Purchasing a franchise in ride-hailing: pros & cons

  • Partner tips
Liza Shvyndikova

Or maybe you’re already committed to purchasing a franchise but trying to figure out the type of business that fits you? A ride-hailing franchise has many advantages. Below, you’ll find the benefits of a ride-hailing franchise Lolo brings you, along with the advantages and disadvantages of a franchise.

Advantages and disadvantages of a franchise

Faster business development vs less reputation control

Franchising gets you a fully-operational business model. No need to validate it or do exhaustive research and customer development. Accordingly, you can develop your business faster at a lower investment level.

However, working with a franchise-like model doesn’t free you from all the hard work. Your business reputation depends on what you do (for instance, making informed decisions locally, doing your best to keep your customers happy). With a franchise-like model, you have less control over the brand’s reputation. At Lolo, we help all our business partners to start smoothly by providing elaborate best practices examples.

Higher success rate vs profit sharing

Success in taxi business

One of the greatest advantages of a franchise is a higher success rate than that among start-ups. This is nice: with comparatively low set-up prices, you have a higher chance to run a successful business at a lower investment.

For a ride-hailing franchise, the set-up costs are lower compared to brand stores (think H&M) or cafes and restaurants (think McDonald’s). Although it’s higher than for beauty services (like hair salons and nail bars), a ride-hailing franchise requires less training to start, making it easier for you to succeed.

What happens when your franchise-like model business is successful? You share a part of your profits with the franchisor. That’s a clear disadvantage of purchasing a franchise—but, well, there’s a price to pay for having started with a fully-operational business, right?

Less vulnerability vs high business dependence from brand

Even though it’s smart to test out a pilot operation before purchasing a franchise, with a ride-hailing franchise-like model, you’re getting a business less vulnerable to market changes than when you launch your own company. Franchises profit from brand recognition created by other businesses with the same name all over the world.

At the same time, switching to a franchise model means being more dependent on how other franchisees do their work. At Lolo, we reduce this risk by being clear about the quality benchmarks and providing assistance with training and instructing drivers and employees.

Ready-to-use guidelines for everything vs less creative freedom

Clear roads for taxi

One of the crucial advantages of a ride-hailing franchise with Lolo is that you get all the necessary documents, including an elaborate marketing plan, branding and design assets, and of course, optimized, functional and adorable applications for your drivers and clients.

You’re less free in planning PR campaigns and brand expression than with your own business. However, with all these materials by Lolo, you can ensure your fresh ride-hailing franchise works efficiently and provides high-quality services.

Lower investments in real estate

One of the huge benefits of a ride-hailing franchise is that your investments into real estate are much lower than if you choose to open a franchise restaurant or a brand store. There are no requirements as to the location of your office to the Lolo ride-hailing franchise-like model. That’s an advantage of a ride-hailing business with no downside to it.

You decide what kind of fleet fits your Lolo best—that, too, is the freedom you get with this franchise.

Ride. Explore. Act.