4.3.3 Märkisches Landbrot

A single-foundation model as a good succession plan

In a nutshell

Founded in 1930 as a bread bakery and delivery service in Berlin-Neukölln, Märkisches Landbrot underwent a significant transformation when Joachim Weckmann assumed ownership in 1981. Fast forward to 2021, as part of his succession planning, Weckmann decided to further transform the company into a steward-owned company. To achieve this goal, he opted for a single-foundation model and gifted the company to a charitable foundation.

Märkisches Landbrot was founded in 1930 as a bread bakery and delivery service in Berlin-Neukölln, from where bread was delivered to other districts of the city. In 1981, Weckmann purchased the company for 50,000 DM – borrowing the money from friends. Driven by his fundamental motivation to contribute positively to society and the environment while producing high-quality bread, Weckmann transitioned Märkisches Landbrot into an organic bakery, using locally sourced grains.

Since then, Märkisches Landbrot has been working towards two goals: contributing to the healing of the earth through ecological products and contributing to the well-being of people through whole-grain bread. Märkisches Landbrot now serves around 330 retail outlets, spanning organic supermarkets, independent stores, food co-ops, and community hubs in and around Berlin, producing around 8000 kg of bread daily.

The company relies on an active, open and honest exchange with employees, consumers, traders and suppliers. It also provides above-average compensation for employees. Long-term supply contracts and fixed price commitments make farmers more independent of strongly fluctuating market prices. The bakery bakes in a climate-neutral manner, minimizes food waste and works with an EMAS-certified environmental management system with eco-balancing.

Succession and ownership

In 2013, Joachim Weckmann began to engage more deeply with the question of succession for Märkisches Landbrot. This issue held significance for him on two levels: the management level, where he had already been working with Christoph Deinert as co-managing director since 2008, and the ownership level. He explored various models to position Märkisches Landbrot successfully for the future and ensure its medium-term independence from his person. Weckmann viewed these succession processes as distinct endeavors. He sought a structure where the management team doesn't solely represent the owners of Märkisches Landbrot.

Joachim Weckmann had been grappling with the issue of ownership and determining a suitable structure for quite some time, even before the issue of succession became more pressing. As someone with roots in a food co-op, he was already familiar with participatory structures but had previously decided against implementing such a structure at Märkisches Landbrot.

The ownership considerations became more tangible for Weckmann as he began structuring his succession plan. Born in 1953, he couldn't and didn't want to continue indefinitely, and it was important to him to actively shape the future structure of Märkisches Landbrot and ensure a smooth transition of the company. He doesn’t have any children who could take over the business and he wanted to establish independent structures. Inheritance was, therefore, not an option. Selling the company was equally undesirable. Joachim Weckmann was well aware of his responsibility in shaping the succession process, as the legal owner and given his significant experience. Nevertheless, he was also aware that the future structure had to be supported by his successors, so he approached the process in close consultation with the inner circle of leadership.

Photo: Märkisches Landbrot GmbH

The path towards steward-ownership

Weckmann came into contact with the concept of steward-ownership at the Ownership Conference in 2018 organized by the Purpose Foundation, where, among others, Franz Fehrenbach from Bosch, Beate Oberdorfer from Sonett, and Götz Rehn from Alnatura shared their experiences with steward-ownership in their companies. Inspired by this, Weckmann delved deeper into the concept and the various models for implementation.

Single-foundation model

With the assistance of Purpose Consulting and the law firm Dr. Mecking, Joachim Weckmann and his team were able to develop a plan to establish a steward-ownership legal structure for Märkisches Landbrot that aligned with their vision. They evaluated the available models for implementing steward-ownership in Germany and ultimately opted for a single-foundation model with a dedicated charitable foundation for the company's future. In doing so, they designed a customized governance structure that ensures that the nonprofit purposes do not jeopardize the continuity of the company. The consulting costs for the process and the establishment of the foundation amounted to approximately €35,000. The foundation itself was endowed with free assets amounting to €50,000, in addition to the contribution of the operating company. Joachim Weckmann chose to establish his own foundation solution for Märkisches Landbrot to maintain the company's independence from other organizations and to create a suitable structure for its desired charitable activities. These factors led to the decision to pursue a single-foundation model instead of the veto-share model option that was also under consideration. A double-foundation model was not considered due to the higher costs associated with its setup and maintenance.

The single-foundation model entails a company being majority-owned by a self-governing, typically a charitable foundation that refrains from distributing profits to private individuals. The foundation retains full ownership rights over the company, and the charitable board members exercise these rights in accordance with the guidelines outlined in the articles of association. The foundation's primary objective is to pursue charitable purposes in accordance with the tax-privileged purposes specified in the German Fiscal Code, under the name of the Märkisches Landbrot Foundation.

Photo: Märkisches Landbrot GmbH