Frequently Asked Questions

Find answers to some frequently asked questions about owning and operating a Flowers Independent Distributorship.
 

Introduction to a Flowers Independent Distributorship

What is the direct-store-delivery (DSD) model?
The direct-store-delivery (DSD) model was introduced to the baking business in the 1950s and adopted by Flowers’ bakeries beginning in 1984. This model is commonly used to sell and deliver fresh products to retail and food outlets. The DSD model provides Independent Distributors (IDs) with the exclusive right to sell and distribute Flowers branded products to businesses requesting DSD service that are located within a defined geographic area or areas. Because IDs own their own distribution rights, they are incentivized to maximize sales and to control costs, thus effectively better managing fresh products which have a limited shelf life and generate high turnover. Flowers Bakeries’ DSD network is currently made up of almost 6,000 independent distributor territories.
What are the responsibilities of an Independent Distributor (ID)?
Independent distributors (IDs) own distribution rights to certain Flowers products within a designated geographic area (distribution rights are the right to sell and distribute products throughout the designated territory to businesses requesting DSD service). IDs are responsible for territory operations and maintaining relationships with all customers in the territories; this includes, but is not limited to, growing sales, taking care of customers’ needs, developing relationships with customers, targeting new customers, and handling all other aspects of the business.
 

Purchasing a Flowers Distributorship

How much does purchasing distribution rights cost?
The purchase price of the distribution rights is based on sales history (usually using a 52-week average to account for fluctuations in sales that may occur week to week, especially in seasonal areas).
What are the financing options for purchasing distribution rights?
A Flowers-related entity can provide financing options (for up to 10 years), or buyers may elect to seek their own financing. If requesting financing from the Flowers-related entity, a 5% minimum down payment is required (5% of the purchase price).
What qualifications must be met before purchasing a territory?
  1. Flowers will only enter into a distributor relationship with corporations (Note: the entity must be a corporation, not a limited liability company/LLC).
  2. Each ID is required to have a primary owner who maintains at least 51% ownership of the corporation.
  3. IDs must have an approved delivery vehicle; options include a box-body-style truck, a step van, or a pickup truck/trailer combination.
  4. IDs must have insurance that complies with the terms of the distributor agreement; usually either (a) $1 million auto liability plus $1 million general liability plus $1 million umbrella, or (b) $2 million auto liability plus $2 million general liability.
Is the owner of an ID required to have prior experience in the baked foods industry?
No. Prior to purchasing a distribution territory, many owners complete a distributor orientation session. This is a 10-week orientation designed to enable prospective distributors to understand how to operate a bakery distributorship. Topics covered during the orientation include, but are not limited to, the baking business, specific customer requirements, use of a hand-held computer for ordering products, and proper ordering techniques. Completion of the orientation does not guarantee the prospective distributor will be offered a distributorship franchise.
 

Operating a Flowers Distributorship

How does a distribution territory generate revenue?
Independent Distributors (IDs) are not paid any wages, salary, or commission by the company. Rather, they purchase products from the bakery at discounted prices, then resell those products to customers in the territory (indicated by the distribution rights) at higher prices. IDs operate off a profit margin and are responsible for any costs incurred in operating the business. An ID can generate additional revenue by increasing their sales and controlling expenses.
Does the owner of an ID need to personally service the distribution territory?
No. The owner of the ID is not required to personally service the customers located within the territory. Many IDs hire employees to operate all or a portion of the business.
How do IDs deliver and sell products?
IDs order products from Flowers using a handheld computer, and Flowers transfers the ordered products to the ID at a mutually agreed upon location.
Can IDs carry other brands of products?
IDs may carry non-competitive products that do not interfere with the distribution of Flowers' products.
Are IDs able to own multiple territories?
Owning an ID is about owning and operating a business. You want your business to make as much profit as possible. For these reasons, we strongly encourage that IDs own multiple territories. When owning multiple territories, it would be helpful to engage with accounting, tax, and, legal advisors to assist you in:
  • Filing corporate tax returns;
  • Filing personal tax returns; and
  • Paying payroll (the owner’s and employee’s), collecting and remitting income and payroll taxes