For the owner driver working in the courier industry, whether to buy into an established franchise or go it alone is a decision not to be taken lightly. Investing in a depot-based or courier franchise of an established brand can offer an instant leg-up to success in a crowded market, but there are plenty of things to consider before taking the plunge – not the least of which is the financial commitment.
What is a Franchise?
In a nutshell, there are two different kinds of courier franchise: a depot-based operation, where you run a number of vans and drivers, or a simple courier operation where you as the owner driver work on your own, covering a particular exclusive territory.
For this second kind, under the umbrella of the brand, you’ll work to a designated area (usually by postcode), finding your own jobs within that area. You will, however, receive depot and administration support from a regional franchisee (the first kind mentioned).
Will it Suit You?
Just the same as an independent owner driver, you’ll have to be prepared to work irregular hours to get the jobs and run a profitable business. You’ll also need to put in a fair bit of work marketing yourself. If you have managerial skills it will certainly help you organise your time, and you’ll most definitely need to have good customer service and be a ‘people person’.
How Much Will it Cost?
This depends entirely on the brand, the size of the territory and the individual operation, but for a single person business you’re probably looking at an investment of between £6,000 to £20,000. Some may require you to have your own vehicle and some will lease you a van for a fee per month, which can cost up to £500 including the running costs. You may also be required to pay several months’ lease costs in advance.
While the outlay may seem daunting at first, remember that if you’re buying into an established brand you may be able to borrow from a bank to cover your start up costs.
How Much Will I Make?
As with any owner driver business, how much you get out of it will depend entirely on how much you’re prepared to put in. However, again it will depend on the size of the territory and how quickly you want to pay back any bank loans or reinvest in terms of expansion. And when it comes to franchising, the experts say that expansion is definitely where the big money can be made – if you’re ambitious there’s plenty of scope to build up a territory and then sell off part of it to another driver.
Top tip: There’s always more profit to be made in operations where you deal with jobs from pick up to delivery – no depots.
Secrets of Success
Finally, a few top tips from successful franchisees:
- Control your cashflow – this means invoicing regularly
- Control your costs – budget for the quiet times
- Have a buffer – in case you’re unable to work for any reason
- Know your customers – and show them you care
- Protect your reputation – even under the umbrella of a known brand name, it’s your name you want your customers to remember
By Norman Dulwich