Mobile franchises: what to know about buying a business on wheels
In an environment of rising commercial rents and cost-of-living pressures, mobile franchises are gaining momentum as a more accessible way to enter business ownership.
Jim’s Group chief marketing officer Joel Kleber says the business has received an overwhelming number of enquiries over the last year.
“We had 43,000 franchise inquiries in the last 12 months, up from 27,000 the year before,” he says. “But we also had 200,000 unserviced leads last year … we still don’t have enough franchisees.”
Franchise consultant Tereza Murray says most of her clients are buying businesses on wheels, highlighting a move away from traditional shopfronts.
“Consumers are increasingly choosing convenience, and mobile services fit perfectly with that shift,” she says.
The appeal is perhaps unsurprising. The franchise model gives business owners the freedom to run their own operation while benefiting from proven systems, brand backing and ongoing support.
Compared to traditional bricks-and-mortar franchises, however, mobile businesses offer several advantages. These include lower start-up costs, easier set-up, greater flexibility and fewer overheads.
“The start-up costs are usually significantly lower,” Murray says. “Instead of needing hundreds of thousands of dollars to fit out a shop, many mobile franchises can be started with a vehicle, equipment and the franchise fee.”
That mobility is largely what determines the type of business best suited to operating on four wheels. Murray says home services and trades work well because the work is carried out in a customer’s home.
She adds that personal services like pet grooming and beauty therapy are becoming more common in mobile formats because the convenience of a home-based service is a major drawcard.
Despite the appeal of running a mobile franchise, both Murray and Kleber caution that the model still requires careful evaluation by prospective buyers.
Understand territory efficiency
One of the most critical factors is how territories are structured, a standard feature of franchising but one that plays a particularly important role in mobile businesses. Territories are effectively the area and reach of a franchisee’s business, and they can have a huge impact on efficiency, daily workload and earning capacity.
“A territory might look big on a map, but if the travel time between jobs is too long, it can limit how many customers you can see in a day,” Murray says.
“When I help clients design franchise territories, we always look closely at population density and service demand, not just geographic size. A well-designed territory should allow a franchisee to work efficiently and build a strong local customer base over time.”
Factor in true operating costs
Mobile franchises may have lower fixed costs than traditional shopfronts because there’s no rent to pay. But Murray cautions they’re not exactly cheap to run.
“Fuel, vehicle replacement, insurance and equipment all add up, so it still needs to be assessed like any other business,” she says.
Kleber adds that these expenses can build over time, and mobile franchisees have to stay consistently busy to remain profitable.
“There are obviously leasing costs in a site-based business … but with mobile, you still need to work hard to be profitable,” he says.
Analyse real earnings, not projections
Murray emphasises that, as with any franchise, prospective buyers should carry out thorough due diligence on earnings.
“One mistake I see quite often is people getting excited about the idea of working for themselves without properly analysing the numbers,” she says.
She recommends looking at practical metrics such as the average job value, how many jobs can be done in a day and what that realistically translates to in revenue.
Buyers should also consider their exit strategy, including how easily a mobile franchise – often tied to a territory rather than a physical asset – can be resold down the track.
Speak to existing franchisees
Both Murray and Kleber stress the importance of speaking to other franchisees to get a clear and unbiased picture of what the business is actually like day to day.
“They should call every one of those franchisees, current and former, and ask what it’s like,” Kleber says.
“That way, they’re not just relying on what the franchisor or the sales team tells them. If they do that research, they’ll get a really accurate representation.”
Get legal advice before signing
The franchise model comes with a set of unique legal obligations and constraints that many buyers may be unaware of.
Murray says that engaging a franchise-savvy lawyer or adviser before signing a franchise agreement can help flag potential risks and clarify what you’re committing to.
“It’s important to review the franchise agreement with someone who understands franchising, because the legal structure of the relationship matters just as much as the business model itself,” she says.
As more Australians look for flexible and lower-cost ways to run their own business, mobile franchises are likely to remain popular. But, as with any investment, doing your homework is key.
