54 Business Franchise Australia and New ZealandTErrIT orIES For
MoBILE FrANCHISES
...WHAT yOu nEEd TO knOW (And
ASK YOuR FRANCHISOR)
more and more mobile
franchises are coming onto
the market, many which we
expect to be successful: like
a business flying drones, or one taking mobile video
games to kid’s parties.A potential client rang me the other day and
said he and his wife were looking at going
into a mobile franchise in the auto industry.
He said the franchisor had given him a
territory, and could we do some work to
decide if it made business sense!
Well, while I feel I am reasonably astute
in these areas, my first question was:
what did your franchisor tell you in the
disclosure document, and what are the basic
assumptions about the market and business
you are becoming part of?
The answer was quite unclear!
This seems to be a common problem,
especially with small franchise systems,
where the potential franchisee sits between
a franchisor telling them enough to raise
interest, and trying to avoid saying anything
of substance in fear of later recriminations
(legal), if there is a problem.
My view is if some logical work and
assumptions have been formulated by the
franchisor, then there is a reasonable case to
give a territory with a realistic explanation,
not just “This should work GREAT,
but don’t ask me how we came to thatExpERT ADvIcE“the franchisor should have a business
plan that addresses issues like total market
size and forecast market share, and a good
understanding of where the opportunities lie
for the business.”peter Buckingham | managing director | spectrum ANAlysisconclusion!” – which then evolves into the
‘Beer and Pizza map’.
The ‘Beer and Pizza map’ is the map derived
by a few early entry franchisees and the
franchisor, after beers, pizza, and a black
texta on the Boardroom table.Some research and arithmetic:
As a potential franchisee, you are
predominantly interested in your own
market and probably not other capital cities
where the franchisor may operate. For
this example, let’s consider we are in the
automotive aftermarket business. Maybe we
are joining a system that services vehicles as a
mobile franchise.
The first question is always: How big is the
market? Let us imagine we are going into
business in an area of Melbourne – so that
we can visualise it.
On a world-wide and national basis, if we
undertake some research, we may find a
report that incorporates the following:
“The world slushie drink hire market is
expected to reach US$5.59 billion by 2020,and the Australia market is expected to be
$40 million in 2016”. This may be able to be
broken down to state level, and ultimately to
specific areas.
The franchisor should have a business plan
that addresses issues like total market size
and forecast market share, and a good
understanding of where the opportunities
lie for the business. The franchisor and their
advisors have decided that with their mobile
vehicle service system, they will target 30
per cent of the market, or a Melbourne and
Geelong market of $7 million p.a.
NOW WE ARE STARTING TO
UNDERSTAND THE MARKET!
While you may dispute the detail, at least we
are gathering an understanding of the big
picture, so now we need to understand:- Are the franchisor’s assumptions realistic?
- How many territories should be created
and what should a territory comprise of?
the franchisor’s assumptions
In your Due Diligence - doing your own
investigations to decide whether youfEATURE:
F ixed v
’S m
oBile Fr
AN
chi
SeS