Mobile coffee vans. Independent or Franchise?

GaryatGala · February 2012

I am seriously considering a move into a coffee related career after working many years as a humble food and wine consultant (ie. a waiter)

I figured the most affordable way of owning my own business is to run a mobile coffee van business.

I have looked high and low to research into it. I have spoken to other owners, even have had a franchise sales manager to fly over and travel through a couple of industrial/commercial areas close by my suburb. He has given me a disclosure document and I have had a solicitor read through said docos and paid a fair amount for the priviledge. The franchisor said looking at the territory and looking at my background as a waiter and coffee maker as well as customer relations, I should have no problems and he is confident I would do well. He goes as far as I would not have to travel out of one of those industrial areas and business would be sufficient to achieve efficiency and less costs, and i would have to run a second van in the third business park once i have rights to the territory mapped out for me.

I have also looked into a few businesses that deal with independent ownership.
They provide various van packages complete with generators, fridges, machine, grinders etc with training.
They do not take royalties and do not charge a franchise fee one off and neither do they charge a weekly franchise fee.

As far as i see it, perhaps a franchise system does offer best chance of success, they would appoint a manager to build the business in the first few weeks until i can do everything on my own, plus they provide training on book keeping. When i'm on the road, they would provide assistance with any issues i might have. They may have weekend events booked by customers and i would be informed if i want to undertake the event as icing on the cake over the weekly run.

The thing is, it's not really my business. I am bound by their rules and territories, and the products i sell has to be by their guidelines for consistency. Also i would have to pay a weekly franchise fee as well as marketing fees which would add up over a year. I am also bound by their logo, and branding.

As for going independent, I can pick and choose my choice of van, colours and schemes.
Choice of coffee ( Can use my own roasted coffee, once i sort out the thermostat bypass on the KKTO), milk, cups and food/drinks items are mine as well, and i can choose which provider. to deal with.
No franchises and fees associated with that.

Cons would be the lack of book keeping skills on my part, and I'm on my own as far as building clientel base.
I would have to do a small business course as i don't have any idea of GST or BAS statements :-[

Could have added this to the other topics in this thread, but i wanted to keep it mobile coffee van based.

I love my coffee, and i love being on the road and having a chat with customers, come rain or shine. So this perhaps could be the turning point for me. This is the perfect forum to ask for advice.

So, if there's anyone out there whether franchised or independent owners as well as experienced business operators can chime in and offer advice, please join in. What are your thoughts? That would be much appreciated.

Gary at G

GaryatGala · February 2012

Also like the idea of having the roasting station in the garage with the van. Kind of suits the scenario. Perhaps a 1-2 kilo commercial roaster or pimped KKTO to handle 1 kg loads would be great

Koffee_Kosmo · February 2012

I have a franchise for the last 12 years Its in building services I do have fees but in my case where we get paid monthly you pay the franchiser to chase any money owed to you if any If the company is run well and with smart hard work from you its easier to succeed with a system based operation KK

mycuppa · February 2012

Gary, you should extend your research to understanding the territory and the competition. This is something that is best performed by getting out and about, rather than looking online. Park near remote commercial office and factories and check who and what is going on. Based on many conversations with van and cart operators over the years who have and are my customers, some have had prior experience with franchise systems and on balance the majority of them elected to develop their own independent offering once they had let their franchise lease terms lapse, or they had negotiated an appropriate, ethical exit. part of this was their desire for personal freedom and for others it was about looking to reduce their cost base. I'm not advocating against the franchise systems, however, if I look at Melbourne where there are about 60/40 ratio of franchise versus independent, it seems the independents rely predominantly on their evolved customer base (named "RUN"), rather than continually searching for leads and deals. The vans do the rounds at various commercial and office districts that are not well serviced by cafes and takeaways. Sometimes it can be amusing as a van will beep the horn, wait for 10 mins, serve a few coffees and then take off. Half an hour later another van from the competition rocks up and does the same thing. Don't be afraid of book-keeping - it's relatively easy and for a few hundred dollars you can pay a book-keeper to get you up and running. Marketing on the other hand is a little more challenging - these days you need an online strategy so that prospective customers know how to get hold of you. This may cost your $5 - 10K Good luck on your journey. Jeff

GaryatGala · February 2012

Thanks for your feedback thus far KK and Jeff. So far I have travelled 7 times to 3 industrial areas that are close by of which i'm interested in. Two of them are established and contain smaller and medium sized companies, mainly services like tree trimming, car repairs, bus companies, painting, gardening etc. and also retail outlets like tyres, painting, mowers, plumbing etc, but very few offices. There seems to be a fair amount of traffic and activity going on there. Have been travelling out there once a week to see if there's any other vans out there operating and just generally get a feeling and finding and learning the streets. There's a third business park being developed and that's a biggie. It would contain a mixture of light and heavy commercial as well as services. http://www.mra.wa.gov.au/Documents/Armadale/Forrestdale-East/Forrestdale-Business-Park-Structure-Plan.pdf I have rung a handful of companies about mobile coffee vans as a survey, and they mostly are not interested. Ringing them on the phone is perhaps not a good indicator since most of them have had their fair share of dodgy callers from overseas. Perhaps they are more inclined if i turned up in a colourful and sparkling clean van with free coffee to sample and flyers/menues and a friendly face. Am in the process of sending a few emails and gauging to see their reaction. If it's a franchise system worth joining, then it would be the one that has 117 units here in Aust, over 50 in UK/Ireland and master franchising started out in the US. I like the idea of someone specialized with me to build that all important clientele base. Then it's up to me to keep the quality and customer relationship going at a consistent level, perhaps gaining more as time passes from word of mouth advertising. Gary at G

blanyon · February 2012

Gary, Each offers different benefits, support vs freedom. You pay for the support through the fees and only you can decide if that is the right option for you. Don't sweat the bookwork, coffee vans are pretty simple and there are some good basic bookwork courses out there to teach you all you need to know. If you already know the coffee side of things well then I would buy a van kitted out and do the legwork yourself to get it running how you want. As for roasting leave it to the side for the moment and get a good blend to get you going, after doing your morning run roasting coffee might not be a high priority as it can be taxing running a van. Hope you decide to take the plunge and I look forward to hearing more. Brett

FreshCoffee2 · February 2012

If you are young and energetic I would be going it alone sans franchise.....I have never really understood what a franchise does for a coffee van owner....perhaps someone can help with that here. My son did his own, he did all his own legwork drumming up business, gave lots of coffee away in the beginning as a kind of 'calling card", and did very very well with good faithful long term office, retail shop and industry clients For heavens sake park the coffee roasting ideas. If you are successful in the van, you wont have time to scratch yourself let alone roast coffee. That's like saying, I think I'll milk my own cow......where's the advantage in a business designed around selling cups of coffee? Its very much a lifestyle business (or was in my sons case), he'd get up early and do the rounds, go surfing in the middle of the day then organise & replenish his stocks, do accounts, then go out again in the afternoon. He'd do sports fields on Sat and Sunday, festivals etc. On the go basically seven days, anf he made very good money for his efforts. And he also built the van for a fraction of the cost of buying into a franchise. That is where you save heaps first up.

Kelsey · February 2012

Gary, have you looked into the NEIS program offered by the government? It's designed to help you get a certificate III in small business management and provides you with a $10,000 grant. It needs to be for a new business and there are some other restrictions - you have to pass the course, for example. But they teach you about the bookwork and management side of things. Our business got our start with NEIS and we found the program invaluable.

UNM · February 2012

As others have said, no need to be scared of the bookkeeping, GST or BAS. All pretty straightforward. The ATO run regular free seminars for those starting out in business to help explain what your obligations are. I did several evening sessions, but they also do one day events at weekends. State and federal governments can help with advice and possibly finding a business mentor. I use MYOB for my bookkeeping - it is 'free'as my accountant takes care of the licensing and supplies me the software as part of their annual fee. Makes paperwork easy - tedious, but easy. What you need to satisfy yourself is whether the franchise system actually gives you any real benefit in the short/medium/long term. In my case, I signed up with a (dog grooming) franchise system as I felt my marketing skills were not well developed and I wanted the extra support that a large franchise chain should offer. Three months or so after starting, they offered to make me 'franchisee marketing manager' - advising new franchisees on how to market themselves because they recognised my strong skills in this area. I took the role partly because the irony appealed to me. ;D I was the third franchisee in Victoria and basically got service calls from 50% of Melbourne in the early days. This let me build my business quickly, even though I was zipping around like a blue arsed fly. In my case, most new business came from our large Yellow Pages ads. Quite different to your business model. Even so, long term it may well have been better to be independent. In a coffee van, I imagine that very little business will be due to newspaper/radio/TV advertising, or brand recognition - could be wrong here, just seems likely to me. I would expect most of your new business comes from your own leg work. Depending what the manager appointed to you does, they may provide good value, or may not. No reason why you should not hire your own consultant. I know there are people on crema that do consultancy work for cafes, someone should be able to advise how you would track down a local consultant. Repeat business presumably comes from you being reliable, consistent, realistic pricing and having a product people enjoy. Seems to me you are worried about higher risk of failure going it alone, but would like the freedom of not being tied to a franchise. The owner of the franchise will work on your fear as part of their selling process. They will try to make you feel secure with being part of their 'family' - nothing wrong with that, but don't let natural worries about going out on your own become a stumbling block. You can hire advisers to take the place of the franchise system and you just need to weigh up the costs/benefits of both approaches. If not part of a franchise, having some way for people to order when they see you outside, without leaving their desks might be a nice touch, especially if weather is bad. Think smartphone/tablet in the van and either use someone like 365cups, or get your own website setup to take orders and shoot them across to your mobile device. Oh yes, don't forget - plenty of us here will willingly offer advice and encouragement if we can, some of it may even be useful. So even if you go independent, you are not alone.

GaryatGala · February 2012

Wow! Gentlemen, i really appreciate your time and energy to provide your own feedback on this. I figured this is the perfect forum to ask for help of this nature, and i know a few members here who are into or have had experience in this field. Kelsey, thank you. I will look into the NEIS. I was not aware of that program. Certainly as far as i know, turning up in person with a smile and good presentation with a free sample of coffee and a menu would go a along way to build up a new client base. Certainly too, if i was to go independent, i can set my pricing to be more competitive than a franchise. Say a standard cup costs $4 from a franchise, then i can set my pricing i guess at $3.50 since franchise fees is not an issue. I have spoken to a local roaster, and he can provide to the door free delivery, a blend that is easy to work with due to the different environment conditions as compared to a stand alone cafe with air con. And i suppose i can use this as a marketing tool. Local product freshly roasted as opposed to a franchise whose beans have to travel 2-3 days to get here. Local product dollars stays local. The issue now is this. My other half lives overseas. I have expressed my interest and showed her the performance guides and all the communications between myself and a franchise company. It is more difficult when she is not here and a representative is not able to speak to her in person. As well, not being able to spend a day with a franchisee to see how it all works does not help. I told her this would be a lifestyle change, i can spend more time with her, I start at 7am, be done by 1 or 2pm, stock and clean up, ordering and paperwork, done. Evenings free to relax. This is in contrast to what i'm doing now, starting at 4pm, work right through til midnight and don't get home til 12.30-1am and i'm beat, don;t get to sleep til 2am, and still beat when i wake up next morning. She is afraid of failure and is very much not agreeable, and it could mean we are paying off a mortgage as well as the business loan til stumps. Having said that, at 47 years of age, I don't really want to work in a restaurant environment (front of house) til i retire. Having a coffee based business is the fullfilment to a coffee journey. Atillo, i like your son's style. Just out of curiosity, what was the rough ratio of rejections and acceptance when your son went out to build his client base? I do understand everyone's different, not to mention the type of area potential customers. Were they mostly office workers or blue collar workers? Being at the pointy end of fine dining, selling is second nature to me. UNM, you're a wealth of information and i appreciate your own accounts/experience and have taken on board your PMs as well to your comprehensive info here. Perhaps the best way is to do the franchise thing for the first 5 years for the best chance of success, then when the term ends, go independent. What do you think? Gary at G

Brett H · February 2012

There are several ice cream franchisee's in Townsville currently being sued by their prior franchise for opening similar stores soon after their 'time' was up. Check the legal side of ditching a franchise. It may not be as simple as it seems. I am not a risk taker, but I would be inclined to research research research and then set up/go it alone. I would start up as a hobby (with a good quality locally serviced kit NOT from ebay) and hope that the hobby becomes too demanding and profitable to ignore. I'm a hedge your bets kind of guy who wants to keep his home and protect his personal NTAs! I would set up, do weekend/day's off gigs and when you take your four weeks holidays or long service then ramp up and go hard... who knows you may not have to go back to work. The brave would jump in the deep end and the really successful people are often single minded and uncompromisingly focused sometimes sadly at the expense of family and relationships. Understanding who you are and what you want (and your partner wants) first, and this will help guide your decision-making. Set goals!!! The best goals are Specific, Measurable, Attainable, Realisitic and Tangible. The goals you set now can help you measure your journey and your success however, always remember that successful people are not always happy people. Happy must come first!

UNM · February 2012

If you might want to put on a second van, ask the franchisor who else is running multiple vans and speak to them. Generally, a coffee van franchise would be more akin to buying a job than a business to manage. Most such franchises don't make it easy for franchisees to expand beyond a certain level (mine for example is pretty much maxed out). If the franchisor gets extra fees for every van you run, or a percentage of your gross, then they have a strong incentive to help you. If the only benefit to them is sale of another van, they would prefer to get you to split your territory and get a new franchisee. I have sold some of my customer base before now and it is one way to get some extra money out of the franchise and reduce costs by improving efficiency. Regarding quitting a franchise and then going independent. Most, if not all, franchise systems have a restraint of trade clause intended to prevent this. I was careful to set up as sole director of the trading trust established for the business. This means that I COULD quit the franchise, someone else (my wife perhaps) could start trading with a new ABN and employ me, allowing me to service the customers as before, without breaching the letter of the contract. You need to read the contract carefully to work out what you can and can't do. My restraint of trade clause prevents me running a competing business within 200km of the territory for a period of 4 years after the end of the agreement. If it went to court, that might be considered unreasonable and it would probably end up at 50km and 2 years, but easier to avoid the issue. Don't forget that whichever roaster you choose would love you to be successful as it is good marketing for their business too so will likely be very helpful and might have a lot of good advice for you. I reckon independent is the way to go, but a franchise will have more WAF Edit: As to happiness, I have often put personal happiness after good of the family because I reckon that will give more happiness in the long term. Not disagreeing with you Brett, just sometimes both short/long term need to be considered.

Brett H · February 2012

on 1329902069:

Edit: As to happiness, I have often put personal happiness after good of the family because I reckon that will give more happiness in the long term. Not disagreeing with you Brett, just sometimes both short/long term need to be considered.

An excellent point and eloquently stated!

GaryatGala · March 2012

Hello gentlemen, Thanks to those who have contributed to helping me thus far in my quest. Have taken all the posts here into account and i have taken great care into further research. At this point in time, my priorities is for the other half. I feel it's not the right thing to push ahead when she is not really happy with the whole deal and risk. I'm ready, she's not. We agreed we'll take another look further down the track and choose the right time to launch the big step forwards. If we do, it's more than likely it will be with a well known franchise which will gives us more chance of success at the expense of fees payable. In the meantime i will be carrying plates and living life below the poverty line with the same love for coffee in all it's glory. Gary at G

derrilex · March 2012

Speaking from personal experience as a customer of the coffee vans from my motor mechanic days I'll throw my advice in. Ditch the franchise and go it alone. x 2 with fresh coffee and the free give away calling card coffee but once only - give them a taste of top coffee and they are yours instantly, easy. Most of those vans ( 100 % in my personal experience) serve absolute crap at 90 degrees so it wont be hard to convert people. Better product, consistancy of product and most importantly consistancy with turn up time is vital. Turn up at the same time, give or take 5 minutes and call the business if you are running late. Let the customer tell you what time suits them the best and accomodate the big number businesses first. Most smaller customers are bit more flexible. Invest in a very, very, very quite inverter genny. Having a monster genny screaming away in the side of the van is probably the biggest turn off from a customers perspective. We couldnt ever hear our phone ring when the coffee van turned up and he stayed there for 15 minutes serving the other businesses and ruined our coffee break in the process. Watch the temp of the milk. I know its a given to anyone with any knowledge at all but hot coffee sucks balls. And finally, love it and live it. Enthusiasm rubs off.

GaryatGala · March 2012

Thanks for your take of your experience as a customer derrilex. I can tell you, i took a ride with a franchisee who won the state as well as the national franchisee of the year award for one day just to test the waters. His customers relationships is his best attributes, his coffee skills however, needless to say i was biting my tongue on occasions when he failed to rinse out the milk jugs, did not tamp correctly apart from not having an appropriate tamper and he was using the tamp built into the grinder, did not flush the heads before inserting the portafilter, did not clean temp probe before changing to soy milk, plus a few other idosyncracies that would make a speciality cafe squirm, like i did. That goes to show that you can be successful remembering customers and what they normally order and not necessarily have to focus on making that great cuppa to the nth degree. This is what's killing me. With extensive experience with customers and being a serious coffee enthusiast, boxes are ticked, but it's just the other half remains unconvinced at this point in time. BTW, what's the difference between a invertor (how does it work?) and a generator made by a company from say, Cummins Onan? I do agree, going independent may be more difficult initially, but the payoff may be more rewarding due to great coffee, great service and better pricing without paying for franchise fees. To be continued... Gary at G

Bottom Line · March 2012

on 1330870814:

BTW, what's the difference between a invertor (how does it work?) and a generator made by a company from say, Cummins Onan

An inverter changes DC to AC. For a generator it means a cleaner sine wave and maybe better fuel economy, better control. Less of an issue for a coffee machine, more for medical and computer equipment. AM probably could add more info and put in a better form then me. It doesn't technically follow that an inverter is quieter but the ones in the market tend to be. The noise level is more down to the insulation, build and the muffler. By far and away the best one at the moment is the Honda EU65is. The Yamaha is the closest but a little more $s for a little less. The Kipor 6000 is almost half the price but over two times louder. Hope this helps

derrilex · March 2012

Inverter gennies are generally very small for their output and the good ones are very quite as opposed to the more agricultural and cheaper gennies out there. As far as how they work, lots of electronics. You should be able to have a normal conversation whilst making a brew. If your customers have to shout a order to you its no good. A lot of older vans dont have a quite genny because of the cost. I would probably say that a pure sine wave inverter genny would be mandatory to use with any espresso machine with electronics ( clean power). Heaps of specialist companies make them in all sizes. I like the Yamaha stuff personally but I dont really know the market very well. One of the issues with a franchise is you are locked into their product, regardless of quality/taste. Dont feel bad about stepping on others toes either. This is business and if you provide a better service then you deserve the business. You know you can provide a top cup. A foot in the door is all you need. Go hard.

GaryatGala · March 2012

Thanks to your encouragement derrilex and to all who have encouraged me. Just had a dream just now about a specialty coffee van with a Mazzer grind on demand grinder, Simonelli Aurelia with a single origin and house blend. Cold drip and Clever Coffee Dripper. No syphons, too messy and time consuming. Ditch the frappes and flavourings for coffees. Iced coffees and quality hot chocolate ok. Only other cold bevvies apart from cold drip and iced coffees would be affogatos ( can see it now, big bloke with tatts cheesed off with his boss trundles over and says "Gidday sunshine! I'll ava affogato with an extra scoop of ice cream and extra shot of espresso"...) Angus beef, venison and emu pies using quality pastry. Gourmet sandwiches. Gourmet cakes, cookies and muffins. Fresh fruit in a basket. All at a price range that is attractive due to being independent. Higher quality standards of product and service that sets the independent operator above the typical franchisee. Gary at G

blanyon · March 2012

Start reading up on machines and power requirements so you can match the power to the machine (there is a good reason you see expobars in a lot of vans) and talk to people in the industry so that when you are ready to go you have sorted through all the issues. Hope it works out for you. Brett

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