Taxi Driver Online

Cabs command a pretty penny

If Cudworth farmer Jim Frie sold his 24 taxi franchises, cars not included, he could be harvesting a fortune of $1.8 million, based on 2008's average selling price.

The invisible economy of buying and selling taxi franchises -- a sheet of paper that allows a person to put a cab on the road -- swelled last year with Saskatoon's boom. The 77-year-old grain and canola grower owns more franchises than anyone else, according to city records obtained by The StarPhoenix.

The market price of a taxi licence in Saskatoon shot into six figures for the first time in 2008. The value of a taxi licence rose from a top price of $65,000 in 2005 and 2006 to $97,000 in 2007 and up to $133,000 in 2008. The prices settled down late in the year, ending 2008 with an average sale price of $79,565.
"I'd rather not see it go so high," said Frie. "I suppose if I were to sell them all, I'd have quite a bit of money."

Some franchises sold for as little as $1, but those transfers usually involved family members.

The market law of capped supply and growing demand is behind the soaring value of a taxi franchise. The City of Saskatoon hasn't issued more cab franchises (sometimes called licences or plates) since 1987. The 160 taxi franchises out there have reverberated around ever since, picking up value as they flip between owners.

Prices have also soared because drivers from Vancouver, where franchises sell for as much as $400,000, have been moving to Saskatoon, attracted by strong income potential, said Scott Suppes, president of United Group, Saskatoon's largest cab company.

The rising value of a cab franchise is pricing drivers out of a chance to buy into the industry at the time they're most needed, said Karen Naylor, national representative for the Canadian Auto Workers union. It represents drivers at United, but has been locked out since August 2007.

"There has to be some transparency, some recourse for people," Naylor said. "The city can't just say, 'We're going to throw (leases) into the marketplace and whoever grabs them, we wash our hands of it.' "

When a franchise owner wants to get out of the business, he or she should simply return the franchise to the city, not sell to the highest bidder, she said.

Even Frie, who's no longer buying franchises with the going rate so high, said the price is insurmountable for drivers.

"There are lots of good men out there driving, but they can't buy a franchise," he said.

It's difficult to arrange a bank loan to pay for a franchise because it's simply a sheet of paper, not a tangible asset like a house, he said.

Frie paid $2,750 in 1963 for his first taxi franchise, which included a car with 150,000 miles on it. He drove for 12 years and now leases his 24 franchises out to drivers.

High franchise prices pose a practical problem for the taxi industry. Franchise owners have to recoup the hefty price they pay by raising the lease rates they charge, which makes it harder to find drivers, Suppes said.

"If we don't have leasing, we're going to have cars that aren't moving."

_________________
Think of how stupid the average person is, and realize half of them are stupider than that.
George Carlin