How to buy a courier franchise
Everything you need to know about purchasing a courier franchise in Australia.
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With relatively few physical assets involved, a courier or delivery franchise can be one of the cheapest new businesses to buy.
While industry-wide revenue fell by 2.8% between 2012 and 2016, the courier sector is forecast to grow by 2.5% annually, reaching a predicted $4.8 billion in revenue by 2021. Starting a courier business from scratch is tough, with the market share divided, for the most part, between a few big-brand names.
Buying an existing courier business gives you an established customer base to build on, allowing you to cut out a lot of the effort of starting a company from nothing. But what does a new business owner need to do to become a courier franchisee, how much does it cost and how do you apply?
How do courier franchises work?
To become the owner of a territory for making package deliveries for an overarching established brand, you have to become a franchisee. A franchisee effectively purchases a licence from a courier corporation, such as DHL, to use their branding, products and operational structure, and then runs the courier service as their own business, in exchange for a share of the profits.
By becoming a courier franchisee for an established brand, your business will have a steady customer base from the outset. Companies can offer franchise packages for a minimum investment, providing an established brand name, pre-contracted work and business support to increase your company's revenue.
A franchisor offers more than just a recognised name for you to trade under. It will already have a network of established contacts, meaning it can provide you with pre-arranged contract work and a steady, regular stream of income for minimal effort on your part.
The rapid growth of Internet shopping, aided by the COVID-19 pandemic, means that money previously spent in physical stores is now being spent online more than ever. This makes business-to-consumer deliveries an attractive source of future growth.
What do I need to do to become a courier franchisee?
To become a courier franchisee, you can get started by simply buying a franchise, or a franchise package, from a reputable existing company.
You will need:
- Funding. Whether you are planning on using your own savings or taking out a business loan to cover the expenses, you will need to have the funds to purchase the franchise in question.
- A driver's license. It is essential to own a full driving license.
- Training. Almost all franchisees will be subject to a training program. The length of this program will depend on the courier in question.
Choosing a courier franchise
As with any investment, it's worth doing your research to figure out which company to franchise with. Every franchise has different standards, rules and fees.
Popular courier franchises in Australia include:
- DHL Express (Australia)
- Toll Holdings
- Aramex Australia (previously Fastway Couriers)
Talk to other franchisees about their experiences with various companies, and ask the franchisor for financial projections to check that you are making a worthwhile investment. Ask questions such as:
- How long is the training schedule?
- How quickly will you break even?
- Will the franchisor provide you with the start-up essentials such as fuel, uniforms and vehicles?
Eventually, you will sign a franchise agreement, confirming your obligations and those of the franchisor. It will include details of any training you will need, your territorial rights and any fees you will need to pay the parent company. It's worth getting a solicitor to look over the franchise agreement to make sure the contract is attractive and fair.
How much does it cost to become a courier franchisee?
The initial investment in a courier franchise can vary depending on the location and company size. Established couriers across Australia, such as Aramex Australia, offer franchise packages ranging from $20,000 to $50,000.
Some companies may be more flexible on the initial investment, but as with any business investment, a larger initial cost will yield a bigger reward, allowing you to break even more quickly.
Most companies will provide training after the initial investment is made, and companies operating within exclusive territory may require a larger initial investment, as would those servicing a larger area.
What are the pros and cons of a courier franchise?
There are a number of pros and cons to purchasing a courier franchise, as opposed to starting your own courier business:
Pros:
- Low start-up costs. Costs for starting a courier franchise are often lower than that of a new business, and there's often no need for premises.
- Training. As with most franchises, pre-existing business experience is not crucial, as new franchisees are provided with training.
- Brand recognition. There's no need to build-up brand recognition, as you would have to do when starting your own business from scratch.
- Proven formula. A series of success stories from franchisees prove that the method works.
- Exclusive territory. You will be provided with an exclusive area in which to work in, meaning that you will have specific areas that only your courier service will deliver to.
- Help and support. Ongoing business support, as well as financial help with purchasing equipment such as vehicles and uniforms, is provided.
- Locked-in. There's the possibility of you entering into an agreement that might be difficult to get out of, should it end up being a less attractive investment than anticipated.
- No guarantees. Franchising gives no guarantee of business success, despite its many positive aspects. Franchisors also do not have to renew an agreement at the end of the franchise term.
- Contractual obligations. Buying a franchise means entering into a formal agreement with your franchisor.
- Restrictions. Franchise agreements dictate how you run the business, so there may be little room for creativity. There are also usually restrictions on where you operate, the products you sell and the suppliers you use.
- Lack of control. Bad performances by other franchisees, which are out of your control, may affect your franchise's reputation.
- Sharing profits. Buying a franchise means ongoing sharing of profit with the franchisor.
How do I apply to become a franchisee?
To apply to become a courier franchisee, call or visit the website of the company with which you are interested in opening a franchise. From there you will:
- Obtain the rules and costs associated with the franchise.
- Review all disclosure statements and provide the franchise representatives with any supplementing information required, such as lease options, background information and disclosures.
- Sign the franchise agreement.
- Submit the application.
- Pay the investment fees and set up shop.
How do I finance a courier franchise?
The start-up investment can provide a hurdle for an aspiring new business owner if they don't have the savings to hand. However, you can apply for start-up funding from both banks and non-banks alike.
Banks may be more likely to give a loan to a franchisee than a lone entrepreneur, as operating under an established brand name makes you much less of a financial risk.
You may consider some of the following business loans:
How do I apply for finance?
Make sure that you compare your franchise finance options carefully before submitting an application for business finance. To start a business loan application, simply click "Go to site" on our table to visit the lender's website directly and submit an application.
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