially, it’s someone awkward, eccentric, or ‘too unique’ who doesn’t fit in with the crowd.  But don’t forget that Jesus left the herd to go and find the one sheep that went sideways.  Jesus cared deeply about the one black sheep.  The most well-read book in the history of the world, the Bible, constantly teaches that it’s not wise to follow the herd (those who surround you) because they are heading towards destruction.

But what does this mean in the Vancouver coffee industry?

This means opportunity.

Vancouver is saturated up the yin-yang and out the other side with coffee shops, but if you ask espresso drinkers where the good coffee is, there aren’t too many enthusiastic replies.  In a land with so many coffee shops (and sushi shops while we’re at it), most of them seem to fit under a handful of brands. When you get out of the Kitsilano, Gastown, Main Street or the Commercial Drive ‘coffee zones’, the story gets even worse.  So, for a city that has so many coffee shops, there is a surprisingly low number of either extremely high quality shops, or shops that are stepping out on a limb to be different.  Most of them are slight variations of each other but following a very similar model of Italian espresso drinks with some pastries and the odd panini – nothing wrong with that and there is probably good arguments against breaking what might not be broken, but where are the boat-rockers or the feather-rufflers?

Blaq Sheep Fine Coffee, on the other hand, appears to be totally separating themselves from the herd.  Our first reports are that they have a ‘very good coffee’, unique and good food program, and a decent selection of alcoholic drinks coupled with a unique atmosphere.  Their slogan on their sandwich board ‘Outstanding in our Field’ right under their logo should be both entertaining to the customer, but a concern to competitors.  It’s a bold statement of who they are and what they are planning.

It will be interesting to learn more about their products, their business model and ‘black sheepness’ of their branding as they grow from two locations.

blaq-sheep-logo

 

Waves Coffee Location Introduces Two-buck-per-hour Minimum Seat Charge

That’s a buck per cheek per hour – not bad!

We apologize for the low image quality but it was taken by someone in the public who thought we’d be interested in covering it.  Here is what the text on the sign reads:

————————–

DEAR VALUED CUSTOMERS

In recent weeks we have received many “Customer Comments” regarding “Waves” never having seats available and some customers staying for long periods of time without purchasing anything.

To ensure more customers have a chance to enjoy our facility, there is now a $2.50 per hour, per seat minimum charge

Thank you for your continuous support!

Waves Coffee

—————-

No one understands this Waves Coffee location franchisee (owner) more than the members of the VCSFA do.  It’s the message behind the sign that most people out there will never understand.  Within the lines of the text of this sign is found the foundation of the VCSFA.

If this sign were found at an independent cafe, it would be understandable.  The customer would think “Mario is having a hard time with cheap, abusive college students in his cafe so he’s going to get rid of these freeloaders with a butt-cheek penalty – ingenious!”  In fact, he’d probably get a lot of positive press for that.

But this isn’t an independent.  It’s a franchise – And a big one in Vancouver.

Customers of this location will look at the sign and say to themselves “That’s weird.  I’ve been to many other Waves and I haven’t seen this rule before.” Or, “McDonalds is a franchise and they don’t do this.”  And they will leave thinking somewhat less about the brand because of this inconsistency, even if it’s subconscious.  They will start thinking of this location more of an independent than a chain.

But what drives this inconsistency?  Why would this franchisee feel strongly enough to put this kind of sign up?  You can be sure the franchisor does not know about this yet.  It would not be there if they did.

Profit.  They aren’t making enough.  It’s that simple.

This franchisee of this location isn’t making as much money as he or she feels they ought. If the money was flowing in, they wouldn’t be too worried about the freeloaders. If you don’t believe us, go and test us it for yourself and ask.

So, from the street the cafe looks full – so full that there aren’t enough seats.  Yet the franchisee had to put this sign up?

Waves Coffee has a particularly punishing business model which you will soon see more and more franchisees rebelling against.  They would like all their stores to be open 24/7 and have unlimited and free WIFI for their ‘customers’.  Does anyone see the flaw in this business model yet?  Maybe the sign above in the photo might shine some light on it.  At least with Blenz they ask their franchisees to use a non-free but fairly innovative system of marketing that’s attached to the WIFI system which gives the franchisee some control over the length of connection.

But Blenz has its own questionable ‘programs’ for their franchisees.  One such example is their ‘Free Birthday Drink’ that they desperately try to get their new franchisees to adopt. It sounds great from the customers side but… oops!  They forgot to force a minimum order with this free drink (and this ain’t just a regular drip coffee – it’s ANY drink!) so the franchisee soon learns that if they participate they are buying free drinks for every Tom, Dick and Harry around town.  You read that right!  Just walk in, say ‘it’s my birthday’ and walk out with a drink paid for by the owner of that Blenz because head office doesn’t offer any compensation to the franchisee when they do this for the sake of the brand – straight loss of goods out the door. Needless to say that participation in this program has not had great success across the chain.  If you want to try this out for yourself, we recommend the Library Square location – the operators of this location always give it away for free with a smile.

So then what can a franchisee do?  The franchisor should have been there to help this franchisee address their issues and support them to come up with a system to overcome these challenges so that it doesn’t appear to the customer as a brand inconsistency.  Since this franchisee is not a member of the VCSFA, they wouldn’t have access to our vast resources and may not even know that a WIFI system exists out there that could help them overcome this.  WIFI and freeloaders is a commonly discussed topic amongst our members and innovative idea sharing has lead to improvement in this area.

Where is the franchisor?  Why is the franchisee forced to seek outside of their chain to stop the bleeding?  Where are the ears to hear and the hands to help? Why are they spending over 7% of their revenue on royalties only to end up running their shop like an independent and having the public look at it that way? Franchisees expect a certain amount of support for this royalty yet in many cases they are left to figure it out on their own.

We hope that this Waves owner has great success with their butt-cheek-penalty program. I’m sure every VCSFA member would love to institute it themselves! We hope the freeloaders go abuse someone else, as well. But more importantly, we hope that this franchisee will join the VCSFA and dozens of others who also had nowhere else to turn and need that edge of support to better their future.

Until then, I think I just used $5 worth of butt-space writing this so I better sign off.

Does a Coffee Shop Franchisor Have to Do Anything for Their Royalty Cheque?

It’s a provocative title, but isn’t that the million dollar question that at least one side of the relationship is always asking?  Owning a franchise is always tricky because the franchisee (owner) would like to see more value for his/her dollar and the franchisor (their boss) always feels that their name alone is worthy of praise and since they did all the hard work establishing it – way back when Grandma and Grandpa were smooching at the drive-in –  that customers and franchisees should be lining up to dump money in their tills.

–>       Times have changed.     <–

Ask Dunkin’ Donuts in Quebec who’s bottom got tanned recently for a total neglect of their brand and for ignoring their franchisees for just a little too long.

This article by Mcarthy Tetrault walks through the situation in depth.  There is one paragraph, however, that I would like to draw the reader’s attention to as follows:

In the Franchise Agreements, the franchisor promised to protect and enhance both its reputation, and the “demand for the products of the Dunkin Donuts System” – in sum, the brand. The Court found that, despite the fact that the franchisor had assigned to itself the principal obligation of protecting and enhancing its brand, it failed over a period of a decade to protect its brand. The Court concluded that brand protection is an ongoing, continuing and “successive” obligation and that franchisees cannot succeed where the franchisor has failed to in this fundamental obligation. According to the Court, the franchisor has a duty to minimize losses and reposition itself in a changing marketplace. Although the Court made mention of the civil duty of good faith and of loyalty owed by franchisors to franchisees, no analysis was undertaken as to what that meant in these circumstances apart from a duty to work “in concert with” the franchisees in such market conditions.

The article then goes on to conclude:

Unfortunately, there is next to no guidance in the decision as to what, practically speaking, it means to protect the brand. Clearly, a franchisor cannot be content to rest on its past success. It must innovate and rejuvenate. However, beyond that, the decision is quite unhelpful.

I disagree that the decision is unhelpful.  I know that lawyers are always looking for black and white and would salivate if a crystal clear cookie cutter judgement would have resulted from this case for ease of use in all their upcoming  cases of a similar nature – so maybe in that case it’s not ultra-helpful for lawyers.  However, from a franchisee’s perspective, this case is monumental and has significantly contributed to the greater good of the future of the franchise system in Canada.  Now franchisees across the country can stand up with great confidence together to make sure that their franchisor is not letting their assets and life investments get eaten up while they sip martinis watching the fireworks while hooting their hardy-hars on their yacht out in Coal Harbour (you gotta be from Vancouver to real feel that one).

It allows franchisees to ask of their franchisor questions like these:

  • What is my franchisor doing to combat competition in my market?
  • Does my franchisor have any concrete plans to combat competition or do they plan on riding old systems hoping they keep working?
  • What is the value of the brand I’m paying for?
  • Is the brand I’m paying for decreasing, stagnant or increasing in value?
  • Where under the sun is my marketing pool money going?
  • Has my franchisor allowed the dilution of the brand I’m paying good money for (ie. notable inconsistencies across the brand, unclear core business, multiple direction changes that confuse the customers, etc)?
  • What kind of calibre leadership does my franchisor employ? What are their credentials? Were they hired because they are best for the job or because they grew up with the franchisor’s son’s girlfriend’s uncle?
  • Am I a member of a group like the VCSFA which facilitates the banding-together of other coffee shop franchisees to address such important things or am I an island on my own?

Now think about the franchise coffee market in Vancouver and the competition. Which brands are in competition with each other? You can go to our increasingly exhaustive list of Vancouver coffee shop franchises page called “FRANCOUVER” to run this question yourself.

At the VCSFA we have plans to conduct surveys to find out how much your brand is being affected by other competing brands.  Be sure to become a member so you can gain access and even help contribute towards these important future works.