{"id":4208,"date":"2023-01-24T17:01:13","date_gmt":"2023-01-24T06:01:13","guid":{"rendered":"https:\/\/sanickilawyers.com.au\/?p=4208"},"modified":"2023-01-24T17:05:04","modified_gmt":"2023-01-24T06:05:04","slug":"on-the-road-again-mobile-v-fixed-site-franchise","status":"publish","type":"post","link":"https:\/\/sanickilawyers.com.au\/on-the-road-again-mobile-v-fixed-site-franchise\/","title":{"rendered":"On the Road Again – Mobile v Fixed Site Franchises"},"content":{"rendered":"\n

Ahh, mobile franchises, the wind in your hair as you drive to your next appointment in your branded van with a dog in the back, the freedom from paying exorbitant rent and staff costs, and the possibility of work\/life balance. Mobile franchises are a great option\u2026 or are they?<\/strong><\/p>\n\n\n\n

There is an emergence of mobile franchises on the market which have certain benefits over the traditional high-cost franchises that we see in shopping strips and shopping centres. However, the rise of mobile and home services was happening pre-Covid (yes, everything is now measured by pre- or post-Covid)!<\/p>\n\n\n\n

Covid drove businesses to move online quickly to survive and provide their goods and services to their consumers via door-to-door delivery and click and collect. In a way, Covid did many businesses a favour as it forced them to go online and update their systems.<\/p>\n\n\n\n

The demand for courier drivers, food delivery, and other home delivery services exploded, and then businesses realised that in fact, this was a more efficient and profitable way of doing business.<\/p>\n\n\n\n

On the other hand, employees are still working from home and the return to the office has been slower than expected. The demand for home services has however remained strong as we now want our cars serviced at home, our dogs washed at home, our garden mowed at home, and our dinner or groceries delivered to the door.<\/p>\n\n\n\n

Taking your business to the consumers\u2019 home or office is a great way to generate work without carrying the huge overheads of a fixed site. Consumer spending is now driven by convenience and instant gratification!<\/p>\n\n\n\n

Mobile services mean convenience to overworked families and people working from home under work pressure.<\/p>\n\n\n\n

The Benefits of Mobile Franchises<\/strong><\/p>\n\n\n\n

The Pros<\/strong><\/p>\n\n\n\n

Mobile franchises require a much smaller upfront capital investment and are generally more affordable.<\/p>\n\n\n\n

They also o\ufb00er greater lifestyle and work\/life balance \ufb02exibility than a traditional site-based franchise.<\/p>\n\n\n\n

They are generally owner-operated so you do not have staff costs and the issue around staff management when operating a retail site.<\/p>\n\n\n\n

The franchise fee is usually the biggest cost apart from the need to lease a vehicle, branding, and equipment costs. Comparatively, a \ufb01xed site franchise is usually the lowest cost but the investment by the time you add stock and shop fit-out, bank guarantees on a lease, staff costs, and insurance can be considerable.<\/p>\n\n\n\n

The ongoing operational costs are also generally much lower with a mobile franchise depending on the nature of the business.<\/p>\n\n\n\n

The Cons<\/strong><\/p>\n\n\n\n

Mobile work may not suit everyone as not everyone is suited or likes to be \u201con the road\u201d travelling around with the worsening traffic and cost of fuel.<\/p>\n\n\n\n

Even though a mobile franchise has less upfront costs (which means less risk) that may also mean a smaller income.<\/p>\n\n\n\n

A typical \ufb01xed site franchise may require an investment of anything between $350,000 to $800,000, of which the franchise fee may be $40,000 to $60,000. Although a mobile franchise investment in total may be around $100,000.<\/p>\n\n\n\n

Many mobile franchises elect to charge a \ufb01xed royalty rather than a royalty based on the gross turnover of the business.<\/p>\n\n\n\n

This can be positive if the business is successful and growing but can otherwise be a \ufb01xed cost that becomes a debt to the franchisor, irrespective of the franchisee\u2019s revenue.<\/p>\n\n\n\n

Fixed site franchises generally charge a royalty, based on the turnover of the business of between 4% to 10% of gross turnover (revenue) and a marketing fund contribution of around 2% to 5%.<\/p>\n\n\n\n

A mobile franchise may still charge an upfront 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.<\/p>\n\n\n\n

Fixed site franchises also require the franchisee to hold stock so that must be funded upfront. Evidently, the working capital requirements for a fixed site franchise over the first six or twelve months of operation will be much greater.<\/p>\n\n\n\n

What to consider<\/strong><\/p>\n\n\n\n

The things to be considered are:<\/p>\n\n\n\n