Friday, 5 December 2014

Velofix Franchise - Dragons Den £168,000

3 Canadian cyclist's come business men have secured £168,000 with a pitch on Dragons Den "Canada" to help fund their professional mobile bike service and repair business.

This is great news for the mobile bike business, as it shows The Mobile Cycle Repair Service is in high demand. Velofix are working hard with leading cycling brands to make this happen. But it will all be down to the network of the franchisee's to make it a success.

The Deal:
  • The franchise fee is £14,000 plus £28,000 (+ vat not sure if included???) for the van build-out (this does not include the cost of the vehicle From £30k + vat Mercedes Sprinter LWB or tools minimum|£2,500), the royalty fee is 8% of sales, branding fee 2% plus £50 monthly Velonet user fee. 
  • Velofix works with lending companies, including BDC, that roll up the cost of the vehicle and buildout package into a monthly lease for franchisees. For about £19,600 to £25,200 in upfront capital you can get a truck on the road.
  • Rates start at £38.70 an hour plus tax based on the service package selected.
  • One mechanic can carry £14,000 to £19,600 worth of inventory in a van
  • 5 year agreement 
  • Please contact Veleofix direct for the exact coasting for your setup requirements 
  • Does the fee's included training?
What separates Velofix from other mobile bicycled shops is technology. “One of the challenges of operating a mobile service is scheduling. We have proprietary cloud-based software that books a service, route optimizes the van and allows the mechanic to wake up in the morning and see who is on their call schedule and what they booked so they can make sure they have all the parts they need,”
What separates Cycle Tech UK from other mobile bicycle shops it's not too corporate for a group of professional mobile bicycle mechanics who are by nature individualistic and happy to be their own boss. Means cyclists like using our independent local mobile bike businesses for their care of service, rather than a business working to a target. 

My initial thoughts:
  • As you have 3 business men who need to make a return and a Dragon who wants 20% return, means that a large amount of money has got to come from Franchisee setup and ongoing royalty fees. 
  • They have a unique booking system that allows them to direct work to the franchisee, where Velofix keep the customer base?
  • How can they tell what all parts are needed with out seeing the bike first? 
  • And where do the parts come from? Especially in the morning! Buy from Velofix or their own trade accounts?
  • In Canada cycling is more seasonal then here in the UK. 
  • My question would be how much volume does each franchisee need to be profitable? "To build this business, with the stock required, plus pay back original investment and ongoing fee's, would mean at least 5 years of hard work before you start to make a real profit living."
  • This could work in London, with a different setup to Canada with cooperate being their main goal.
  • If you search Velofix uk, you will find this name has already been used.
The Franchise start-up is for the lazy business man, for someone who wants all the hard work done, is willing to pay for it and expects a return. Sorry folks! It needs your ongoing effort, without it, it wont make any difference how much money you keep throwing at your business.

The idea of being mobile, is to setup and run your business at a lower cost and be flexible, by that I mean: Reaching out to those customers that find our services right for their needs, By offering a professional service, from a professional workshop that you have invested in and is yours. By also having the time to chat cycling and give advice to your customers. Where someone who needs to cover his costs to a Franchise will not be offering a unique service (I would think they would end-up working 12 hour days and 4 of those days would only cover the franchise fees only and not the other running costs) and the business will end up being like some of the meany bike shops with grumpy owners. You would be better off putting your money in a bike shop or the bank lol. You have to ask yourself; Why are you going in to business for? For me is to do what I love, that I can also make a good living from and able to take time off cycling or even touring. Also the business setup also can handle quite periods of no work, as this maybe the case of your first year in business, but it can happen anytime. If there is no work, you still need to pay those fee's............



View the full Dragons Den with Velofix pitch on Video HERE

Also read:
Read the full story By Business Financial Post HERE



If you would like to receive a copy of Cycle Tech's information brochure which provides further details, joining fee, including an overview of our business model then please contact the Cycle Tech team. Email: info@cycle-tech.co.uk  


7 comments:

  1. Hi Martin,

    I saw this on twitter and I think your break down of how its got to work is spot on, its a big investment and a long time before you see a return. I was impressed with the computer based booking system, but It does take away the personal touch. You are also right about parts and keeping stock. I wonder how many jobs you would go to and not have that one part you need to complete a job! I think the way we work is far more flexible and user friendly. Cycle tech UK all the way!!

    Happy days

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  2. Hi martin

    I have a computerised booking system on my web site , it's been used twice in 4 months, customers either email or call so that must be the preferred way

    Regards

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  3. It’s a good report

    I have a booking system that works from website, but I confirm date and time manually. It cant be workable if fully automated. How can you guestimate travel time / job times etc? Local or distant blar blar blar.

    Kind regards

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  4. Scheduling repairs based on the customers fault diagnosis. That's not a recipe for success, I wish them luck.

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  5. I don't know. I would have made more changing a bottom bracket as requested rather than oiling the chain as required!

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  6. In the short term you would have, but the fault would have still been there, wouldn't it. And that, for me, would be a problem.

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  7. I would imagine their booking service is a bit more sophisticated! "Cloud-based software that books a service, route optimizes the van and allows the mechanic to wake up in the morning and see who is on their call schedule and what they booked so they can make sure they have all the parts they need,”

    I would have mine setup to stop me at all good coffee shops and cafes on route.

    There could also be PO Box for pickup of parts!

    ReplyDelete