You might not have bricks, mortar and rent to pin you down but a mobile or service franchisee has to ask all the same financial questions as any new business starter – and then some.

When you invest in a mobile franchise you buy rights to work according to a brand and its intellectual property in a defined territory. You also buy rights to market it and benefit from central marketing and lead distribution.

A mobile franchise lacks passing trade and the ongoing shopfront visibility of a stationery franchise, so relies more heavily on quality of territory and central marketing.

You know what sort of work suits you – outdoorsy, physical or less active and indoors. You’ll be attracted to being out and about between jobs. Yet, when choosing an opportunity, remember there’s back-office work for mobile services.

“Unless you are buying into a high-end franchise which trains in selling and marketing and has strong business management systems,” says Kate Groom, co-founder of Smart Franchise and The Franchise Accounts Network, “you need to do all this yourself. You also have to plan the best way to do it.”

If you’re inclined towards professional services such as bookkeeping or coaching, Groom warns to think carefully because, she says, “the value of the brand is harder to define” although there are training and qualifications. And you have to work closely with professional services clients.

“So clients want a rapport with you,” says Groom. “And it’s harder to demonstrate your professional advantage whereas with cleaning or mowing, results are obvious when the job’s done.”

Be aware that mobile businesses, however small, still need a business plan that fits with the franchisor’s longer-term business vision. Decide whether you just want an income or a business to build into a saleable asset and be sure it fits the franchisor’s long-term view. It’s especially vital for mobiles which are so often a one- or two-person show – without staff to stretch when busy or cover if you’re unable to work.

Jane Garber-Rosenzweig, a principal at Gable Lawyers in Melbourne, believes good agreements have options for more growth or less. She recommends asking about a franchisor’s longer-term plans for:

• future numbers of territories over what period/s. Is there a guide to a total?
• whether any will be near your territory?
• will you be required to put on a second van at any point?
• options such as split or trimmed territories, subcontractors, on-selling or buying back territories

“At first glance, franchisees might think changes to territories are not in their interest. But it goes both ways,” says Garber-Rosenzweig. “Revisiting territories and making changes can benefit  them.

“When signing, ask a franchisor for a current expansion plan but it’s not mandatory under the Franchising Code of Conduct,” says Garber-Rosenzweig. “Where a longer-term plan that affects territory selection does exist, it should also be disclosed, as part of the territory selection policy.”

Size isn’t everything

It’s not a territory’s size and population that counts most, it’s the demographics and the level of interest in a service. In fact, a big territory could be just what you don’t want because travel is money – in petrol, vehicle maintenance and driving time. Condensed trade is the most efficient and profitable.

In country areas, territories need a really good town centre or two and ideally will be growth areas.

“Small isn’t always best,” says Buckingham, “but, based on freeways and waterways, an area should be logistically and geographically efficient.”

Sizing up a territory is not all about square kilometres. Franchisors should present solid evidence of how a territory was drawn, showing potential custom based on demographics. This includes residential and business numbers, ages, incomes, disposable spend – all backed up by maps. The  Code of Conduct requires not only disclosure of site selection policy but also annual updates.

It’s up to buyers to investigate a franchisor’s method to be satisfied that a territory will work for them. “Do your own research on the territory’s demographics, what they mean for your business,” Buckingham advises.

Buckingham believes good franchisors understand and present their ideal customer profile and the likely number of these customers in an area based on the Australian Bureau of Statistics’ Socio Economic Index for Areas (SEIFA shows affluence and disposable income) and, if freshly available, Census data or Household Expenditure Survey (HES shows spend on household services). Or, for business-to-business franchises, look to ABS business data.

“Find a franchisor whose logic on territories makes good sense to you.”

Use common sense to see if a territory matches your service. There’s no point running a a mowing franchise in a highly populated but high-rise area.

Well-planned territories are not equal in base numbers of population, households or businesses. “Better that territories are similar in potential business each area offers each of you”, says Buckingham.

“No franchisor will stick their neck out to claim a definite number of customers for an area,” he says. 

Mapping your asset

An indisputable map is vital. Unfortunately these are often presented with a list of postcodes or, worse, a description of boundaries. Postcodes, along with streets, can change. A map is not mandatory but, to avoid problems, it should always be part of your original agreement, according to Garber-Rosenzweig.

“If you can refer to your original, clearly drawn map,” adds Buckingham, “most discussions between franchisor and you can be worked out happily.”

Buckingham advises that boundaries based on suburbs, main roads and other obvious topography avoid issues arising from postcode changes. Be careful, too, of variations between ABS postcodes for demographics and Australia Post postcodes for area maps and lead allocation – because new customer leads will follow Australia Post’s numbers.

Selling your services

Without passing trade, marketing and leads are all-important. You need to buy into good central marketing nous – and action – or be confident your own marketing will drum up business.

Marketing in a territory is either active – most often leafleting – or you can respond to leads from passive marketing such as word-of mouth that pulls customers from outside a territory.

Garber-Rosenzweig advises checking out disclosure on the central marketing fund and the way it is spent. “A franchise buyer can ask about marketing results – sales and growth – but the franchisor isn’t bound to supply that.”

Your rights to do franchisor-approved marketing in a territory will be spelled out. Guidelines or restrictions should be very clear, right down to what you can say when cold-calling. Then there’s internet marketing which needs to be disclosed.

“Disclosure includes online presence within a franchisor site or whether a you can run your own Facebook page,” she explains.

Create your own leads

Lead allocation is a bigger part of the value of a mobile franchise – because there’s no walk-in business. Yet franchisor leads are unlikely to be enough. “You can’t afford to wait for centrally generated leads to come in,” says Groom. “It’s a bigger deal to make that mistake if you’re not where there’s passing trade.”

Allocate regular hours for marketing, and factor it into your business plan, she suggests. “You shouldn’t be doing 40 hours a week on paid jobs and no marketing or admin. Unless you’re buying in with a high-end franchisor which trains you in selling and marketing, and has really strong systems, you needs to do this work yourself.”

Research how many leads other franchisees get from a franchisor weekly or monthly, how easy it is to convert leads to work. Then estimate how many of your own leads you’ll need to generate.

You should also find out how fast and efficient the lead allocation system is, because this will affect your ability to convert leads into business. Buckingham helps expedite leads by embedding a map of territories in Google Earth so franchisors can immediately see which territory gets a lead.

The franchise agreement should cover how lead allocation works, says Garber-Rosezweig, including what you’ll pay per lead, and time-frames for you to respond. It must also cover in what cases the franchisor gives a lead to you outside a territory – because this affects whether a territory is truly exclusive or not.

“Some central offices send a lead to three franchisees near the job – so it’s competitive like a taxi system – whomever answers first gets the job.”