Ideal franchises to attract corporate refugees

Norman Friend Western Investor

July 31, 2017
franchise stock

We’ve looked at the growing trend of “corporate refugees” quitting the rat race and turning to franchises as a liberating career choice. In part one, we looked at why this is happening, and in part two, why corporate refugees make great franchisees. In this third and final part, we take a closer look at why mobile/service franchises tend to be the best fit for this professional group.

The types of mobile/service franchises that attract franchisees can be divided into three categories.

• The first category requires the franchisee to have some level of mechanical ability e.g. mobile tire service, or windshield replacement.

• For the second category, a franchisee would need to have, or obtain, some type of education or certification – e.g. home inspection, plumbing services or pest control.

• For the third, and probably the category with the most franchise opportunities, a franchisee would not be required to have any specific training or abilities. Such franchises would include services such as junk removal, mobile automotive detailing, window cleaning, graffiti removal, cleaning services and pressure washing.

Generally, the conditions imposed by each category limits the choice of potential franchisees to one particular category. Some franchisors may require the franchisee to have some basic experience in areas such as landscaping, handyman services, and restoration services, although it may be possible to train franchisees in these areas.

Benefits of sales experience and network

In situations where the franchisee is not required to have specific education, certification or some level of mechanical ability, the franchisor’s preference is often to look for a franchisee with selling experience and proven networking skills. Why? Because it is often easier to provide training on the technical or trade skills, than teach someone who already has the technical or trade skills how to market, sell and promote their business.

Preference is also usually given to an applicant who has lived in the proposed territory for some time and has a circle of influence, as this is a big asset during the start-up period.  This is important as mobile/services are “marketing-driven” not “location-driven” like bricks-and-mortar businesses such as restaurants and retail stores.

Level of investment required

Another aspect that will limite a corporate refugee’s options in terms of the franchises they can buy into is the level of investment required. However, the total initial investment in a mobile/service franchise can often be reduced significantly by opting for a leasing package rather than purchasing the vehicle and equipment outright.

Most mobile/service franchises have negotiated pre-approved packages (subject to the franchisee’s credit record), with leasing companies that include the vehicle, equipment and vehicle wrap. Depending on the relative costs and what equipment is required, the franchisee’s total initial investment can be reduced by as much as 60 per cent, which can make the franchise opportunity very affordable.

Obviously, the monthly lease cost has to be factored into the franchisee’s monthly expenses to ensure it is affordable. The franchisee will still need to fund other initial costs such as the initial franchise fee, working capital, insurance, uniforms, licences and pre-opening advertising.

Some franchisors require their franchisees to acquire new vehicles that conform to their specifications for a number of reasons, including the need for any designated equipment to fit into the vehicle with adequate room for supplies. Franchisors that don’t have such specific requirements may allow a franchisee to select the type of vehicle they wish to use for the franchised business; however, this may be limited to a small number of vehicles in order that the vehicle wrap can be applied.  Some franchisors allow franchisees to acquire used vehicles providing they meet certain requirements with respect to make, model, age and condition.

 

norman friend
Norman Friend is founder and president of Franchise 101 Inc. and founder of the Franchise Forum, which presents regular breakfast meetings in Vancouver for professionals involved in franchises. Norman is widely recognized as an expert in expansion strategies, franchise development and franchisee recruitment with almost 30 years’ global experience. He has consulted on multiple franchises that have featured on CBC’s Dragon’s Den TV show, and is also the franchise expert for CBC’s TV series The Big Decision.