Most people are likely well aware of the major courier services, such as FedEx and UPS. However, courier franchises – an offshoot of the larger packing and shipping franchise industry – vary in size and are more accessible to own for prospective franchisees than many probably believe.
But first, to define what courier services do. Simply, courier franchises deliver goods, whether it be packages, letters, or documents, to the door of the recipient. They are primarily business-to-business (B2B) operations that function similarly to the postal service. However, courier services are provided in a more on-demand fashion. Courier franchises also tend to have fewer restrictions in the way of size, weight and/or commodity because they are in the private sector.
When to comes to the more commercially-focused sector of these franchises, services focus on helping business owners with their logistical challenges, including parcel and freight shipping. Oftentimes, these franchises are partnered with one of the larger courier brands. For example, World Options is partnered with UPS.
However, many of these franchises on the retail side offer an array of services that can be used not only by business owners, but one-off customers as well. These services can include mailbox rental, package receiving, postal, printing, copying, packaging, shipping, office supplies, passport photo, notary, and certain other business support services such as website design, web hosting and email marketing.
A major development in the courier industry was the development of internet selling, also known as e-commerce.
Though traditional postal services were put somewhat into flux by an increase in electronics usage, particularly the advent of email and online billing, e-commerce bolstered the future prospects for courier franchises.
Just take it from Unishippers, one of the most popular franchises in the industry: “Shipping and logistics are trending upward, driven by globalization, economic expansion, e-commerce growth, increasing freight volumes and favorable pricing trends. Paired with advancements in freight and logistics technologies, it becomes a complex proposition for SMBs to manage without a 3PL [third-party logistics] partner in their corner. Now's the time to hop on board a trend that's likely never going out of style.”
Further, as stated by market research company IBISWorld, “E-commerce represents a vital growth area for [couriers & local delivery services] industry operators. In 2022, e-commerce sales are expected to increase, representing a potential opportunity for the industry.”
In fact, over the past five years (2017-2022), the market has grown 6.6% per year on average.
Though not a courier service in the traditional sense, food delivery can be considered a major emerging segment of the industry.
Not that long ago, food delivery was largely focused on pizza and Chinese food. However now, accelerated by the pandemic and advances in technology, food delivery has expanded to include all types of food across many different level of price points.
According to research from McKinsey, “The most mature delivery markets worldwide—including Australia, Canada, the United Kingdom, and the United States—grew twofold (in the United States) to as much as fourfold (in Australia) in 2018 and 2019. This exponential growth continued in 2020 and early 2021 to the point where these markets are now four to seven times larger than they were in 2018.”
While many food franchises might eventually bring their delivery in-house one day, for now most food franchises are currently contracting with third-party delivery companies. And though options such as DoorDash, Grubhub, or Uber Eats aren’t franchises, there are franchises and business opportunities in this field.
In addition, industry observers see grocery delivery as another key development in the projected future growth within the courier industry.
From Technavio: “The B2C [business-to-consumer] sector by parcel type is another segment that is driving the courier and local delivery services market. The retail grocery market is also seeing an increase in demand for courier and local delivery services. With the growing popularity of internet shopping, purchasing food online is a cost-effective and handy choice for individuals. As a result, numerous e-retailers are boosting their investments in online food sales. As a result, courier and local delivery service providers in the United States are likely to compete in terms of personalized grocery products.”
The Initial Investment and Opening Costs for Courier Franchises
The amount necessary to open a franchise varies depending on the unique business system and execution requirements for that particular franchise. The initial investment required for a courier franchise can range widely, mostly dependent on the level of real estate purchase that will be needed.
In addition, for the function of certain business models in this field, you might need to factor in the lease or purchase, along with the maintenance, of a reliable vehicle to your initial budget estimates, if you don’t already have one.
Our franchise profiles will present you with a basic range for the initial investment or minimum cash required to open a franchise. But when it comes to finding out the details of an initial investment, the FDD is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.
Keep in mind these estimates are just that, though—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.
Ongoing Costs for Courier Franchises
Throughout the length of the agreement there are costs for being a part of the franchisor’s business system. These costs include items such as royalty fees, charges for technical support, and continued advertising/marketing costs.
The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.
In addition, it’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.