A well-established mobile retail franchise system utilising the research and development of its US parent, Snap-on puts franchisees on the doorstep of vehicle mechanics, ready to update their tools with a truck full of good quality merchandise and state-of-the-art computer diagnostics. And the cost of this business?

Initial outlay

Initial franchise fee (this includes all costs associated with training including one week at Snap-on’s headquarters training centre, Dallas, Texas; laptop computer, software, uniforms) $40,000

Capital for customer credit program (receivables) $30,000

Estimated start-up costs (incidentals) $2500

Working capital $10,000

Lease deposit for mobile store (estimated) $20,000

Initial inventory $72,000

Total cost $174,500

A new custom built mobile store costs approximately $160,000 but this is leased so it is not an upfront cost. A monthly truck lease is likely to cost in the region of $2400.

Ongoing fees

Once the initial payments have been made to secure the franchise, there will be regular and ongoing payments. For Snap-on the fees are as follows:

Monthly management fee: fixed at $400

Software support: $93 monthly

Mobile store insurance: fully comprehensive plus public liability: $204 each month

Inventory insurance calculated on the actual stock holding: approximately $50 monthly

Wages

A Snap-on franchise is typically a one person operation and consequently there are no staff or associated costs.

Marketing

Every franchisee receives a detailed survey of their territory, which identifies and profiles the location of all the potential customers within the territory, explains national franchise manager, Nick Hudson. “Snap-on puts an advertisement in the local paper of every new franchisee introducing them to the area, at no charge to the franchisee. Consequently there is no need for local area marketing as the franchisee calls on the customers and takes the retail shop right to their place of business.”

Building the business

As part of the recruitment process to become a franchisee, a Snap-on business manager assists the franchisee with their business plan and cash flow forecast. Once the franchise begins operation the performance of the franchisee is then tracked against the business plan and forecast. “Franchisees are taught that a business plan is a living document and is regularly updated,” says Hudson.