Paul Spain:
I’m Paul Spain, futurist and chief executive at Gorilla Technology. I love seeing individuals and their organisations thrive. The New Zealand Business Podcast is helping you learn from our most tenacious and effective leaders. Today I’m joined by Dawn Engelbrecht, chief executive of Kitchen Studio and a successful innovator and growth focused leader in business franchising and governance. Dawn has built an impressive career across retail, education and services with deep experience scaling organizations and leading franchise networks, including sKids. From a single franchise into New Zealand’s largest before and after school care provider, growing it into an international business operating across multiple countries. In 2023, what was meant to be a temporary role turned into a new chapter with dawn stepping in to lead Kitchen Studio.

Paul Spain:
The New Zealand Business Podcast is brought to you by One New Zealand and Gorilla Technology. And before we jump in, if you work in a mid size or smaller firm, I have a quick question. How confident are you that your organization is appropriately leveraging AI and other technology and that your house is in order from a cybersecurity perspective? If you’re not fully confident, get in touch with Gorilla Technology for an advisory session.

Paul Spain:
How are you today, Dawn?

Dawn Engelbrecht:
Yeah, great Paul, thanks. Yourself?

Paul Spain:
Good. Well, thank you for coming into the studio. Now I always like to start at the beginning and to hear a bit of the backstory. So tell us a little bit about your upbringing and where you were born.

Dawn Engelbrecht:
Yeah, so I grew up in a little coal mining village in the UK called Kirkby in Ashfield. It means church in a field. And my dad worked down the mine since he was 14 and over the years he trained up and upskilled to becoming a draftsman. But essentially the other thing he did was he ran the local coal miners welfare which was basically a pub. And yeah, so I grew up between a mom who was a stay at home mom and A dad who worked extraordinarily hard.

Paul Spain:
Quite a fascinating upbringing, I imagine.

Dawn Engelbrecht:
Yeah, I’m pretty good at dance and pool.

Paul Spain:
Good. And what are the things that stand out of, you know, that period in your life now when you look back and can you see sort of certain areas that are very much, you know, connected to that period?

Dawn Engelbrecht:
Yeah, possibly. I left home when I was 18. I literally finished my A levels, and two days later I was on a flight out to South Africa because my childhood sweetheart, we’d been dating throughout the last couple of years of high school, had got a job in Johannesburg. So I went off to see him, and two days before I was supposed to fly home to go to uni, I phoned my mom and said, don’t go to the airport. I’m not coming back. I have told my children that repeatedly to ensure that none of them did that to me.

Paul Spain:
How did it go down?

Dawn Engelbrecht:
I think she saw it coming, to be fair. I think she was hoping the lure of uni would bring me back. But, no, the fun was stronger. But I think context behind that as well, in my later teenage years was when there was the massive coal miner strike in the UK, 1984. And, yeah, that was a really tough time in the uk. It wasn’t fun. My dad ended up out of work because the. His.

Dawn Engelbrecht:
The way he worked closed down, never reopened. So it really affected our local economy badly. And I think that probably instilled in me a little bit of that, you know, make sure you can always look after yourself. Don’t always, you know, don’t be reliant on somebody else. So, yeah, it probably stemmed from there.

Paul Spain:
Yeah. And so what did South Africa look like for you?

Dawn Engelbrecht:
Gosh. So when I first got there, obviously I was with this chap that I thought I was in love with. Pretty soon realized that. Nah, not really, as you often do at that age. But by that time, I’d fallen in love with Africa. It was a really fun time. There was a lot of expats mulling around Johannesburg at the time. And I moved into what was known as a commune, which, you know, conjures up different pictures for different people, but essentially it was a shared house, and it was a bunch of Zimbabweans that were living there, and that’s where I met my husband.

Dawn Engelbrecht:
Yeah. So we spent a couple of years living not in that commune, but in another one until we got married. And.

Paul Spain:
Yeah, yeah, yeah.

Dawn Engelbrecht:
But it was a fun place to be.

Paul Spain:
Wow, that sounds fascinating. And I mean, sometimes these. These sorts of things actually, you know, play quite A big part into the next phase of. Phase of life. How was that connected up? Obviously, you know, finding your husband there is.

Dawn Engelbrecht:
That was quite a big step. Yeah, yeah, yeah. Look, I mean, we, we’re still really good friends with everybody, you know, that we played with, lived with, associated with there. But also that’s where I. So I had a job at a TV repair company pretty soon. That was hilarious, actually, because my boss was Scottish. And the one day he sat me down and he said, dawn, you either lose the accent or you’re gonna lose your job. And I remember looking at him going, really? That sounds a bit odd because I had a very midlands England accent anyway.

Paul Spain:
And what was his accent like?

Dawn Engelbrecht:
It was very broad. Very broad, Yes. I thought a little bit cheeky. But anyway, his business, his call. So I had to really force myself to drop my accent, which is why I’ve probably still got quite a good South African twang, because you pick something else up along the way. But, you know, I really quickly realized that I didn’t want to spend my life working at a TV repair company. And so I studied for my Bachelor of Commerce through what’s unisa, which is a correspondence university. And it took me six years.

Dawn Engelbrecht:
And along the way I had three kids and got there in the end.

Paul Spain:
Fantastic. That’s great. And when you had completed that time, what was next?

Dawn Engelbrecht:
Yeah, so I set up my own little accounting and bookkeeping company. And as luck would have it, I ended up picking up a couple of franchised restaurants as clients. And that was probably been my first exposure to franchising. And I remember at the time thinking, gosh, this is a jolly clever idea. You know, everybody does the same thing as a customer, you know what you’re going to get as the owner, you know, what you’re expected to do. Yeah, so that’s probably where I got my first taste in franchising. But yeah, I spent until we left. That’s what I was doing.

Paul Spain:
Right. And those franchises that you came across, were they part of international networks, local?

Dawn Engelbrecht:
No, it was, it was very much a South African based franchise network. So.

Paul Spain:
Yeah, yeah. And anything that really sort of sticks with you in terms of the, the, the, you know, the learnings during that, that period.

Dawn Engelbrecht:
Yeah, yeah. So I’m going to age myself now, but at the time. So I, I used to go into each of the restaurants once a month, pick up all the till receipts, take them home, chuck them into a wonderful spreadsheet that I developed. And I was able then to report back to the franchisee and say, here’s your GP percentage. Here’s this. This is working well. This is not working well. So it really gave me a good ability to learn how to benchmark.

Dawn Engelbrecht:
You know, you learn these theories at uni, but it was a very practical benchmarking process. And a funny story from that time was I had a couple of these. They were cag Ann. So it was CAG and barrel CAG and dog CAG and what? And I was doing the accounts for a couple of them, and the head office phoned me the one day and said, oh, we’ve heard about you. And one of our franchises is really struggling with their gps. Can you go help them? Sure. They were local. So off I trotted, met the franchisee, started doing the work.

Dawn Engelbrecht:
And I think it was either my second or third visit where I was reporting back. And as I’m walking through the pub, through the restaurant, to the back rooms, had to walk past the kitchen, and there’s this almighty ruckus happening in the kitchen, and the doors are swinging and it’s like, okay, not sure what’s going on here. Turns out it was the head chef, and he’d seen me coming through. He knew what my job was, was to look at the benchmarking. Unbeknownst to everybody, he’d been selling chickens out the back door. And this is why the GPS were out. And he was legging it. All you saw was this chap on his apron strings legging it down the road.

Dawn Engelbrecht:
Cause he thought I’d caught him out. I hadn’t. But, yeah, there you go.

Paul Spain:
Wow. And so how did that end up getting revealed?

Dawn Engelbrecht:
Oh, yeah. Yeah. So he obviously gave the game away. And so that forced us to go. Hang on a minute. And the reality is, though, it must have been my second visit there, I didn’t actually have enough Dieter to go. And it’s this line item. You know, I was starting to build up a picture, was like, okay, this is where it’s going out of whack.

Dawn Engelbrecht:
But I hadn’t quite got to that detail. So he saved me a lot of work.

Paul Spain:
Yeah, the guilt caught up with it.

Dawn Engelbrecht:
Yeah, yeah. It was very funny.

Paul Spain:
Yeah, yeah. And I’m curious how you went out to, you know, build clients, because that’s, you know, starting a small business is actually. It’s not easy. There’s so many different hats that you. That you have to wear. You would have been across the accounting side for yourself.

Dawn Engelbrecht:
Exactly, exactly.

Paul Spain:
And then all these other hats, marketing,

Dawn Engelbrecht:
all of this nonsense. Yeah, it was. A lot of my business was referral based. So I started off with a lady who imported dresses from France and sold them.

Paul Spain:
How did you get that? How did you get a first coin?

Dawn Engelbrecht:
How did I get her? A friend of a friend. Yeah, yeah, it was. It was a friend of a friend who’s like, oh, hang on a minute. Dawn’s starting to do that sort of thing. You should have a chat. Yeah. And that was quite handy, actually, because every now and then she couldn’t pay me, so I got some lovely dresses out of it.

Paul Spain:
There’s a good arrangement.

Dawn Engelbrecht:
Yeah, yeah. And then from her, she referred me to a gentleman who imported leather bags and wallets and that sort of thing, and. Yeah, and it just grew from there. And then somewhere along the line, I got my first referral to one of these kegs restaurants. Yep.

Paul Spain:
Yeah. Oh, fantastic. Right. So it very much grew by word of mouth, as commonly does with small business when you do a great job. Yeah, yeah, yeah. What happened from there? Because you didn’t stay in South Africa forever, obviously.

Dawn Engelbrecht:
No, no, we didn’t. By late 1999, early 2000, crime and violence had increased quite dramatically, particularly in Johannesburg. And I distinctly remember a convers my husband and I had about, you know, it was no longer going to be a matter of if one of us got attacked or hijacked, but when there’d been a massive spate of them, particularly in our area. And I won’t bore you with some of the horror stories, but there were some horror stories. And we ended up having to sit our daughter down, who was, gosh, she would have been eight or nine at the time, and just say, right, Emma, if mommy pulls up at the gate and if there’s a man with a gun, Mommy’s gonna ask him if you can take your brother and your sister. And you have to promise mommy that you’ll just walk down the street and not look back, knowing full well that mommy’s probably gonna get shot so they can get the car. That was a horrendous conversation to have with an 8, 9 year old. Yeah.

Dawn Engelbrecht:
And we sat that evening and went, I cannot believe that we’ve just had that conversation. That’s ridiculous. And that’s what started our journey. You know, we wanted a better, safer life for our kids. That was the top and bottom of it. And we knew we’d have to start again. You know, we knew it would be tough. Our house was fully paid, our cars were fully paid.

Dawn Engelbrecht:
We had no debt. You know, we were in a very comfortable position in Johannesburg, but it wasn’t safe. Yeah.

Paul Spain:
So how hard was it to make that, make that move and make that transition in terms of selling things up and starting a whole new life?

Dawn Engelbrecht:
It was a very challenging time. We were very fortunate. We sold our house very quickly, sold the cars very quickly. So I think from making that decision, I came over and did what we used to call the LSD trip. Look, see and decide.

Paul Spain:
Yes.

Dawn Engelbrecht:
And I stayed at a lovely bed and breakfast in Parnell and spent a couple of days, well, probably about a week and a half, just traveling around Auckland, visiting some employment agencies, looking at houses. And I went home and I said to Peter, yep, yep, we can live there, that’ll be good. Yep. And that started our immigration process.

Paul Spain:
And how did it, how did it go down for your daughter?

Dawn Engelbrecht:
Fortunately, she was at an age where, yes, she had friends at school, but she wasn’t a teenager, you know, so there wasn’t those deep, meaningful relationships that you have to deal with when your kids are teenagers. So, yeah, the kids were actually fine. We made it a big adventure. We bought them all an army, like an army storage box, you know, the kit box that you have at the end of your bed. In the army, they all got one of those. Each painted their name on the top and they were allowed to put whatever they wanted into that. That was their treasure chest to bring to Auckland. So we brought McDonald’s toys all the way from Johannesbur.

Dawn Engelbrecht:
It was, yep, good investment, but it was theirs, it was precious. And they’ve actually still each got their boxes today and they use them to store probably McDonald’s toys for their own kids. Now I would suggest immigration took a while. There was a lot of work you had to do, and rightfully so. You know, I mean, New Zealand does get to choose who comes in. I was the main applicant, Peter was the secondary applicant. And yeah, we got it reasonably easily. You know, we were young enough, educated enough, all of those good things.

Dawn Engelbrecht:
The next challenge came, so we booked our flights, everything was sold. And then South Africa had restrictions on how much money you could take out the country, which was interesting because that

Paul Spain:
sounds like a challenge. It was a challenge, correct?

Dawn Engelbrecht:
Yeah, so we just cashed everything up. So we were allowed US$5,000 per person per year. That’s all you were allowed to take out. So we cashed all of that up. Fortunately, we could do 5,000 for each of the kids. So my 4 year old son had his allocation. We put it all in bum bags. Myself and Peter had a serious chunk of change wrapped around our bodies while we traveled and we put the rest onto our credit card and that’s how we got our money out.

Dawn Engelbrecht:
It sounds awful, but that’s what you had to do. And yeah, we got to New Zealand and we rented a house in what sounded like a really gorgeous place. Otara. And we then discovered that there was a thing called a tinny house. And yeah, we had quite an adventure that first year with interesting neighbors. But yeah, that’s how we got started.

Paul Spain:
Yep, yep. Well, you’ve got to start somewhere, don’t you? You figure these things out.

Dawn Engelbrecht:
Yeah, you do, you figure these things out as you along.

Paul Spain:
Yeah, yeah. So what did, what did that first, that first period, that first year look like in terms of, you know, getting established and getting the family set up and getting into work at some point?

Dawn Engelbrecht:
Yeah, yeah. So the silly thing was that we’d thought about everything except who was going to look after our children when school was closed because it hadn’t been an issue in South Africa. And so we enrolled our children at the local primary school and they had an after school care there, which was great. Perfect solution. There were six children attending and three of them were mine. So being the stroppy person that I can be sometimes, I said to the lady that owned it, I said, listen here, I’m giving you half your profits, you need to sell this to me. And she did. And that was my very first Skids franchise.

Dawn Engelbrecht:
And I’m sad to say, as a qualified accountant, that was the sum total of my due diligence. The numbers just made more sense if it was mine. Very quickly discovered it was a great concept, very poorly run, so spent a few years working with the original franchisor trying to, you know, lift up standards, create some standards, processes, policies, all of those normal things. And then it got to a point where myself and one of the other franchisees, we just said, enough, enough’s enough. We can’t keep doing this. We’re paying somebody else to do. They’re making money out of us and we’re doing all the work sort of thing. And so myself and Bev, who is my business partner, she was one of the other franchisees.

Dawn Engelbrecht:
We got together, got some legal advice, and shortly thereafter we suddenly found ourselves as franchisors, which was really, really interesting.

Paul Spain:
So you, you’ve got to go in to tell us a little bit about that behind the scenes there, the legal advice and how that all came about.

Dawn Engelbrecht:
Yeah, so at the time there was 12 franchisees in the group and we’d only ever met about four of them. So the original franchise all deliberately kept us Apart. And. Yeah, and I think it was because she knew that if we got our heads together, then she’d be in trouble. So myself and Bev contacted all of the franchisees and said, look, hey, this is what’s happened, this is what we’re doing. And we spent the first 12 months basically just reassuring everybody that it wasn’t going to be more of the same. We genuinely wanted to make things better. We genuinely wanted to, you know, to improve the system for everybody.

Dawn Engelbrecht:
And, yeah, it worked, you know, so

Paul Spain:
was the situation that the franchisor wasn’t meeting their legal commitments in terms of operations?

Dawn Engelbrecht:
Yeah, yeah, yeah. So, I mean, as I say, literally there was no policies, no procedures, no guidelines, no website for a long while. Yeah, you name it, it didn’t exist.

Paul Spain:
And so did you, you know, buy. Buy it out, did you?

Dawn Engelbrecht:
There was a token payment.

Paul Spain:
Yeah, yeah, okay.

Dawn Engelbrecht:
Yeah. And I was in Israel when it all came together on a school trip with my husband. My husband was a secondary school teacher. So Bev went with a solicitor to the franchisor’s home to collect, you know, the stuff.

Paul Spain:
Yeah.

Dawn Engelbrecht:
And it all fitted into an A4 paper box.

Paul Spain:
Oh, wow.

Dawn Engelbrecht:
Yep.

Paul Spain:
So that. That was. That was the entirety of the business.

Dawn Engelbrecht:
Wow. Y. Yeah. And it wasn’t full.

Paul Spain:
And that wasn’t because it was on a hard drive or anything.

Dawn Engelbrecht:
No, no, no, that was hard copies.

Paul Spain:
That was it.

Dawn Engelbrecht:
Yeah, yeah, yeah. So we had a very clean base to start with and, yeah, we were fortunate that the other franchisees, they were just happy that somebody was actually finally, you know, taking control. So, yeah, we had a lot of fun. I ended up carrying on working. So I was the business manager at the local secondary college. Clearly there was no money to pay wages, so I did that in the daytime and at night was working on, you know, putting all of this stuff in place that we so badly needed. So I think it was probably close to four years in before I finally took the plunge and stepped into it on a full time basis.

Paul Spain:
Oh, wow. So that’s a good chunk of time

Dawn Engelbrecht:
to be burning the candle at both ends. Absolutely, yeah.

Paul Spain:
And over that period, what would you say are the things that, you know, those key founding achievements, really? Because you’re really starting it from scratch.

Dawn Engelbrecht:
Other than the fact that we had a few people with our badge on. Yeah, exactly. I think one of the big things for us was we entered the franchise. So we started attending Franchise association events and we became members of the Franchise Association. I reckon that was probably one of the. The best decisions we ever made. Franchising community in New Zealand is phenomenal. They are so supportive, so welcoming, they advocate for franchising.

Dawn Engelbrecht:
And, yeah, we were welcomed with open arms and that was. That was awesome. It really helped us learn how to be franchisors because we knew what hadn’t been there. But, you know, what else were we not doing? So that helped us learn from others how to be good franchisors. And along the way, somebody said to us, oh, you girls have done a fabulous job with this business. You should enter the awards. I’m like, us, me. What? And so we did and we won and it was just incredible.

Dawn Engelbrecht:
We won our section. And honestly, I think, yeah, it’s a highlight.

Paul Spain:
So up until the time of winning that award, you maybe just didn’t recognise how well that you were doing.

Dawn Engelbrecht:
Totally.

Paul Spain:
Did that change your mindset at that point?

Dawn Engelbrecht:
It did, it did. But, you know, sometimes you’re so busy doing, you know, and I’m sure every business owner, every founder, every entrepreneur will get that. You’re so busy in the weeds that you don’t have time to look up. You know, we all know the theory, we all know that, you know, you should work on your business, not in it. But when you’re in that incredible growth phase that we were in, you know, it’s hard. It’s hard to step back. So I think taking the time to enter the awards was the first time that we’d actually stopped and gone, holy shmoly, look at what we’ve done. You know, we’re actually quite good at this.

Dawn Engelbrecht:
And, yeah, and it was just amazing.

Paul Spain:
Recognition, fantastic. So walk us through, if you can, a little bit of what that growth journey looked like.

Dawn Engelbrecht:
At one point, we were growing something like 30% year on year. I think we did that for about 10 years. It was crazy. And speed wobbles along the way were huge because you. And I think one of the first learnings was, it’s easy to look back now, but we didn’t know what our ideal customer looked like. So our model was that we were based on site at the local primary school and we rented space from the school and it made it really safe for the kids. They walk out of the classroom into the school hall or whatever it is we were renting. And so off we went and we were signing up all these schools left, right and centre.

Dawn Engelbrecht:
And I remember saying to somebody, you know, we wanted her to be like the Hoover, you know, for out of school care. You know, instead of people don’t us go and buy a vacuum cleaner, they go buy a Hoover. That’s what we wanted people to say. Have you got a skids program, not an after school program? Yes, and I’ve got firmly believe we achieved that for a long time. But what we didn’t understand because the data just wasn’t available, we were collecting this information as we went along was that roughly 10% of the school population attends after school care on any given day. Broadly speaking, we didn’t know that. So we didn’t know that some of these smaller schools that we were helping were never actually going to be financially viable. And that’s okay if it’s a strategic decision and you can afford to have, let’s say 2% of your cohort as basically charity cases.

Dawn Engelbrecht:
And I don’t mean that in that way, but we didn’t have that data. We were learning it as we went along.

Paul Spain:
Right, that was interesting. So there was a fair few, fair few learning curves, bits of pain from those ones. So what did you do in that case? If you’ve got, you know, pay somebody to, you know, look after these kids after school and the actual return isn’t enough to cover your costs, or was that more on, I guess on the side of a franchisee who had signed up for that and then they were very, no doubt disappointed.

Dawn Engelbrecht:
So we generally, we would run the site first before we would sell it to a franchisee. So generally we would know if it was gonna be viable or at least we were never doing that. We did have to make some tough calls and we probably took, in the beginning, probably took too long to make them because it’s a very personal service. You’re looking after somebody’s child, you know that by doing that you’re enabling somebody to stay in work or in full time study. So to take that away, you know, you’re creating a problem for somebody. So we would try and merge a couple of locations together if geographically, if that made sense, if one had the biggest haul, put on, you know, transport from one to the other. But there were some that, that had to go, unfortunately.

Paul Spain:
So what, what was your approach with, with dealing with that? How did you, how did you, you know, break that news to.

Dawn Engelbrecht:
Yeah, so we always had to go to the school first because that was our contractual relationship. And some of the schools were amazing. They, they went, okay, well don’t pay rent, then it’s fine if that helps, if that’s going to keep it going. Just don’t bother about rent. But if they didn’t make that call, then they were normally supportive. You know, schools are businesses, principals are they’re not silly. And, you know, as long as you present the facts and you can show them what you’ve done and how you’ve tried to make it work, I don’t think anybody lost it with us. And then with the parents, you know, we just have to tell them, you know.

Paul Spain:
Yeah, yeah. That’s interesting about the schools because I think, you know, I don’t know what it was like for you, but I can imagine there would have been a bit of fear of, you know, how’s this gonna play out? And, you know, depending on what agreements you had in place with them, you know, potentially they could have come out and said, yeah, do what you like, but you owe us the next six months worth of, worth of rent and so on. But sometimes you don’t get the positive response because you don’t bother asking.

Dawn Engelbrecht:
Yeah. So look, as I say, they were all very supportive and they could see that we tried what we could do.

Paul Spain:
And walk us through the journey in terms of how you worked to grow up, to grow your base of franchisees. What did that look like?

Dawn Engelbrecht:
Obviously, lots of marketing and recruitment. A lady called Chris joined us in a business development role. She was Bev’s sister in law, so that helped and she was fabulous. So Chris would do all of the recruitment, you know, she would walk the prospects through, you know, what, what we were offering. We would always, always take a prospect to one of our bigger sites and get them to spend a few hours there. Because my philosophy was, I can teach you how to run a business, I can’t teach you how to like children.

Paul Spain:
Yeah.

Dawn Engelbrecht:
So, you know, you could pick up really quickly, you know, with. Cause everybody will tell you that they’re in it for the kids. Put them with 60 or 80 of somebody else’s children and you go, maybe I’m not in it for the kids. Yeah. So that was always a good filter. But Chris was really good at, you know, working out who was going to be a good fit for us across the network. Yeah. So off we went and, you know,

Paul Spain:
how much did you have to, you know, really sell them? And, you know, what did it look like when you thought somebody didn’t or wasn’t going to fit? How did you address that if, for instance, they were keen to sign up, you know, anyway and come on board as a franchisee?

Dawn Engelbrecht:
Yeah, yeah. So we never talked about selling franchises. We grant franchises. So that decision was ours, not the buyer’s.

Paul Spain:
Great.

Dawn Engelbrecht:
Yeah. So. And we were always very upfront, you know, that it was important for us to make sure that we were going to take on people who were going to be successful. You can’t always get it right, you know, I mean, sadly, you know, there was one or two that it didn’t work for, no matter what we did. And generally, to be fair, was probably some of the earlier franchisees, if I’m honest. But we were very clear right from the beginning that that final decision was always ours, not theirs. Yeah. And not everybody liked that, but that’s okay.

Paul Spain:
Were you also finding franchisees coming through, folks that maybe would work for you if you have a location that would

Dawn Engelbrecht:
come through naturally that way we allowed our franchisees to be multi site owners. They could have up to three. So that helped with some of the initial growth. Also what we found was a lot of our franchisees were actually referrals from our existing franchisees. So they were already sold. We didn’t have to sell because they knew Susie or Fred was running a business. They were having a blast, you know, making a nice income out of it. Nobody’s ever going to get rich out of childcare.

Dawn Engelbrecht:
I don’t care what you know, you’re not doing it well if you’ve got to invest money into the systems, the processes, the resources for the kids, but you can make a reasonable living out of it. And we were always transparent about that as well. Yeah.

Paul Spain:
And how was it structured in terms of, you know, fee structures and so on? And was that something you got any pushback on or.

Dawn Engelbrecht:
No, absolutely not. So it was just a percentage of their income. Very typical franchising. And we didn’t have a marketing levy. That’s probably something I should have done. But we didn’t, so so be it. But yeah, so it was just a percentage of the, the income that they received and that’s, that’s what they paid. So made it fair across the group.

Dawn Engelbrecht:
Didn’t matter if you were the biggest or the smallest. Percentage wise, it was always the same. It also meant that when Covid hit, nobody was paying fees. Good for them. Not that good for us.

Paul Spain:
No. So how did that ultimately play out then?

Dawn Engelbrecht:
We had resources that we could call on, so we were fine. We didn’t let anybody go. Everybody took the 20% drop and we rode it out and we made sure all of our franchisees could do the same thing. And yeah, I’m not saying it was fun, but we rode it out.

Paul Spain:
Yeah, well done. And then what, you know, what ultimately, you know, happened with skids? There was a sale.

Dawn Engelbrecht:
Yeah, there was a sale. Yeah. So we’d had by this time we’re talking 20 odd years later. We’d grown it. So we had grown to 58 franchisees and 183 locations across the country. Wow. I know, I know.

Paul Spain:
So most of them were taking up, up the opportunity to have multiple franchises.

Dawn Engelbrecht:
Yeah, yeah, yeah. So we had incredible growth. We really did. So, yeah, that was a lot of sites across the country. But at some point, I’m trying to remember what year it was. It was about 2016, I think. I started on the international development of the business. So one of my goals had always been world domination in childcare.

Dawn Engelbrecht:
That was up on my wall.

Paul Spain:
Fantastic.

Dawn Engelbrecht:
Yeah, you got to put something out there to make it happen. And so obviously first step was Australia. So we set up in Australia, then we went to England, Ireland, Canada and South Africa. We did try Singapore, but it was just too hard. Their regulations were just really challenging. But yeah, so we, yeah, we set up in all of those countries.

Paul Spain:
And what did you find? What were the differences compared to operating in New Zealand and how, how easy was it to transfer and how much did you really need to, you know, reshape and look at local regulations, local approaches and so on to actually be able to make it work in different countries?

Dawn Engelbrecht:
I think going to Australia first set us up really well because they are really good at creating red tape.

Paul Spain:
So it’s not something to be too proud of.

Dawn Engelbrecht:
No, it’s not. Yeah. So they’ve got probably the toughest franchise regulations in the world. So I was fortunate. We had really good legal advice that helped us with the franchise paperwork. And then as far as the localization of what we did, essentially what we did was we appointed what’s called a countrymeister franchisee, so somebody who’s responsible for that country. And we worked with them collaboratively to adapt our resources to suit the local environment.

Paul Spain:
Right, and how did you find, you know, that person or that entity to do that for? Well, let’s start with Australia.

Dawn Engelbrecht:
I met her at a trade show. Okay, yeah, yeah, yeah. So it was a New Zealand trade show. She was over from Australia doing something else. We got chatting and then she’s like, I really need to do this. So, yeah, that’s how that one got started. And that went really well. And then the next one was.

Dawn Engelbrecht:
Where was the next one? England. That was from some very simple marketing in a magazine. And the gentleman there, this is in

Paul Spain:
a franchise sort of magazine?

Dawn Engelbrecht:
Yeah, yeah, Franchising magazine. He liked what he saw. He came over to New Zealand, spent a couple of weeks with us here, went over to Australia to have A look at what we were doing there and went, yep, I’m in. So that was the next one. South Africa was very similar. The lady there had just done her MBA and she’d done. Gosh, she’d done a thesis on basically what was next in education and childcare. And that’s how she found us and went, oh, we don’t have this in South Africa, not in a formalised basis.

Dawn Engelbrecht:
So Genevieve was the next cab off the rank. Fabulous lady. Really, really smart cookie. Very, very clever lady. And then Ireland was the next cab off the rank, John. Yeah. And then Canada. Yeah.

Paul Spain:
And was there in each of those markets, were they similar to South Africa, where there wasn’t something similar? Or were you going up against some existing things?

Dawn Engelbrecht:
Yeah, England. Franchising in England’s very simple. I could literally meet you in a cafe and sign you up. There’s. It’s very poor and that’s why you end up with cowboys sometimes in that environment. But their regulations were quite tough. Although at the time, New Zealand had a ratio of one staff member to every 10 children, with a minimum of two staff on duty at any given time. It’s quite a heavy wage bill, if you start thinking about it.

Dawn Engelbrecht:
England was one staff member for every 30 children.

Paul Spain:
Oh, wow, that’s night and day.

Dawn Engelbrecht:
And they could be sole charge.

Paul Spain:
Wow.

Dawn Engelbrecht:
Now you imagine that.

Paul Spain:
So that’s quite a different model from a.

Dawn Engelbrecht:
Absolutely. So we basically said, okay, well, we’ll follow your regulations for everything else except that. And we’re bringing our standard in as far as staffing ratios go. So that immediately set us apart from the competition. South Africa, it was very informal what was happening. So they do have franchising regulations, but nothing too onerous. And there was definitely no childcare regulations at the time. So we.

Dawn Engelbrecht:
They really enjoyed having something that they could, you know, follow and set a standard with. So that was good.

Paul Spain:
And did that impact. Did that have a. An impact down the. Down the track in terms of legislation sort of, you know, coming in that it influenced.

Dawn Engelbrecht:
It’s lifted standards and we lifted standards here. So, you know, when. When we built our processes and whatever, we actually looked around to see what was happening internationally. And, you know, typically what happens in New Zealand is whatever’s happening in Australia, it filters down here at some point in time. So we actually built everything we did on the Australian standards up front. So when we started, the only regulation that was in place was that you had to have one person with a first aid certificate on staff.

Paul Spain:
Oh, really?

Dawn Engelbrecht:
In New Zealand. So that was the regulation when we started, that has totally changed, I’m very happy to say. And yeah, it’s very much more regulated and it’s really good. Yeah.

Paul Spain:
And what was the opportunity in terms of the scale and the different markets? Where did you see the best or the biggest opportunities?

Dawn Engelbrecht:
Yeah, good question. I mean, Australia had a massive opportunity, but there were some big players. And what happened probably within a couple of years of us launching there was the private equity groups started buying up some of the bigger players which made it so much harder to compete because they’ve got very deep pockets, as we know. But we still did pretty well, I think at the time when we sold, we had about 40 locations that we were running there. England was a massive opportunity, really was. But unfortunately the manager that we put in place there wasn’t the best, but they were getting stuff done slowly but surely. But it tended to be very much around London and just greater London. It didn’t really get much further than that.

Paul Spain:
So you didn’t get the, didn’t get

Dawn Engelbrecht:
the growth that we needed there. And South Africa went off like great guns.

Paul Spain:
Now you mentioned some challenges with Singapore. You know, tell us about that in terms of, you know, how, you know, how far did you go and you know, how soon did you realise that was going to be a challenge?

Dawn Engelbrecht:
Yeah. So we appointed countrymeister franchisees. I spent two or three trips over to help them get going their regulations. So basically everything there was tender based and once you’d won the tender, it was yours for three years. So if you missed that opportunity, it was gonna be three years before you got another look in.

Paul Spain:
And that was what, on each, on a basis of each location?

Dawn Engelbrecht:
On every location, yeah, yeah. And when we engaged with that couple, the gentleman, the husband was supposed to be the driving force and he would have been fabulous and the wife was going to do the behind the scenes stuff. And then he got offered a couple very lucrative contract which he accepted, which was fine. I mean it’s his life, his choice. But that meant that his wife was supposed to now be the face of the business and clearly it wasn’t her skill set. So we gave it about probably about eight or nine months trying to help her upskill and she just hated it. And I get that, you know, if that’s not your thing, it’s very, very hard to get up and go and be the business development person when you actually like just doing admin. Yeah.

Paul Spain:
When you saw those, you know, things like that happen and it didn’t go the way you’re expecting, you know, how do you deal with that.

Dawn Engelbrecht:
Just honest conversation. Yeah, yeah, yeah, yeah. And fortunately, you know, when we did setting up new countries, yes, there was a fee for the license, but we staged it so there would be a fee that incorporated use of IP and training. Then the next one kicked in when they got their first location, and then there was like a, you know, staggered payment. So for. For that instance, they’d only paid for what they’d got. So, you know, it was no win, no foul.

Paul Spain:
Yeah, yeah. Fascinating journey. Then Covid came. Was that part of the. The trigger to.

Dawn Engelbrecht:
No. Well, fortunately, we’d sold just before that.

Paul Spain:
Okay, okay. Good timing.

Dawn Engelbrecht:
I know, I know. Timing, plumbing’s everything. So we sold in March 2019. At the time when the sale was signed, the plan was for me to do international business development. So to stay on and do that, we had a general manager in place for the New Zealand business, and obviously the country masters were looking after everything else. But then, of course, you know, early 2020 was when everything went pear shaped, and the general manager that we had in place in New Zealand, for various reasons, chose to step from the role. So the group that bought us asked me to step in as GM for a transition period, which I think worked really well for the franchisees through Covid. They had a familiar face, somebody they knew, they trusted, who I knew them, they knew me.

Dawn Engelbrecht:
And I think that ended up working out really, really well through that period. By the time we got through that period and got to the end of it, I had an honest conversation with the group CEO and I said, look, I know because we had recruited a new GM for New Zealand. And I just said, look, I know that technically you have an obligation to me to give me a job and to do this, but the reality was there was not going to be any international development for a number of years coming out of COVID So I said, I’m happy to walk. And I did.

Paul Spain:
Now let’s go back to selling the business, because this is something that is often easier, easier said than done. What was your approach to putting the business on the market?

Dawn Engelbrecht:
We didn’t. We never advertised it. So we’d had approaches over the years. And early on, you know, as we grew and grew and grew, it became very clear that there was not going to be anybody in New Zealand or very few people in New Zealand that would be in a position that could buy us, you know, so we knew that the approach would most likely come from Australia, somebody wanting to expand. And I got a random phone call the one day I was actually in Melbourne Visiting my daughter.

Paul Spain:
Okay.

Dawn Engelbrecht:
And I got a random phone call from this lovely Irish lady to say, oh, I represent this. This group and, you know, we’d like to chat to you about, you know, maybe buying your New Zealand business. Okay, that’s fine. So I happened to be in Melbourne. She was in Melbourne. Let’s get together for coffee. And I said, you do know that this other brand, because the international stuff was under a second brand. I said, you do know that I own Sherpa Kids as well as skids? And she went, oh, do you now? And yeah, we probably.

Dawn Engelbrecht:
And obviously, it wasn’t my decision solely, you know, we had Bev as a business partner in New Zealand, and by that time, Chris, our business manager, had also invested in the New Zealand business. So there was multiple people who had to go on the journey. But we realized that they’re called Junior Adventures Group. Their focus was on childcare, but specifically the out of school care sector. They understood our world. They knew that it’s not an environment where you can strip all the costs out just to make money. They were a really good fit for us. So we reached an agreement.

Paul Spain:
That’s fantastic. And, you know, being an accountant, I’m sure you would have, you know, had your head around how to do the valuation, but, you know, what can you share with us around valuing the business and, you know, coming to a number that you could agree on from both sides.

Dawn Engelbrecht:
So fortunately, because they understood our world, they’d already got multiples and factors that they were using. But what they didn’t understand fully was the franchising aspect. So that was the educational bit that we had to do for them. And just to. Basically, because it’s like, hang on a minute, but they’re also Skids or they’re also Sherpa kids, but you don’t own them. And, you know, how does this work? So we spent some time. We. I spent some time modeling for them, what it looked like.

Dawn Engelbrecht:
But then what we did was we actually went to our accountant, which was Grant Thornton at the time, and they did some modeling for us. Because obviously I can model to my heart’s content, but, you know, nobody’s going to pay for Dawn’s version of the world. So we agreed mutually that they were happy with Grant Thornton doing the modeling, and they basically put together how they saw the growth. If the growth continued in the way that we believed it would, and there was no reason to think it wouldn’t, then that would be a fair valuation and they accepted it.

Paul Spain:
Can you share anything with us on The.

Dawn Engelbrecht:
Not really, no. If it was just mine, I would. But there was other people involved. Nobody was upset.

Paul Spain:
Yeah, that’s good. That’s the sort of outcome you’re looking for. And so at that point, you’ve built a great business, international business, you’ve sold it. Was that enough?

Dawn Engelbrecht:
Well, that was the theory. So I was exhausted, if I’m honest, by that stage. So what was happening? I was doing the New Zealand business during the day and then supporting internationally at night. So here we go again, you know, working all hours that God sent in a few more. And I like to be busy, but there’s busy and there’s busy. So I was exhausted. So at first it was like, you know, finished. And then it was like, okay, my first grandchild had been born by this stage.

Dawn Engelbrecht:
It’s like, cool, I’ll be a granny, you know, I’ll, you know, just potter around and when I’m needed. Well, that got very boring very quickly.

Paul Spain:
I can imagine.

Dawn Engelbrecht:
So. And a colleague of mine, through franchising, was a director at Link Business Broking, Nick, and he said, you should come and sell businesses, Dawn. You’d be great at it. I’m like, nick, I’ve never sold a thing in my life. He said, of course you have. He says, you get your kids to brush their teeth, you can sell anything. Okay, all right. So I got my qualifications and I did that for a couple of years, and it was great fun.

Dawn Engelbrecht:
But also what I did was I took on a couple of independent director roles, and that’s where my association with Kitchen Studio began.

Paul Spain:
Ah, fantastic. Now, in this Business Broking work, you must have, you know, seen some really interesting things in terms of the. The different businesses you interacted with, in terms of how they were valued, how the deals were done. What can you share with us?

Dawn Engelbrecht:
Yeah, I think there’s a lot of accountants out there that really should not advise their clients on what the value of their business is. Because if I heard one say, oh, you just take the bottom line and you multiply it by three or four, and that’s what it’s worth. No, it’s not. You know, there’s all sorts of factors involved. You know, what industry is it in? How long has it been operating? What sort of leases in place? Are you. What is the staffing complement? Are you the be all and end all for your business? The number of times I looked at businesses where, you know, the owner was everything to the business.

Paul Spain:
Right. You couldn’t really separate the owner from the business.

Dawn Engelbrecht:
Absolutely. And, you know, that’s A very dangerous place to be, not just from a business sale perspective, but from a business continuity perspective. So I did find myself actually educating a lot of small business owners on, you know, things that they should be putting in place before they go to market, which, which obviously meant, you know, I didn’t necessarily get the sale there and then, but I did have people coming back to me and saying, right, dawn, we’ve done what you told us to do, now we can go to market. Because, you know, if you think about it, if it’s a husband and wife team and maybe they’ve got Suzy who does reception, but maybe the wife does all the accounts, the husband does all of the sales, or if it’s a hands on, you know, he does all of that. What is the buyer thinking? You know, I’m going to give you a check, John, and then you and Mrs. Jones are going to walk out the back door and who’s going to run the business, you know, who’s going to do all of the doing? And unless they come with the same skill set, then you’ve got a problem and there goes your value. Whereas if you can have teams in place and you can say, well, actually I do this much, I do 10% of it and Fred does this and Susie does that and John does that, then the buyer goes, man, that’s a good business and they pay more for it.

Paul Spain:
What were the typical business and what was sort of the range in terms of values and scales in terms of people?

Dawn Engelbrecht:
So the businesses that I worked with, they could be anything from. I think the smallest one I sold was, I think we sold it for about $30,000 and the biggest one was just shy of 2 million. So there was the whole gamut along the way. So we are a country with a lot of one man bans and they are very hard to sell because, you know, obviously everything does revolve around the owner. The other thing we saw quite often coming through was people who had really left it that little bit too late for their retirement. So, you know, maybe five years ago they had a thriving business, but as life age, health, whatever had started to affect them, of course it affected their business. So the value of their business was being eroded every year before they sold, which is such a shame.

Paul Spain:
Yeah. So sometimes exiting earlier, even though you’re not going to be earning necessarily in the business over that period, you actually might get more than if you had stayed working.

Dawn Engelbrecht:
Yeah. Because what happens is the buyer looks at it and goes, well, yeah, I can see it used to do that. But the Last five years, it’s not come close. So I’m gonna pay you for the last three years average. Not what it used to do and not what you tell me it could do. Cause the could has to be done by the new owner. So they’re only gonna pay for recent history, basically.

Paul Spain:
And what did you find was the typical state of, you know, systems, processes, technology, platforms.

Dawn Engelbrecht:
Yeah, all over the place. There’s some small out there with really great processes. You know, they’ve thought about it. And then there’s some bigger businesses out there with horrendous processes or none at all. And you know, there’s still the, those that put personal expenses through their business. And you know, I know a lot of small businesses do that, but if you’re going to paint your entire house and put it through as a business cost, you’ve got to know what you know, I mean, surely knows. Yeah, yeah, we did, we had. And unfortunately for him, I’d sold a similar business not too much earlier.

Dawn Engelbrecht:
And I’m looking and I’m looking like these numbers are just not making sense to me. And eventually I sat him down and I said, look, I’m not the taxman, but you just need to tell me what’s going on here. Because what I’m seeing, what I know I should be seeing, this is not making sense. Then he got all really like, oh, well, yeah, I did paint my house last year and I spread it across the business and I did this and I did that. I’m like, okay, now you need to go back to your accountant and see if he’s prepared to redo your accounts, refile your tax and then I can do an appraisal for you.

Paul Spain:
Well, you’d get a better result anyway.

Dawn Engelbrecht:
Of course you do.

Paul Spain:
On the business side, if you’re selling it, if you’ve actually been honest.

Dawn Engelbrecht:
Totally. You know, so I mean, if you think if it’s a three times multiplier, you know, and if you’ve just chucked $30,000 through your business, you’re multiplying something 30,000 less than what you could have been. Yeah.

Paul Spain:
Oh, that sounds like an actually amazing opportunity.

Dawn Engelbrecht:
Yeah, it was, it was fun.

Paul Spain:
And then taking on board roles as well.

Dawn Engelbrecht:
Yep, I’ve enjoyed that. And I still have a couple of board roles. I’m on the board of Bedsaras and I’m on the board of a company called Taxi Charge, which is a payment gateway service for taxi businesses. Yeah. So I do enjoy my board roles and it’s a way of giving back.

Paul Spain:
Yeah, you Know what brought to an end your period of business broking.

Dawn Engelbrecht:
The CEO at Kitchen Studio left in a bit of a hurry.

Paul Spain:
Okay.

Dawn Engelbrecht:
And the board needed somebody to step in and I’m like, didn’t run fast enough. It didn’t interest you immediately, to be honest. It did. It did. You know, I kept looking and going, man, I’d love to get my teeth into this. Yeah. So I took on the role. It was supposed to be for six months and I’ve been there nearly three years.

Paul Spain:
Wow. And so what was it that initially got you excited and interested in the opportunity? What were the things that you saw from the get go?

Dawn Engelbrecht:
I love franchising. I think it’s a fabulous way of doing business if it’s done well. And there was just a few elements that I could see that it just wasn’t being done as well as it could have been done, you know, like in the franchise support area and that sort of thing. And I’m just like, man, you know, they’ve got such a great bunch of people in this group, but they’re just not getting what they need out of the support office. Yes, they got marketing and that sort of thing, but franchising is more, more than just making sure they’ve got marketing stuff to use. It’s sitting alongside your franchisees, understanding what’s working well for them, what’s not, where do they need help, you know, and can you give them that help or do you have to find somebody to give them that help? Because my job, as far as I’m concerned, is twofold. Protect the brand. That’s my first job, so protect the brand.

Dawn Engelbrecht:
Second is make them successful or help them be successful. You know, take horse to water, make them drink. But most people who buy into franchises are looking for that support. They don’t want to be doing business on their own. They want somebody walking alongside them. So, you know, that was my first goal is like, get around them, find out what do they need, what do they want, what’s working, what’s not working, and let’s move it from there.

Paul Spain:
And you had the existing knowledge on the business from being a director. So you weren’t coming into.

Dawn Engelbrecht:
No, I wasn’t in cold.

Paul Spain:
Yeah, yeah, yeah, yeah, yeah. And so maybe you can just give us a quick overview of what the business actually does and what it looked like at that point.

Dawn Engelbrecht:
So what we do is we design beautiful kitchens, we get them manufactured and we install them for you, but we also project manage the whole process.

Paul Spain:
You know, what did you find when you actually stepped in to lead the business. In terms of what was that like? Was there a little bit to do or a lot more?

Dawn Engelbrecht:
There was a lot to do. There was a lot to do. The manuals hadn’t been updated since I think it was 2006. So there was a lot of that sort of stuff needed to be done. And look, to be fair, they hadn’t been selling franchises either. So their growth had been very stagnant from a franchise growth perspective. But a good franchise system should always be growing, you know, not necessarily new locations, but you need new blood. You know, you need to help people be excited, get a good return on their investment and then go off and do something else.

Dawn Engelbrecht:
And that’s what keeps it alive and vibrant. And, you know, one of our franchisees had been with us for 38 years, another one’s 37, you know, so there’s a lot of long term franchisees in there, which is great from a knowledge perspective, but it’s not fresh energy coming into the group and there’s a balance there somewhere. So lots of work from a systems and process perspective. But the biggest one was the actual way we were doing business. So we take the old kitchen out, get the area ready, put the new one in, clean up on the way out. Sounds really simple. The back end process to make that happen was horrendous. So we have this fabulous drawing software that designs the kitchens and we can give you a 3D render and we can do all of that.

Dawn Engelbrecht:
Unbeknownst to the franchisees, when they pressed the button to order the kitchen, which at that time came through to Support Office, they thought that that would generate an order that would miraculously feed into a system at Support Office. And then that did something else miraculously. And ordered all the component bits from the suppliers? No, it generated a rather large spreadsheet that landed on the desk of a couple of ladies in the office who would then have to break it down into its component parts, order it from the various manufacturers or suppliers, and then there was just this massive merry go round of paperwork. So they were confirming orders from the franchisees, issuing purchase orders to the suppliers, receiving invoices from the suppliers, paying that on, billing it to the franchisee. Oh my goodness, it was just awful. And two things came out of that. So one was, I realized really quickly it was going to be the biggest barrier to our growth because we were either going to have to keep throwing headcount at it or we were going to have to invest in some serious technology because there was no. It was just so labor Intensive.

Dawn Engelbrecht:
But the other thing was because they were basically buying from us, we were putting our markup on upfront. So on more than one occasion, by the time we’d put our markup on, the franchisee wasn’t as competitive in the marketplace as they could have been because it was an inflated cost. And so if they wanted to get the sale, they could discount to their heart’s content, but we always got our full clip and they took the brunt of any discount. That felt a little bit unfair. So we modeled what could it look like if we turned it into a traditional franchise system whereby they buy direct from the supplier and then they just pay a levy on their sales? And we could see that it would work for them, it would work for us. We had to talk to our suppliers because we had payment guarantees with all the suppliers. Yes and yes. So we spent six months traveling around the country sitting with each franchisee individually to make sure that they were really clear about what that change would look like, sitting with our suppliers to make sure they were really clear with what it would look like.

Dawn Engelbrecht:
And on the 1st of April, 24, I think it was, we flipped to the new model and it’s. Yeah, it was interesting in the beginning. You know, there was a few teething issues. There always will be. But now everybody is 100% confident that if they have to discount to get the sale, we all share the pain. They are 100% confident that they’re getting the best buy price based on. On national volumes. And it’s been a smooth transition from there on.

Paul Spain:
Wow. Well done. How clear was it that you needed to make that move and that change? Was it something that was really, you know, hurting everybody?

Dawn Engelbrecht:
Yeah, it was. It was hurting everybody. Not the least the girls in the office. It was one step away from modern slavery. It was awful. You know, they literally spent their entire days, head down, bum, just moving papers around, basically. It was awful. Yeah, it must have been a horrible job.

Paul Spain:
And so working through this process, when you look back, how much difference has that sort of made over the last couple of years since you put that in place?

Dawn Engelbrecht:
So we’ve reduced our headcount by 50%. So that’s been huge.

Paul Spain:
At a head office.

Dawn Engelbrecht:
At a head office perspective, we also, during that period, transitioned most of our branches from. We used to buy the kitchens essentially as flat packs from our manufacturers, and then the franchisees would. Would assemble them in warehouses that they had themselves and then install it in the customer’s home. We now get all of our kitchens fully assembled from our manufacturers. We’ve got four manufacturers around the country, so whatever you want, we can make. And so the franchisees not only get a better upfront buy price, basically they’ve managed to reduce their own running costs by getting rid of warehousing that they no longer need and all of that sort of thing. So I think it’s made a fundamental difference to whether they’re still here or not, quite frankly.

Paul Spain:
That’s fantastic. And, you know, how much coverage do you have around the country? What does that look like?

Dawn Engelbrecht:
At the moment, we’ve got 16 showrooms. We’ve got two more opening, hopefully by the end of this month. And my next big project that I’m working on is I’ve got a goal of having 45 showrooms by 2030.

Paul Spain:
Wow, that’s quite a target.

Dawn Engelbrecht:
It is quite a target, isn’t it? There you go. But there’s a plan behind the target.

Paul Spain:
Yeah. Okay. And so what do you think are the biggest, the biggest challenges ahead?

Dawn Engelbrecht:
Getting good locations at a fair price is always interesting. Getting the right people in. So some of you mean in terms

Paul Spain:
of physical real estate?

Dawn Engelbrecht:
Physical real estate, Yep, yep. So a lot of our showrooms are quite large at the moment, which of course means rental costs are quite high. What we propose, or what we have proposed to the franchisees, they’ve all got really large territories, is for them to have one hero showroom in their territory and then have four or five satellites around the rest of their territory that maybe only has one or two. So it might be 90 square meter footprint instead of 150 square meters. So that’s how we’re going to help them do it.

Paul Spain:
Yeah. Fantastic. Now you’re responsible for a lot of people’s livelihoods. What are the techniques that you apply to, you know, help each one of them achieve their best?

Dawn Engelbrecht:
Yeah, yeah, good question. Because everybody needs something different. Yep. So one of the things I always do, if somebody walks into my office, the first thing I do is I close my laptop because I want them to know that I’m there and I’m listening. But also I travel around the country. So three or four times a year I’m in front of individual franchisees talking to them about what’s working, what’s not working, you know, what else can we help them with? I’ve got an operations manager, Mark, who is fabulous. So he also travels around the country from a support and training perspective. He’s an ex designer.

Dawn Engelbrecht:
Well, not X. He’ll never stop designing, but yeah, you know, so he does a lot of training with Our designers, he used to teach design for nkba, so he’s very, very good at that. So he helps from a technical perspective. I come in and help from a business perspective and it seems to be working. We’ve got a very good culture now.

Paul Spain:
And what does it look like for somebody to enter in and say, join Kitchen Studio, either taking over an existing franchise or a greenfield maybe?

Dawn Engelbrecht:
Yeah, so we got a couple of greenfields available. In fact, if you know anybody in Queenstown or Wanaka, they really need to talk to me because I desperately need somebody there.

Paul Spain:
That’s a good market too. You might just find somebody listening.

Dawn Engelbrecht:
Exactly, exactly.

Paul Spain:
Thinks they’ve hit the gold mine and they may have done.

Dawn Engelbrecht:
Yeah, Honestly, we’re desperate to get somebody in there. But basically you’ve got an upfront fee of about 150k that covers your access to the IP, the use of the brand forever. And, you know, as long as you’re a franchisee, you’re training. We are a cooperative style franchise. So what that means is that every franchisee owns a share in Kitchen Studio. So, yeah, that’s slightly different. Means that I have got 16 bosses around the country, but that’s okay. Yeah, so it includes everything from that perspective, then we help you find premises.

Dawn Engelbrecht:
We’ve got fabulous agreements with our suppliers where they will contract quite significantly to the showroom. Fit out. It’s not free. And there will always be things like lighting, flooring, painting that you’re gonna have to budget for, but, you know, that will help you design your first showroom, help you recruit your designers and just get you going.

Paul Spain:
And what about the process of selling and delivering a kitchen? I remember a discussion with someone who’s, you know, done this sort of thing in the past as, as part of, you know, building work and so on. And sometimes you would get customers that are like, that’s not what I wanted, or, you know, varying, you know, challenges, whether it’s that they’re upset or they refuse to pay the bill or those, those sorts of things. So, you know, how, how does it all fit together and how, you know, how do you minimize the pain that can come? I guess because the business has been around a long time, you’ve got these things down to quite a fine art.

Dawn Engelbrecht:
Yeah, we do 43 years this year, so it’s quite a long standing system. We come out to your home, we do all of the measuring ourselves. We don’t rely on somebody else to do the measuring. But I think the main thing is, so we actively, our designers are fabulous. So they’re very well trained. You come into the showroom, you choose the bench top that you want, you choose the cabinetry that you want, all of that, you get a 3D render. So you know visually what it’s going to look like. But quite honestly, if something’s not right, we put it right.

Dawn Engelbrecht:
So we have a 10 year guarantee on all of our cabinetry and all of our products. We’ve got a guarantee on your deposit. So if, heaven forbid, you paid as a deposit and something happened to the franchisee, we guarantee you’re still going to get your kitchen. We sort it out. But we also have incredible relationships with our suppliers and funnily enough, just before I came today, we’ve got a client who ordered a specific bench top. The benchtop that’s arrived is not right. Absolutely. Mark, my operations manager’s had a look at the photos.

Dawn Engelbrecht:
Totally. We all agree that’s not what we expected. He’s already onto the supplier to say, mate, this needs to be put right now and it will get put right because we have really good relationships with those suppliers and they, they want our business. But we don’t take the Micy either. So if the customer has changed their mind.

Paul Spain:
Yes.

Dawn Engelbrecht:
And it’s already been ordered, that’s not the supplier’s problem, you know, so that’s for us to sort out, you know, can we resell it? What can we do? Yeah, but if it’s a genuine warranty issue or a product issue, then they will stand by it.

Paul Spain:
Yeah, yeah, that’s great. We’re probably running out of time now, so maybe there are one or two sort of practical tips that you can share for those that are listening in. What are the things that you will often recommend to the business owners, franchisees that you deal with that can really make a difference?

Dawn Engelbrecht:
I think the most important thing that any business owner can do is you must, must, must know your numbers. You cannot wait until the end of the financial year to go, did I make a profit or did I not? And you’d be surprised how many small business and bigger businesses do that. Or they wait until the month end accounts come out, which, you know, the bigger the business, the longer that’s going to take. So that’s one thing I’m very strong on with my team is they must know their numbers, they must understand that if they discount, what is that doing to their profit, you know, where is that flex? Because it’s very easy to say, oh, I’ll take 10% off or 20% off. That has a flow on effect and you may end up doing the job for free. Well, why would you do that? Do you love them that much? You know, so that’s one thing, know your numbers. Secondly, you have to have a crocodile skin when you’re in business. You know, you’ve gotta be tough.

Dawn Engelbrecht:
You might not be tough on the inside and. But you’ve got to find a way that. Nobody likes confrontational conflict. Very few people do. But if somebody owes you money, you have to be strong enough to say, excuse me, but we have a contract here. I’ve done my bit. You now need to do your bit. And if you don’t do your bit, these are the consequences.

Dawn Engelbrecht:
We’re quite fortunate. At Kitchen Studio we get paid in full before the installation happens. So bad debts are not necessarily something we deal with. But at skids, it was often a problem, you know, and when you having to look at evicting somebody’s child from your program because mom hasn’t paid, that’s really not very nice. Cause you actually quite like little Johnny. He’s lovely. It’s mom and dad that’s the issue. They haven’t paid their bill, but that’s where that crocodile skin has to come in.

Dawn Engelbrecht:
Because they’re not your kids or, you know, it’s not actually your problem. You can’t let it be your problem. So I think, you know, that’s. And always ask, always ask questions. You don’t, you don’t know everything. So I’m a sponge. I’m always listening, learning, asking questions. I enjoy it.

Paul Spain:
And did it take you, you know, a long time to, you know, to learn to deal with those tough situations, whether it’s somebody not paying a bill or what have you. How did you.

Dawn Engelbrecht:
You get burnt? Yeah, yeah, yeah, you get burnt. So, you know, the quicker you learn from, from some of those things, the better, you know. And yeah, fortunately the, the burns that I got were, were never that bad. But, you know, and the other thing I did learn along the way, because obviously within franchising and within a lot of business, there’s always something legal, some piece of paper that’s. That’s legal. What I did learn was don’t assume that your solicitor has necessarily checked everything. That cost me quite a bit of money. The once I thought he’d checked, he hadn’t checked.

Dawn Engelbrecht:
He thought I’d checked and there was a signature missing. That really made a difference. So that was the other learning I had, was, yes, you pay them and, you know, it was resolved second to that. But you pay people to help you in your business, but you are still responsible for your business. So you never fully abdicate the responsibility for everything to anybody as the business owner. It’s. You’re still responsible.

Paul Spain:
And I guess both businesses, across Kitchen Studio and Skids, you had boards. What did they look like and how important was that?

Dawn Engelbrecht:
Yeah, it was really helpful. So with Skids, we had what they call an advisory board. Cause it was myself, Bev and Chris, we were the directors and we had an external chairman who joined us and he was great. He really was. He, you know, he challenged us, he pushed us, but he kept us accountable and he kept us in a really solid reporting rhythm and, you know, which was great. So we had a lot of big business practices well before we became a big business, so that was great. At Kitchen Studio, we’ve got a board of five, so there’s three franchisee shareholders who are directors and two independents. And again, you know, it’s just really solid discipline because again, you know, you’re so busy in your business, you’ve got to find ways to stop and work on the business.

Dawn Engelbrecht:
And having a board really, really helps you to do that.

Paul Spain:
That’s fantastic. Anything else you’d like to add, Dawn?

Dawn Engelbrecht:
No, I think I’ve told you my whole life story.

Paul Spain:
Well, there’s a lot that’s packed up in there, so thank you so much for your time, really appreciate it.

Dawn Engelbrecht:
Not a problem. Thank you.

Paul Spain:
Thank you. Cheers.

Paul Spain:
Well, I trust you enjoyed hearing from Dawn Engelbrecht. The New Zealand Business Podcast was brought to you by One New Zealand and Gorilla Technology. Be sure to listen in to our other episodes featuring many of New Zealand’s most successful leaders, including founders such as

Paul Spain:
Sir Peter Beck of Rocket Lab, Brooke

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Roberts of Sharesies, Cecelia Robinson of MyFoodbag, Sir Michael Hill and many more. And if you benefited from this episode, be sure to share it with a friend. And before we go, if you do work for a mid size or smaller

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firm, I wonder how confident are you

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that your organisation is appropriately leveraging AI and other technologies and that your cybersecurity posture is solid?

Paul Spain:
If you’re not fully confident, get in

Paul Spain:
touch with Gorilla Technology for an advisory session. Well, thanks everyone for listening in. This is Paul Spain signing out and I will catch you on the next episode. See you then.