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Canadian cyclists win Dragons' Den backing for mobile repair business (+ video)

Velofix founders growing business through franchising - and say no reason it couldn't come to the UK...

Three cyclists in Canada have secured $300,000 (£167,700) in funding for their mobile bike servicing and repair business – and say there is no reason it couldn’t eventually come to the UK.

They say that their business, Velofix, is differentiated from similar enterprises due to the technology it employs, and are currently rolling it out across Canada as well as planning to launch the concept in the United States and Australia.

Velofix was founded in Vancouver in 2012 by Chris Guillemot, David Xausa and Boris Martin to launch Velofix, reports the Financial Post. The concept is explained in this video.

Guillemot said: “We love cycling but had experienced challenges getting to a bike shop. Here in Vancouver, it can take between seven and 10 days to get a bike serviced. The three of us started talking about making a premium service mobile by putting the shop inside a van. ”

After the three friends had drawn up a business plan, they bought a Mercedes Sprinter van, with Martin – who started working in bike shops in his early teens – setting about designing a 100 square foot workshop inside.

“He designed the electrical systems, compressors, and set it up ergonomically so that all the tools are exactly where you need them to be,” explained Guillemot.

The company began operating in January 2013, and Guillemot underlined the use of technology that he believes sets the business apart from its competitors.

“One of the challenges of operating a mobile service is scheduling,” he said.

“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.

“We have a just-in-time inventory system, payment processing and online operating manuals,” he added.

The trio engaged former Olympic triathlon champion Simon Whitfield as a consultant, and he became its first franchisee.

Guillemot said that the pricing of franchises, for which a finance package is available, is aimed at attracting people who want to set up their own business, and that prices charged to customers are similar to those in bricks-and-mortar bike shops, but without the overheads.

“For about $35,000 to $45,000 in upfront capital you can get a truck on the road,” he revealed. “It’s very affordable and that was intentional because we want to sell the vans to young mechanics … who likely don’t have a lot of capital.”

He added: “We didn’t invent mobile bike shop but we haven’t found anyone with multiple trucks on the road.

“If it works in Vancouver, there is no reason it couldn’t work in London or New York or anywhere people are time challenged. We’re in discussions now with a group in Australia looking to roll out vans there.”

The business currently has five trucks generating anticipated sales this year of $760,000 with gross margin standing at 60 per cent.

Their Dragons’ Den appearance resulted in a 20 per cent stake being sold for $300,000 to a pair of investors, Jim Treliving and George Melville, who have built their own business using a franchise model.

With the help of their new backers, they are now preparing to enter the US market. Treliving said:  “It was a quick due diligence because they were so prepared. The model works. They are helping consumers save time to ride more.”

However, he cautioned: “The U.S. is litigious. You have to make sure you deliver what you promise.

“The key will be finding the right franchisees, who in this case have to be both a good bike mechanic and a good business person, which isn’t easy.

“The other scenario is to have a money person who works in partnership with a repair person. We also have to pick the right locations. Two-thirds of the markets are seasonal; we have to balance that.”

John Cho, a partner at KPMG Enterprise, said that while the business sat well with the current interest in cycling, the business’s founders would do well to concentrate on the domestic market before expanding internationally.

“Their convenient service model plays well to the increasing popularity of cycling,” he said. “The question then becomes are the economics favourable enough for a franchisee? How much volume does a franchisee need to make the business viable?

“The entrepreneurs will have to check in regularly with the franchisees to ensure they are making money and having a good experience because their growth depends on the strength of the franchisee network.

“I think they should focus on scaling in Canada before expanding into the U.S. to make sure the model works.”

Simon joined as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.

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dmc | 9 years ago

35-45k to get on the road bloody hell !! i started 13 years ago out the back of my car with hardly any money, still going strong thankfully out the back of a van  3

swansfan | 9 years ago

This has been going on for a few years in the UK! Have a look at Cycletech - looks like the same formula to me!

Airzound | 9 years ago

How do you make money when you go to a job where the client has a BSO worth £30 and won't part with more than a £10 for you to fix everything? This has been done in the UK and those doing it have failed as they couldn't make any money. Realistically you are dealing with people who buy bikes from Halfords or Wilcos so there just isn't the money in this market. They just take their pile of junk back to them. Proper cyclists know how to maintain their bikes so there is no or a very small market for this.

KoenM | 9 years ago

Well this is nothing new, in Belgium we have such services to, and some of those guys use bikes to carry all their equipment!

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