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Matters To Be Considered In Relation To Mobile Franchises

 

The number of franchises in New Zealand and Australia where the business is conducted from a van has grown considerably over the years.

 

There are franchises that are mobile because they have to be.  For example, there are pool valet services, electrical or plumbing services, couriers, and cleaning.  There is Laser Electrical, Laser Plumbing, Aramex (formerly Fastway Couriers) and Poolwerx.  There are also mobile businesses which can deliver products and services to customers.  For example, carpet retailing, carpet cleaning, car tuning, coffee and book-keeping.

 

If you are looking to invest in a mobile franchise which is commonly called “a man with a van”, then you must do your due diligence.  Apart from talking to the franchisor and asking a lot of questions, it is essential to talk to mobile franchisees who are already running their own businesses to see if they like it, what pitfalls they have discovered, and the operating costs.  In addition to the normal expenses to operate a business you will have petrol or diesel costs, maintenance costs for the vehicle, annual registration fee, and insurance.

 

The franchise agreement between the franchisor or owner of the intellectual property for the business system and the franchisee will contain some unique clauses including the use of the trade marks and colour schemes, specifications of the type of motor vehicle and territorial restrictions.  Can the mobile van drive anywhere?  If the answer is no then the franchisor must think carefully about the division of territories, the population base, and how to distribute a territory fairly among franchisees.  A courier van is an interesting case study.  We all see couriers driving everywhere but even the courier/franchisee should have a specified area or territory.  For example, Auckland is such a large city in land area so it would be hopeless to allow a courier to drive from West Auckland to East Auckland delivering parcels.  The same would apply to Sydney or Melbourne so careful thought and research must be undertaken in relation to territories.

 

It is also important for mobile franchisees to comply with all relevant legislation and regulations.  In New Zealand, if you drive a diesel or another type of non-petrol fuelled vehicle, you need to pay Road User Charges (RUC).  These charges go towards maintaining and improving the roading network.  Petrol vehicles contribute towards these costs through an excise tax on petrol.  There is no tax on diesel which is why these vehicles need to pay RUC instead.  RUC is charged according to how many kilometres a vehicle travels, and its type and weight.  Vehicles pay a set amount for every 1,000 kilometres travelled.  For example, a powered vehicle with two axles and under 3.5 tonne will pay NZ$76 per 1,000 km and heavier vehicles pay a higher rate of RUC.

 

In conclusion, it is important for a potential mobile franchisee to do its due diligence, to read the franchise agreement in full and to take independent advice from a franchising lawyer and accountant.  The number of mobile franchises is certain to increase so watch out for a new brand appearing where you live.

 

 

 

Stewart Germann founded Stewart Germann Law Office (SGL) in 1993 as a boutique law firm at Auckland, New Zealand, specialising in franchising, licensing and business law. Stewart has over 40 years’ experience in franchising law and acts for franchisors in New Zealand, Australia, USA and the UK. SGL also act for franchisees and provides legal advice. Stewart has spoken at franchising conferences in New Zealand, Australia, Italy, South Korea and USA and he was on the Board of the Supplier Forum of the International Franchise Association (“IFA”) for 6 years until March 2007. 

Email: stewart@germann.co.nz | Web: www.germann.co.nz