Where it is rare that a franchise owner sells out of their business

You can't buy an existing Bedshed store - because it seems nobody ever wants to sell one. 

Gavin Culmsee is GM of Bedshed, one of Australia’s largest bedding retailers, but he sees the company’s greatest achievement as the strategic involvement and long-term commitment of its franchise partners.

Bedshed is one of biggest bed and mattress retailing operations in Australia, with nearly 40 stores. They’re also one of the longest-running business unit franchises, with the company beginning trading in 1980 and franchising in 1982. Initially focused in the Perth metropolitan area, Bedshed now has a substantial east coast presence in Brisbane and Melbourne.

Gavin Culmsee Bedshed On Franchise Buyer

The brand evolution

General Manager Gavin Culmsee joined the company in 2008. He says the company has seen a lot of changes, both in terms of bedding retail and in the evolution of its business model. “The past 20 years is probably the most relevant in terms of our evolution,” he says. “In 2000, we started our expansion into the east coast and then in 2004, the business began evolving its own furniture import program.” 

In the mid 2000s, Australian bedding manufacturers had begun to feel the strain of lower-cost import options and bedroom furniture manufacturing was waning. So Bedshed decided to source its furniture supply chain overseas. 

“That’s still one of the things that differentiates us,” says Gavin. “Our franchisees order stock from factories overseas. That container of stock then arrives at their warehouse, so there’s no one else ‘clipping the ticket’ on the way through. We get the product without having to use local wholesalers. This obviously improves the margin our owners can achieve.”

It also gives the customer a significant advantage because they’re buying at a better price and the product is also generally available in the franchisee’s warehouse. “The franchisee has got stock, so rather than you waiting eight to 12 weeks for your bedroom suite, our franchise partners can deliver it in a few days.”

Franchise owners advise the company

The franchise has established a Merchandise Advisory Council (MAC) of elected franchisee representatives who are involved in most decisions concerning furniture selection and business strategy. These representatives also go on overseas buying trips in March and September each year.

“It’s not a token, it’s how we operate the business,” says Gavin. 

“The franchise owners are tremendously involved in the selection and design of the product. We’ll have a fairly robust discussion about the strategy and then decide on, say, the maximum number of bedroom suites we can have. We have to deal with different demographics because our stores in different areas might have a different customer base, different buying habits. As long as everyone is clear on the strategy, that makes the decision-making a lot simpler.”

That franchisee involvement is an all-round winner according to Gavin, even if things go wrong. “We select product together, everyone orders it and it lands. Occasionally, we might select a product consumers don’t want to buy, but we all own that decision.

There’s no blame as we’ve all had our say — we just get on with getting rid of it. It’s exciting. We know we’ve nailed it in terms of sampling when the guys walk into a showroom and their faces are filled with smiles. And the hardest decision is what’s coming out of the range to fit these products in. 

There’s a really strong level of alignment behind that. People know what the strategy is because they’ve been a part of developing it. And they are a part of executing the strategy. In the store it all comes together.” 

Bedshed And Franchise Buyer O S Buying Tour

Networking on overseas buying trips

The networking side of these overseas buying trips is also beneficial in that there’s a lot of interaction between franchisees, a lot of idea sharing. “We sit down for a drink of an evening after we’ve been out to factories and everyone’s talking about how they’re running their business,” says Gavin. 

“All those ideas get shared and when they get home they have no problem getting on the phone to pick someone’s brains about their delivery service, or how they train their people in-store.”

While not denying there is still a competitive aspect to relationships between Bedshed franchisees, Gavin emphasises that the most important asset any franchise partner brings to the table is sharing the company’s values. 

“They’re still selling product and all want to be the biggest and the best — there’s no harm in that,” he laughs. “We have a list of values we put together with our franchisees and at our national members’ meeting, we have a ‘Living the Bedshed Values’ award. 

A couple of years ago, the winner was one of our Melbourne franchisees. We were opening a new store in Canberra and she and her husband, in their own time and at their own expense, drove to Canberra to spend a week with the new franchisee to make sure they were settled in and show them the ropes. That’s living the Bedshed values.”

Bedshed Overseas Buying Tour On Franchise Buyer

"Our process is not about, ‘you’ve got enough money, you’re in’"

Gavin adds that the selection process for new franchisees puts a strong emphasis on company values. 

“Generally our franchisees are not entry-level,” he says. “We’ve got a tremendously strong culture with a great group of franchisees and we won’t put that in jeopardy. Our process is not about, ‘you’ve got enough money, you’re in’. 

We’re looking for someone with our values who will add to our culture, not detract from it. Growth is not the most important thing in our lives in this business. The culture of the business and the alignment we have is what drives our performance.”

Longevity is another hallmark of Bedshed franchisees, to the point where some stores are run by family dynasties. 

“I’ve got one couple who started in 1986 and their son has now got a franchise,” says Gavin. “Another family has three brothers who have two stores between them — their father started those stores back in 1984. They don’t come onto the market too often. We’ve got guys who’ve been with us for quite some time. There’s a lot of good will attributed to trading out of one location for that period of time.”

Bedshed Store On Franchise Buyer

The only way to get a Bedshed store

Bedshed has long had a reputation for being one of the best in the business when it comes to engaging with its franchise partners. So much so, that there are virtually no established Bedshed franchises on the market. 

The industry exit average is one in five. Bedshed bucks the trend. Gavin says that at the moment, the only way to get into a Bedshed franchise is to buy a greenfield (new) store and set it up yourself. 

“With most franchise networks, generally there is 10–15 per cent of the network on the market at any one time,” he says. “That’s just not an option at Bedshed. I currently haven’t got anyone with a business on the market. Our guys generally enjoy the business and it gives them results that make it worth coming to work and owning the business.”

The consumer experience

Bedshed’s success at a consumer level has a lot to do with the research it has put into its fit-outs, shopping experience, comprehensive staff training and the direct importing that ensures it can offer immediate delivery. However, it’s on a personal level with the calibre of its franchisees that Bedshed really comes into its own. 

“We operate the business in terms of our inclusiveness, our approachability and our intention to seek feedback from people who are working on the shop floor to understand exactly what we can to do to make everyone benefit,” says Gavin.

One example of this is a new point-of-sale (POS) system, which allows franchisees far more access to information in real time. 

“They can see exactly what they’re selling, what they need to order and how their people are performing — all at their fingertips. That’s about adding value.”

Bedshed Store Floor On Franchise Buyer

The shift to e-Commerce

As part of rolling out the POS system, Bedshed is setting up an e-commerce business, solely for the benefit of its franchisees. “It gives our franchisees the opportunity to sell direct from their warehouses to their consumer,” says Gavin. “Those transactions will take place within the franchisee’s POS system, direct from the customer and fulfilled by their own warehouse. We will make our money from our franchisees’ turnover as we usually do, but our franchisees will get the entire benefit of everything we sell online.” 

Gavin maintains it all ties in with the Bedshed values system. “It’s about us wanting to add value and wanting to be successful together. That’s clarity and being genuinely transparent — not just giving lip service.” 

Going forward, he notes rapid expansion is not on the agenda. “We’re not looking to open 20 stores in 12 months,” he says. “We want to continue to grow and add value by having the right people in our network, which will allow us to continue to grow and expand our supply chain. An important focus is conquering Sydney. That’s a whole market we’re not getting a share of, so there is a massive opportunity for people wanting to join us in Sydney at the moment.”

Gavin’s insights into running a franchise group are fairly straightforward — it’s all about values. 

“I approach this business as a values-based business. We’re trying to add value to our people, but we also have a list of values which we all agree to live and use to guide our behaviour. 

We want to be successful together. You hear about people selling cartons of water to their franchisees that they could buy at Coles for half the price. We’re not interested in being part of that. We don’t break our transparency. We honestly believe the stronger our brand, the stronger our culture equals better performance. That’s our success.”

Find out more about Gavin or Bedshed HERE

Bedshed Team Member On Franchise Buyer