Breaking the deadlock

Healthy Habits has become one of the most successful Australian-founded franchises around today, serving two million sandwiches to customers across the country. But founder Katherine Sampson learnt some hard lessons along the way.

Sampson founded the business in 1992, opening a handful of sites in and around Melbourne. Realising that there was an appetite for healthy food among the standard fast food outlets in shopping centres, Sampson set about expanding the company nationally through a network of franchises.

However, Sampson encountered several obstacles in her quest to take Healthy Habits to the nation.

“Initially, the obstacles were all about the difficulties of establishing a franchise system with a single owner,” she explains.

“The start-up costs were high, which made mistakes very costly, and the business was incredibly difficult to support with no initial capital injection beyond the personal assets of the founder. These were compounded by the difficulty of securing finance as a single woman with two children.”

Another major hurdle was the chicken and egg scenario Sampson found herself in when attempting to lure new franchisees. Healthy Habits wasn’t top of the list when shopping centres were looking for tenants, but without this growth the company couldn’t attract new operators to the brand.

Sampson realised that she needed to take drastic action to ensure that the business could break through and become a national player.

“Healthy Habits urgently needed to be as visible as possible in order to secure franchisees into our brand new business,” she says. “Business growth depended on attracting franchisees into the system, but we couldn’t attract them without business growth. It was the old and well-worn dilemma of a start-up business, and it needed a high risk solution to break the deadlock.”

“I took the extraordinary decision to finance new company stores personally, at a premium price, in new markets, to quickly create a nationally based brand that would give Healthy Habits leverage with leasing agents, and allow access to better and better sites. I knew that Queensland in particular was a key market for the brand, and that we would be paying high premiums to enter the leasing market as a new, unknown brand.”

“That massive risk paid off. The stores were bought and sold as planned, and Healthy Habits is now located in prime, highly visible shopping centre locations in Queensland, NSW, Victoria and South Australia. Ever since, the business has grown.”

The company now has more than 30 sites across Australia, employing more than 200 people. The initial struggles are now behind the business.

Sampson has some succinct advice for start-ups to help them avoid similar pitfalls:

• Understand the opportunity, and keep the belief.
• Never be afraid to take a chance and to ask for help – you’ll be surprised who is prepared to stand up and support you.
• Collect smart people around you and use their expertise.
• Be around positive thinkers.
• Understand that every experience is a lesson. Good judgment comes from experience. Experience comes from bad judgment.
• Wake up each day looking forward not backwards.