Mobile Franchises are Becoming More Popular
A lot of franchise buyers are looking to get into the driver’s seat. Literally.
Over the past several years, there’s been a rising interest in mobile franchises, whose owners work out of a van, truck or trailer, driving around their territories to meet customers in their homes or elsewhere.
These businesses—which offer everything from flavored ices to drug testing—have a simple appeal to buyers: low start-up costs. With financing tight these days, potential owners are eager to save on leasing and building out real estate.
But with the lower costs come potential headaches. Owners and franchise experts say that there are hidden hassles to look out for, such as dealing with local parking restrictions or figuring out how to market a business that doesn’t have a fixed address. And, of course, the mobile setup isn’t for people who want a controlled work environment. It’s best suited to people who like being on the road constantly, meeting with customers.
“I enjoy the lifestyle,” says Shane McClements, a franchisee for auto-repair service Touch Up Guys in Scottsdale, Ariz. “You’re out and about and not in the office or store looking at the same scene all the time.”
New mobile brands have been popping up and expanding in recent years. USA Mobile Drug Testing, for instance, has grown to 42 franchisees in 20 states since launching in mid-2010. FRANdata, a research firm in Arlington, Va., looked at a sample of 57 brands and found that they grew more than 19%, to 20,734 units, from 2006 to 2010.
In some sectors, growth in mobile units exceeded that in the overall sector, which includes home-based and storefront franchises. For instance, in FRANdata’s sample, the number of mobile units in handyman services rose 19%, compared with a decline of 5% overall. Mobile bathroom-remodeling franchises grew 26%, compared with 13% for the entire sector, while mobile units in plumbing and electric services rose 25%, more than the 17% overall growth rate.
“Every time we turn around, there’s another that’s getting into the [mobile] space,” says Stephen Caldeira, chief executive officer of the International Franchise Association trade group in Washington, D.C.
Cost is a key driver of growth. The typical price tag for starting up a mobile franchise is less than $150,000, compared with a far larger amount, sometimes exceeding $1 million, for a storefront franchise, explains Mr. Caldeira.
At Game Dudes, which sends out vans equipped with videogames to kids’ parties and other events, the initial investment ranges from $115,000 to $140,000, says owner Michael Carter. The total includes a 24-foot Mercedes-Benz Sprinter van, training and marketing support for a grand-opening event.
Some mobile franchises cost even less than that. A franchise for dog-grooming service Pooch Mobile requires an upfront investment of $59,000 for a franchise territory, a trailer outfitted with a water-pressurized dog bath, two weeks of training, marketing materials, grooming tools and shampoo to wash 100 dogs, says Annie Ellmers, the U.S. franchiser for the company, which started in Australia.
Along with lower start-up costs, a mobile franchise can bring higher profit margins because owners don’t have to shoulder costs associated with real estate. Most mobile franchisees handle back-office duties and paperwork out of a home office. Franchisees may also end up storing supplies in their basement or renting a commercial storage locker.
A mobile franchise carries other costs that may not be obvious at first. For instance, marketing. A franchisee might think that driving around town in the vehicle, usually emblazoned with the company logo, is enough of an advertisement. But it isn’t, franchisees say.
Unlike a storefront franchise, a mobile franchise “is not stationary so that people can see you and remember you at 123 Rose Avenue,” says Mr. Carter of Game Dudes. “The truck helps, but if people see you, they can’t go back and find you.”
So, like any other franchisee, mobile franchisees need to spend to promote their businesses through the local newspaper and Chamber of Commerce, direct mail and online marketing.
Then there’s parking. Many neighborhoods don’t allow commercial vehicles to sit overnight on the street or even in a driveway, so the franchisee who doesn’t have an enclosed garage may have to pay for an off-site commercial parking spot. In that case, the franchisee would probably also have to pay more to insure the vehicle and install a security system.
Working on the customers’ stomping ground also has its pitfalls, such as the client who stands and chats while you’re trying to work. “It’s their area and they’re comfortable there, and you can’t direct them to the customer lounge,” says Mr. McClements of Touch Up Guys.
And when an awkward situation crops up, franchisees have to grin and bear it. Mr. McClements recalls a car-repair job in a customer’s particularly smelly garage. “I think she had mold, and maybe some garden mulch in there,” he recalls, laughing.
Ms. Lee is a writer in Belmont, Calif. She can be reached at firstname.lastname@example.org.
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Mobile Franchises are Becoming More Popular