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Top delivery and courier franchises in 2023
From Amazon to DPD – these are the most exciting and profitable delivery and courier franchises this year
What steps should you take when opening a delivery franchise?
First things first: are you cut out to be the owner of a delivery franchise?
Buying a delivery service franchise isn’t like buying a job. Being a franchisee fulfilling delivery orders means the buck stops with you when it comes to making the business a success.
To be a successful delivery business franchisee, you need to be self-motivated, resilient, possess first-class customer service and communication skills and have the ability to follow a tried and tested business model. And specifically with a courier franchise, you need a full clean driving licence and to be physically fit if you want to be a delivery driver.
Research is vital before you pay the franchise fee and sign a franchise agreement, which is a legally binding document and can tie you into a delivery partnership for a long period of time.
Check out the courier franchise opportunity you’re considering investing in and research the market it operates in and its delivery competitors. It’s a good idea to speak to as many of the brand’s already established franchisees as you can, as they will give you a first-hand account of the delivery franchise opportunity, whether the franchise fee represents good value for money and whether the franchisor’s projections on profit margins are accurate.
A franchise consultant who is familiar with franchisee recruitment may be able to help you choose the right delivery concept based on the amount of money you have to invest, your personal goals and your skillset and experience.
With a third party delivery business, franchise location is important. Ideally, a courier business or courier service needs to be based in an area that has high concentrations of its target customers so it can thrive.
An entrepreneur also needs sufficient capital to invest, not just to cover the initial franchise fee and startup cost, but for the period of time it takes before you can earn an income from the delivery venture to cover your everyday costs.
It’s a big step to take the plunge and invest in a delivery franchise business opportunity, but an increasing number of people are becoming part of the franchising industry. It’s been estimated that there are 48,600 franchises in the UK, up 10 per cent since 2015. Would-be franchisees are attracted by the opportunity to be their own boss, be in control of their own destiny and reap the rewards of running their own company.
This increase in franchise business owners has contributed to the growing amount of small businesses in the UK, which according to the Federation of Small Businesses statistics stands at around 5.8 million.
What are the benefits of owning a delivery franchise?
The services provided by a dependable delivery company that is able to accommodate hundreds of delivery orders on a regular basis are in big demand at the moment.
While internet shopping has been growing in the UK for many years, since the outbreak of coronavirus its popularity has increased dramatically, which has had a positive knock-on effect for parcel delivery service franchises.
Investing in a franchise and paying a franchise fee enables you to follow a tried and tested business system, have access to the franchisor’s knowledge of the industry and benefit from its brand name and reputation in the business sector.
Many delivery franchises are low cost, offer flexible working hours and are ideal if you want to own a delivery partner business that provides variety during the working day.
Others are management franchising opportunities, where you are in charge of a team of delivery drivers and the administration of the business. With this type of franchise opportunity, the earnings potential is greater than if you were running a man-and-a-van courier company. You may also have the chance to expand into more trading territories once your original business is established, increasing the possibility of even higher earnings.
Most courier delivery service franchises can be run from home, which means your profits can be maximised because overheads are low as you do not require commercial premises, at least in the early days or if you’re planning to work as an owner-operator.
What are the disadvantages of owning a delivery franchise?
Delivery service franchisees have to fulfil a series of obligations as set out by the franchisor.
They must also adhere strictly to the franchisor’s business model and methods of operation.
This perceived lack of flexibility may be seen as a disadvantage by some people. However, systems are put in place by a franchisor for the benefit of the network as a whole, as it guarantees continuity throughout the business.
While delivery franchisees have to operate to strict guidelines, good franchisors consult regularly with their network about all areas of their business, so franchisees are able to influence the future direction of the franchise to some extent.
And while entering a growth market is a positive step, competition will be fierce, which means you need to be focused on providing a reliable, cost-effective service to customers.
Why should you consider vehicle costs when opening a delivery franchise?
They are likely to be the biggest cost when running a delivery franchise, so must be factored in when a franchise business owner is considering return on investment and cash flow for their business.
Take into account not just the initial investment of purchasing your vehicle, but ongoing costs for your small business, such as servicing/MOT test checks and repairs to any damage that must be carried out to keep it roadworthy.
Other business costs to consider include the franchise fee, working capital requirements and any ongoing management and marketing fees that must be paid.
What delivery franchises are the most profitable in the UK?
As a delivery franchise owner, the profitability of your small business depends on the time and effort you put into establishing and growing the business, as well as your ability to follow a proven system.
Franchise ownership means that while you have the backing of a big name brand, you are essentially a small business owner running an independent business.
How should you choose which delivery franchise to open based on profitability?
It’s a case of making a shortlist of the delivery service franchises that interest you and comparing the earnings potential as stated by the franchisor. This may be explained in a franchise disclosure document, which is sometimes called just a disclosure document.
To do this, you need to find out what the figures are based on. Are they figures from franchising operations operating in similar territories to yours, figures based on company-owned outlets or projections based on you following the franchisor’s proven system and methodology?
As well as profitability, you should take into account the level and type of support you will receive from a franchisor to help you achieve your goals and which may supplement any shortfalls in your current skill set.
When looking at a franchise’s profitability, it is worth paying a suitably qualified accountant to check the figures and provide an independent verdict of their accuracy.
How can you get the funding to open a delivery franchise?
According to franchising statistics, a franchise is far more likely to succeed than an independent small business. This makes it easier to borrow money from a bank to cover part of the initial investment.
In the UK, banks such as Lloyds, HSBC and NatWest will consider lending up to 70 per cent of the initial investment required for an established brand and around 50 per cent of the initial investment for a less well established one.
In order to get third party finance, you will need to produce a comprehensive business plan, which a bank will scrutinise before agreeing to fund you. A franchisor may help you produce one.
What should your delivery franchise business model look like?
The system of operation should be tried and tested in a number of locations. The franchise fee should also provide you with comprehensive initial training in all aspects of the business and ongoing support.
The franchise package may include proprietary IT and software, especially with regards to route scheduling and customer relationship management systems.
Why should you consider brand awareness when opening a delivery franchise?
Simply put, it will help you attract more customers. If a customer is aware of your delivery franchise brand and it has a good reputation, this will influence their buying decision and give them the confidence they need to spend money with you, rather than an independent small business with a limited track record of success.
What regulations should you consider when opening a delivery franchise?
If you’re planning on being an owner-operator franchisee, you will need a full clean driver’s licence. You’ll also need to comply with occupational health and safety laws.
In addition, vehicle insurance, equipment insurance, public liability insurance and employers’ liability insurance (if you’re going to be employing staff) are a must.
If you’re going to be basing your business in your home, you may need to get permission from your mortgage lender or landlord. On top of this, you might have to get approval from your local planning office and council, depending on the type of business you wish to run.
What do the most profitable delivery franchises in the UK all have in common?
They have efficient, proven systems in place that enable their franchisees to profit from owning a delivery business.
They also have good brand awareness, a reputation for excellent customer service and provide a cost-effective way of delivering customers’ parcels and documents on time.
The most profitable delivery franchises are innovative in their use of IT and commit to regular research and development activity to maintain their competitive edge in a growing market.
What makes owning a delivery franchise a smart business decision?
Before the outbreak of COVID-19, the UK e-commerce sector was one of the most advanced in Europe, with associated industries - such as courier businesses and courier services - benefiting as a consequence.
Since then, online shopping rates have increased exponentially, which has resulted in even more business for delivery franchise owners. And recent research reveals this change in consumer behaviour isn’t a short-term phenomenon.
According to a report by Alvarez and Marsal in partnership with Retail Economics, 17.2 million British consumers - around a quarter of the population - said they would be making a permanent switch to online shopping because of the COVID-19 pandemic.
Up to June 2019, internet sales represented nearly 20 per cent of total retail sales in the UK. This figure looks likely to increase markedly, which bodes well if you’re considering buying a delivery franchise.
As well as becoming part of a growing market, going down the franchising route increases your chances of success and provides potentially significant capital gains.
According to the latest British Franchise Association NatWest industry survey, around 50 per cent of all non-franchised businesses fail within five years of opening their doors, compared to just one per cent of franchises that have to cease trading because of commercial failure.