Franchise with drive to succeed

Breen says he developed the Towncars model while studying for his masters in business administration at the University of Western Sydney. Originally a sales and marketing man, he switched to taxi driving, then became a hire car driver. At university, he considered the chauffeur market and decided it was more similar to a courier service than a taxi system. He produced a matrix to illustrate his point.

Towncars approached Toll Fast with this theory and uses its method to dispatch and co-ordinate cars for jobs. Cars and franchises are divided into territories and the courier-style system allows Towncars to appoint the nearest driver to the job, which must be booked and quoted in advance, under laws that differentiate taxis from hire cars.

Toll Fast's general manager, Tony Mellick, says Towncars is a natural fit for the freight service due to the similarities in the way the two businesses operate. Toll can see Towncars vehicles on its system and has begun to use them after hours for jobs such as moving spare parts for urgent IT jobs.

Both businesses are hoping to work together to ferry mislaid baggage from airports with a competitive 24-hour service.

Towncars has 22 cars on the road in Sydney and has already attracted 25 franchise investors, Breen says.

The business began about nine months ago, and Breen and Cameron say it has grown 30 per cent a month. Towncars figures show the number of jobs a week has grown from 20 in July to about 300 last month.

It is not yet enough for Towncars to be profitable but it is reportedly paying a profit guarantee to franchisees such as the franchise lawyer Paul Kean.

Kean was employed to advise the company on the franchise structure and became one of its first investors. He says he paid $20,000 for his franchise and $38,000 for the car, under the initial investment offer. Breen says the latest franchise sale is $39,000.

Kean says investing in a client is unusual but Towncars won him over and he has also joined the board of its franchising entity.

''Typically a franchise requires premises, staff, fit-out, so this business has none of those - you buy a car and even if the business were to fail, you're left with an asset that still has some obvious tangible value. So, the risk of losing your capital expenditure is minimal,'' Kean says.

''They have ensured the business will be well capitalised at franchisor level. A lot of businesses kick off on the smell of an oily rag - they're undercapitalised and they want to fund their expansion using the money of franchisees.''

Kean says the way Towncars is acquiring its customers - targeting large companies such as law firms, who need to provide transport for staff late at night - delivers a customer base for a franchisee to build on, rather than putting the onus on the franchisee.

The cars used in Sydney are LPG-fuelled G6E Ford Falcons.

Breen says he argued for that model when ''everybody's assumption was you'd at least go for a Statesman''.

The Ford has the look of an ''accessible solution'', particularly in a time of corporate austerity, he says, and most Australians don't actually want to be seen turning up in a BMW.

Towncars has its sights set on Melbourne and claims to have a buyer for the Victorian operation.

Towncars cannot compete with taxis for most of their business, which comes from taxi ranks and hailed fares. It is limited to the pre-booked market, which accounts for roughly 40 per cent of taxi trips. In Britain, the mini-cab industry has demonstrated this.

Breen's goal is to capture 3.6 per cent of the total taxi and hire-car market, which he puts at $2.5 billion. As the size of the fleet increases (eventually to 750), so will the speed with which Towncars can respond to a call, Breen says, making it better able to compete with taxis as it grows.

Towncars claims to save customers at least 20 per cent in costs over Cabcharge because rorting is made more difficult. BusinessDay was unable to confirm this with clients.

Each Towncar is tracked by GPS and companies can view their account online - including with a map of where an employee was picked up and dropped off.

It's the death of the cheeky leftover voucher that emerges after a few drinks on a Friday night and it eliminates explanations such as ''city to suburbs''.

James Kell, chief executive of the construction firm Kell & Rigby, has joined the Towncars board. His company has not entered a corporate agreement but individual staff - and his mother - have switched to Towncars, he says.

Kell says he realised when moving back to Sydney from Shanghai several years ago that his home city was missing a valuable service.

''I've got nothing to do in my day job with any kind of personal transportation but I've just got this passion for getting it right in Sydney,'' he says.

''I'm a builder, but if you look at this in a similar way to the airline industry, this is a Qantas business-class product but the cost model is on a Jetstar sort of basis.''

Cabcharge referred questions to the NSW Taxi Council.

A council spokeswoman says taxis have always competed with hire cars and the industry thrives on the competition.

''We have the largest share of the market because we provide a superior and regulated service,'' she says.

As for Breen, he's still personally picking new clients. So did he get top marks for his masters matrix? He thinks for a moment. ''I did OK.''