Here are some links about free applique and how to do for you, I hope this helps.

Sergers are wonderful for some things, however, I do not believe that would be one of them. I think applique has to be cut by hand. H&*

I would not use a serger in this case. Just make an applique as usual, but instead of embroidering on fabric, do it on a layer of stabiliser. After the attachment stitches - before the satin stitch outline, cut back your fabric but NOT the stabiliser. That way you get a beautiful patch to be sewn (or applied with wonderweb or whatever it's called where you live) onto clothing.