Bimbo Bakeries Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$14,350 - $606,700
Franchise Fee
$8,000
Min Cash Required
$1,500
Total US Locations
6,672
Business Summary
Bimbo Foods Bakeries Distribution, LLC franchises distribution rights for fresh bakery products such as ARNOLD, BOBOLI, ENTENMANN'S, and SARA LEE brands. Franchisees purchase these products from Bimbo Foods Bakeries Distribution, LLC's affiliates and then sell and distribute them to various retail food outlets, restaurants, and institutions. The business operates through direct store delivery (DSD) to designated geographic sales areas or a "Drop-Merch" system where products are delivered to specific outlets and then merchandised by the franchisee. Franchisees manage product ordering, shelf rotation, merchandising, and removal of expired items to maintain good relationships with their customer outlets. Franchisees are required to operate as an incorporated entity.
Corporate History
Bimbo Foods Bakeries Distribution, LLC, known as BFBD, began in 1996 as Bimbo Bakeries Distribution, Inc., a Delaware corporation. Initially, it was part of George Weston Bakeries Inc. In 2009, Grupo Bimbo acquired Weston Foods Inc., leading to BFBD's name change to Bimbo Foods Bakeries Distribution, Inc., and then to a limited liability company in 2013. A significant expansion occurred in 2011 when Bimbo Bakeries USA acquired Sara Lee's North American Fresh Bakery business, adding many distribution agreements to the system. Over time, other affiliated entities like BBDC and Earthgrains Distribution, LLC have merged into BFBD, expanding its operations. Bimbo Foods Bakeries Distribution, LLC has offered franchises to distribute bakery products throughout the United States since its inception in 1996.
Financial Overview
Investment Range
$14,350 - $606,700
Franchise Fee (Low)
$8,000
Franchise Fee (High)
$500,000
Minimum Cash Required
$1,500
Equipment Costs (Low)
$1,500
Equipment Costs (High)
$82,000
Working Capital
$4,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
The financial statements for Bimbo Foods Bakeries Distribution, LLC are consolidated with those of its ultimate parent company, Grupo Bimbo, which provides an unconditional guarantee for Bimbo Foods Bakeries Distribution, LLC's obligations to its franchisees. Grupo Bimbo's financial statements received an unqualified opinion from its auditors, indicating they are presented fairly. Grupo Bimbo manages its equity structure to balance debt and equity, with a net debt to equity ratio of 0.93 times in 2023. The company consistently meets its loan obligations, including interest coverage ratios, demonstrating a strong and stable financial position. No concerns about the company's ability to continue operating were noted.
Financing Details
Bimbo Foods Bakeries Distribution, LLC offers optional financing through its affiliate, Advantafirst Capital Financial Services, Inc. (ACF). ACF typically finances up to 95% of the initial purchase price for distribution rights, covering the franchise fee, inventory, and some startup costs, with specific maximum limits that vary by location. Franchisees must qualify for the loan. The loans are typically for a 10-year term, with interest rates ranging from 9.75% to 11.00% as of January 1, 2024, depending on credit strength and whether the loan is for equipment only. A documentation fee of $500 (or $250 for existing franchisees purchasing additional rights) and a 0.5% origination fee apply, which can be financed. There is no prepayment penalty, but a $350 fee is charged for re-amortizing the loan if large prepayments are made. Upon default, the entire loan balance becomes immediately due, accruing interest at 12% per year. ACF secures these loans with a personal guarantee from the franchisee and a security interest in the distribution rights and associated assets. Franchisees are free to seek financing from other lenders if they prefer.
Performance Metrics
Total US Locations
6,672
Franchised Units
6,381
Corporate Units
291
Franchising Since
1996
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
65
Litigation Summary
Bimbo Foods Bakeries Distribution, LLC has a significant legal history, including 5 pending lawsuits and 60 concluded cases. Pending matters primarily involve allegations of breach of contract related to distribution rights, claims of independent contractor misclassification, and alleged labor code violations. Historically, Bimbo Foods Bakeries Distribution, LLC has faced numerous lawsuits and arbitrations, often from its franchisees. Common issues include disputes over termination of distribution agreements, denial of proposed sales of distribution rights, alleged product price increases, and claims that franchisees were misclassified as independent contractors rather than employees. Many of these disputes resulted in settlements, with Bimbo Foods Bakeries Distribution, LLC frequently purchasing the disputed distribution rights or making payments to resolve the claims. Several class action lawsuits concerning independent contractor misclassification were also settled or dismissed. There were also cases involving allegations of fraud or theft by franchisees.
Bankruptcy History
Bimbo Foods Bakeries Distribution, LLC has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew, Bimbo Foods Bakeries Distribution, LLC franchisees must provide at least 90 days' written notice if they do not wish to renew. If they do not provide this notice, the agreement automatically renews for another 10 years, unless Bimbo Foods Bakeries Distribution, LLC requests them to sign a new distribution agreement. If requested, franchisees must sign the then-current version of the Distribution Agreement and all related documents, including a general release. The new agreement may have materially different terms and conditions, and could even require the franchisee to change their legal entity type. Franchisees must also return the FDD Item 23 receipt.
Training & Support Program
Franchisor Assistance
Bimbo Foods Bakeries Distribution, LLC provides several forms of support. Before opening, Bimbo Foods Bakeries Distribution, LLC designates the franchisee's exclusive sales area or lists specific authorized outlets. During operation, Bimbo Foods Bakeries Distribution, LLC offers credit for damaged products, purchases accounts receivables for certain credit-approved outlets, and uses reasonable efforts to supply products, inform franchisees of new outlets, develop new products, and assist with promotions. Bimbo Foods Bakeries Distribution, LLC also negotiates with large chains on behalf of franchisees and communicates new service requirements. If a franchisee fails to perform their obligations, Bimbo Foods Bakeries Distribution, LLC may temporarily step in and perform services at the franchisee's expense. For advertising, Bimbo Foods Bakeries Distribution, LLC may advertise products and offers an optional agreement for franchisees to display brand logos on their vehicles and clothing. The company provides a handheld computer ordering system with proprietary software for ordering and accounting, with the right to require equipment upgrades.
Ongoing Support
Bimbo Foods Bakeries Distribution, LLC provides ongoing support by offering credit for damaged or expired products if franchisees follow the return policy. It may also purchase accounts receivables from certain credit-approved outlets. Bimbo Foods Bakeries Distribution, LLC uses commercially reasonable efforts to ensure sufficient product delivery, inform franchisees of any potential new outlets, develop new product offerings, and help with product promotions and sales opportunities at outlets. The company also negotiates with large chain customers on behalf of its franchisees and passes along new service requirements. If a franchisee is unable to perform their duties, Bimbo Foods Bakeries Distribution, LLC can temporarily take over operations at the franchisee's expense. Voluntary orientation sessions and videos are also offered to help franchisees with various aspects of running their distribution rights.
Franchise Requirements
Ideal Candidate Profile
The ideal Bimbo Foods Bakeries Distribution, LLC franchisee is an individual with specialized skills, initiative, and experience necessary to successfully operate an independent distribution business selling and distributing fresh bakery products. Candidates are required to organize their franchise as an incorporated entity, with the individual owning a greater than 50% share or membership interest in the entity. This individual must also personally guarantee all of the distribution business's obligations. The role requires the ability to make a substantial initial investment to acquire distribution rights, implying a need for significant financial capacity.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Mobile
Owner Participation
Absentee Allowed
Territory Type
Limited
Territory Size Requirements
For a Distribution Agreement, Bimbo Foods Bakeries Distribution, LLC grants franchisees the exclusive right to sell and distribute products within a precise geographic area. This Sales Area is defined by specific streets, highways, or various political or natural boundaries, as detailed in Schedule A of the agreement. The company determines these boundaries based on factors like anticipated sales volume, the distance between Outlets, and the franchisee's ability to provide timely and efficient services to achieve adequate market penetration. For a Sales Growth Agreement, the franchisee's distribution rights are limited to specific Outlets, which are identified by their precise names and addresses in the agreement's Schedule A. In both cases, the franchisee's rights apply only to the specific products and brands designated in their individual agreement, not all brands listed by Bimbo Foods Bakeries Distribution, LLC.
Staffing Notes
Bimbo Foods Bakeries Distribution, LLC allows its franchisees to decide on their own staffing needs. Franchisees have complete control over hiring employees or independent contractors, setting their compensation, managing them, and handling disciplinary actions. However, all individuals hired by the franchisee must fully comply with the franchise agreement terms, and the franchisee is responsible for any breaches committed by their staff. Franchisees are also required to ensure their employees adhere to non-discrimination, anti-harassment, and anti-retaliation policies.