The Wall Street Journal online Small Business section posted a piece yesterday on mobile franchises, described as franchised businesses in which owner/operators work out of van, truck or trailer. Low start up costs are the chief attraction, since these businesses avoid the hefty expense of lease and build-out costs for a retail or wholesale location. The piece also mentions some of the drawbacks to the model, such as fierce competition in the areas that are conducive to mobile businesses and some difficulties in marketing and promotion, partially tied to the lack of a storefront presence.
We have seen success with a mobile franchise concept first hand. We have written previously about our franchise client Sir Grout, who are grout, tile, stone and wood restoration specialists and are ranked in Entrepreneur Magazine’s Franchise 500. Sir Grout has shown steady growth from its first franchise in 2008, with 17 franchises operating as of the end of 2010.
The key is to find entrepreneurs who do not want to be trapped behind a desk or counter and thrive on their feet, interacting with people on a regular basis. It is a perfect set-up for a person with a skilled handyman or installation backround. The International Franchise Association recorded growth across the board this past year in the mobile segment, with a 26% jump in franchise sales in the mobile bathroom remodeling business, with similar jumps in mobile handymen, electric and plumbing.
From a franchisor’s point of view, the appeal is very strong. Numerous busineses lend themselves to the mobile model, particularly in the housing segment, and there is a healthy supply of willing and experienced workers left over from the housing boom who can fill the spots. The limited upfront capital necessary is still achievable for many people. Also, the mobile model is flexible, with the ability to expand into other sources of revenue with minimal capital outlay. Once you are in the door, opportunities abound.
As Jeff Gill, one of the founders of Sir Grout, says, “In today’s economy, potential franchise owners can ill afford to take risks when investing in a new business. To be attractive to a prospective franchise owner, you must show them a lot of value with a low cost to start and maintain the business. We have gone to great lengths to create an opportunity that provides multiple streams of revenue that mimics owning 3 different franchises for the price of one.”
Just like in the stock market, franchise investors are looking to make value investments with little speculation. Hitting the road with your own business fits that aim nicely.