So, you’ve decided to launch an electric scooter sharing service. There are two main ways to enter this market: start your own business or purchase a franchise – a license that grants you the right to use an established brand, along with its infrastructure and support. Which path is smarter, simpler, and more profitable?
There’s no one-size-fits-all answer to this question; both approaches come with their own sets of benefits and drawbacks. In this article, we’ll break them down to help you make an informed decision.
Franchise: A Quick Start with Minimal Risks
Buying a franchise is an optimal choice for those who want to launch quickly. There’s no need to develop your own processes or strategies – you get access to a proven business model, along with the support and mentorship of those who have already validated its success. All you need to start is to pay a lump sum, purchase the electric scooters, and follow the plan provided by the franchisor.
3 Reasons to Choose a Franchise
- Proven business model: You won’t need to build operational processes from scratch, create a monetization strategy, or establish a supply chain. Instead, you’ll receive comprehensive instructions, operational manuals, and even personal advice from those who have successfully navigated this path.
- Established brand trust: Along with ready-made processes, you acquire a reputation, and sometimes even an existing customer base eager to rent scooters from you. Advertising costs, in turn, are shared between the brand owner and all other franchisees.
- Lower costs and faster profits: Budget and time won’t be wasted on finding reliable suppliers, developing software from the ground up, or market promotion. Some franchisors promise to recoup your investment and achieve operational profitability within the first few months. Statistics back this up: on average, 80–90% of businesses launched through a franchise model survive and become profitable.
However, purchasing a franchise also has its downsides. Primarily, these involve ongoing costs that can potentially reduce your profits – and not just royalties. For instance, a franchisor might require you to buy parts from a specific supplier at an inflated price or insist on discounts and promotions that weren’t really necessary but negatively impact revenue.
Well-known brands also come with their own risks: mistakes made by other franchisees affect everyone operating under the same name, and your profits could take a hit because of people you don’t even know.
Buying a franchise means you can’t fully control everything that happens with the business. These risks can be avoided by launching your own brand.
Own Business: Freedom of Action and Growth Potential
Starting your own business is a more challenging path, but also more promising. It’s suitable for those confident in their abilities and ready to take on more responsibility now in order to reap greater rewards later. By the way, we have a step-by-step guide on how to launch a kick-sharing service so you can evaluate the risks and assess the scope of work.
3 Reasons to Choose Your Own Business
- Complete control over everything: Unlike a franchise, where key decisions are made by its owner, you’re in charge of everything – from choosing the name to allocating budgets and setting up a supply chain.
- Flexible operations: There’s no universal solution that works equally well for all entrepreneurs. By starting your own project, you can better adapt to the local market, customer needs, and even changes in legislation. To launch a new app feature or adjust pricing, you won’t have to go through layers of approvals – you are the only decision-maker.
- Faster growth opportunities: For example, by attracting investments, increasing your scooter fleet, making additional investments in advertising, or even launching your own franchise.
Some of our partners have already taken this path and are ready to bring on franchisees to expand into new cities. If you decide to start with purchasing a franchise, let us know, and we’ll help connect you with them.
To summarize, if you are new to the kick-sharing market and don’t have much industry experience, we recommend considering the purchase of a ready-made business model. However, if you are somewhat familiar with the inner workings of electric scooter sharing services and, most importantly, want to set up processes your way and make decisions independently, then starting your own business is the right choice.
By the way, these approaches don’t have to be mutually exclusive – a franchise can be the first step toward launching an independent project.
When to Exit the Franchise and Launch Your Own Brand?
Let’s examine a case involving one of our customers from Ukraine.
In 2021, he bought a franchise and launched a kick-sharing in his city under an existing brand. Sharing services were just beginning to appear in the country, and creating his own one from scratch would have been challenging – no one knew exactly how it should work. The franchisor took care of purchasing, configuring, and branding the scooters, provided software and even a call center – in other words, everything needed for a smooth launch.
And it worked, until one day a batch of 30 defective devices arrived. The franchise partner hadn’t properly tested them before shipping, resulting in frequent breakdowns. Attempts to address the issue through the head office took too long, causing the scooters to remain out of service for almost the entire season, which led to financial losses. Another pain point was outdated software: the app wasn’t evolving, and the lack of certain features became increasingly problematic over time.
To resolve the issue as quickly as possible, the franchisee ordered the necessary parts directly from China. The manufacturer assisted with logistics and even provided new features as a bonus. After this incident, our future client decided to leave the franchise and start his own sharing service with ScootAPI.
The new project was launched using a “white label” approach.
Similar to franchises, we provide the necessary software for start, including a user app and an admin panel to manage the fleet and operations. The advantage is that they can be further developed and customized to your request: e.g., by implementing new features or enhancing existing ones. If needed, we can also advise on scooter selection and connect you directly with reliable manufacturers.
What we won’t do is dictate terms or impose our solutions. This is the key difference between a “white label” and a franchise: the client independently develops the brand and business as they see fit – while still enjoying all the benefits of partnering with an experienced company.
Or perhaps you want to skip that stage and launch your own sharing service right away? Maybe you’re even thinking about becoming a franchisor?
In the last 5 years, the ScootAPI team has helped launch over 15 kick-sharing services in 9 countries. We can consult and assist – let’s set up a call and discuss your plans.
