56 Business Franchise Australia and New ZealandoN THE
roAD AGAIN
MOBILE V FIxED
SITE FRANCHISES
can you imagine willie
Nelson happily running hismobile franchise? wind in
his hair, guitar in hand...
mobile franchises canbe a good option to the
free spirited person who
does not want to be tieddown to a shopping centre
environment, working nine
to five. thanks dolly!There is an emergence of mobile franchises
on the market with the demand for home
services.
We all want our cars repaired at home or
work, our dogs washed and taken for a walk,
our laundry done and our personal trainer
knocking on our door. Consumers have the
money to spend on home care and support
like in no other decade. Mobile services
mean convenience to the overworked Mums
and Dad’s out there.
Mobile franchises have a smaller up front
capital investment and can offer greater
flexibility than a full retail franchise. It may
not however suit everyone being out on the
road. The franchise fee in a mobile franchise
may be the largest component of the upfront
cost, whereas for fixed site franchises it is
usually the lowest cost due to the equipmentExpERT ADvIcE“mobile franchises have a smaller up front
capital investment and can offer greater
flexibility than a full retail franchise. It may
not however suit everyone being out on the
road.”robert toth | partner | mArsh & mAher lAWyersand fitout costs required. A typical fixed
site franchise may require investment of
anything between $600,000 to $800,000, of
which the franchise fee would constitute, for
example $45,000.
There may be franchises that charge a fixed
royalty, payable fortnightly or monthly,
not tied to turnover. This can be positive if
the business is successful and growing but
can otherwise be a fixed cost that becomes
a debt to the franchisor, irrespective of the
franchisee’s revenue.
Fixed site franchises generally charge a
Royalty, based on the turnover of the
business of between 4 to 10 per cent with a
marketing fund contribution of around 2 to
5 per cent.
A mobile franchise may still charge a
franchise fee of $20,000 to $30,000, plus
the cost of the vehicle and equipment. The
vehicle and equipment can usually be leased,
thus reducing the capital outlay. The interest
on the lease is tax deductible to the business.
Fixed site franchises generally require the
franchisee to hold stock and thereforerequire greater working capital over the first
six months or year of operation.
A mobile franchise may involve an
investment of $50,000 to $70,000 but will
it generate a basic wage and for how many
hours worked? Where is the territory that
is allocated? Do you have to travel long
distances to service clients for a small charge?
You still need to do your financial due
diligence and cash flows on the business. If
the numbers don’t work, then don’t commit
as mobile franchises can be difficult to sell.
Buying a mobile franchise or a fixed site
franchise usually requires the franchisee to
borrow on the equity in their home. Like any
business, this carries risk. Will the business
be viable? Can it provide a reasonable salary
for effort to the operator? Will it provide a
return on the investment over time and also
build some capital value?
The rise in mobile franchising has come with
the increased consumer demand. Consumers
have limited time and from a marketing
perspective taking your business to the
consumer into their home or office is a greatfEATURE:
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