6 reasons to NOT Buy a Car Wash
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- Опубликовано: 5 июл 2024
- Are car Washes a good or bad business to own? How much do they cost and make? We explore critical data most sellers wont tell you!
1. You think A Self Serve car wash is easy to operate and a good passive business. Self serve bays are somewhat easier, these are the washes where people come in and spray their own car, but they still need repairs and upkeep, someone needs to check chemical levels etc. so are not truly 100% passive. You still need to clean up after people, and people do stupid things that will cost you money. Repairs cost a fortune as it is specialized equipment, most general plumbers or electricians wont work on car washes. If you are prepared to spend some time learning your equipment, doing some cleanup yourself you will be further ahead. You can hire someone do do this but it cuts into margins. Profits vary widely, if you are in a low traffic area you wont make much, but industry norms for a decent location are around $1500 a month gross revenue per bay, that drops a bit if you have a lot of bays. You'll need your location, and land in cities isn't cheap, equipment like a pumping unit, in bay equipment, signage and more. Start up can be around 8k-12k per bay plus real estate, property and business taxes etc. It can be easier and cheaper to find a resale wash you can find those occasionally for less than land value if the business has been neglected. You can update the location add credit card payments, a support line, website, renew the equipment and signage, all will help to build back business. Accepted industry asking prices are generally around 3-5X gross revenue for a resale. Remember, these businesses all take more time than you think - did you consider counting coins? This alone can take a couple of hours per week.
2. Your strategy is to open across the street, be better than the competition and steal their business. In other businesses this strategy can work - car washes not so much. So you see a wildly successful car wash and open a location next door, give better pricing or better service to steal their customer base. Here is the problem with car washes, best case scenario you drive the other car wash out of business. Mission accomplished right? Wrong. The bank will likely take that car wash, sell it for pennies on the dollar, and a new owner with a much smaller debt service than you opens up. A car wash is a single use property. Nobody is turning that car wash into a salon or a burger joint. Every time that car wash reopens, its usually a new owner starting a car wash and taking customers from you, and if their debt is low they may price you out of the market.
3. You think its easy and cheap to start one from scratch. Try and get a permit! It is not as easy as you think. Many cities have a negative opinion of car washes due to the environmental impact. There are greener options today but government is slow to change. What are the costs to start a car wash. You can find resale washes online from under $100k to into the millions. Obviously the lower priced locations are in most cases struggling. Opening a new self service car wash not including the land, which can be a huge investment itself, you are looking at around $40k per bay. Mobile car washing and detailing will be a lot less, basically your vehicle, your equipment and your marketing. A tunnel type wash can make a lot more money as it is automated and can do upwards of 1000 cars a day. Its also a lot more money. Your tunnel Equipment, Blowers, Conveyor, Hydraulics, Pumping Stations, Arches, Boiler around $700k. A water treatment and reclaiming system is a good idea, and may be the only way you get a permit, around $150k, your electronics, tunnel controllers, relays and various electrical around $200k. So you are already over a million and haven't even looked at a vacuum system, heating system, signage, landscaping, planning and permitting and your real estate. So these types of car washes can be a significant investment up to 5 million in some areas, and dont forget the equipment will often need repairs or replacing.
SORRY OUT OF SPACE! SEE VIDEO FOR FINAL TWO REASONS.
If you are looking at starting a mobile wash you can make extra money by servicing vehicle fleets and dealerships, not just focusing on private owners. Those are typically a contract and has a more predictable revenue stream. Some pressure wash companies will wash pretty much anything, like exteriors of homes and this can expand your customer base. There are franchise in this space whose top 10% are making over 1.8m a year. Investment $50k down $100k net worth investment around $80k all-in, give us a call if you want to take a look at franchise businesses.
www.franchise.city/
#FRANCHISECITY #CARWASH
Number 4 is inaccurate. As a car wash owner, having run touchless, self serve and converyor. Self serve are by far the least passive. You constantly clean the bays, people take garbage and throw it next to the trash can. Now that you have trash cans, you have a bin. Yes sir, you thought you bought a car wash, now you just realized you got yourself into the waste disposal business. People fill your garbage bin with mattresses, TVs, you name it. And if you lock it, they just set it on the ground next to it. Homeless people rooting through it. Once again, if you lock it, they slide the hinge pin out and go through it. Just from having garbage, you can spend hours a week just bending over picking up Tim Horton lids and trash debris that constantly blows around the property because you welcomed garbage disposal. You can have the bay completely spotless, leave for lunch and within minutes a truck comes in and dumps mud everywhere just from cleaning out his wheel wells. You can't really kick these guys out because they pay a lot more per use then say the grandma that comes in every week and spends 4 bucks on a quick clean. But that's the conundrum, you still have people that abuse it, come in and clean BBQs and leave grease all over the floor, cleaning out their pickup truck bed, that's got nails, glass, drywall, you name it. The bays also welcome homeless people to sleep in the winter, because if the heated floors and being covered from the elements. Drug users like to hang out in there constantly you name it. Conveyor belt washes, have none of that. Vaccums are a constant Hassel because homeless people and thieves are constantly breaking into them. Once again it's a waste disposal business. If you have a big row of multiple Vaccums, you're going to welcome more trash, people love smoking cigarettes while they wash and vaccum their cars, so once again you can spend countless hours just sweeping up butts. The best model is a cashless conveyor, touchless. 1 foot per car, per hour. So 100 ft tunnel means you can do 100 cars an hour. No vaccums, no garbage, no bins, no Hassel, no clean up. You run cashless, on a subscription model. That way you're guaranteed an income every yr. The best part is, it takes out the painstaking months that are slow because of rain and bad car washing weather. Rain or shine, you're always guaranteed ex amount per month. Because you're cashless, you save time, cost of repairs on bill validators and coin mechs. When purchasing and selling a car wash, the banks take a percentage of cash that they assume is skimmed off the top when they're deciding how much they will make you put down, which is usually 35-40 percent because of the cash sales. So if you're completely digital, this will help banks work with you better. Being in real estate I run the financials though the CCIM gauntlet, a top producing Tunnel wash on leased land can produce 350k a yr Canadian, net net net. In your pocket after taxes..
Great comment! Thank you. And yes, sorry if the point of the video wasn't clear, none of these types of businesses are ideal for passive. But I would still assert that the employee equation in large tunnel washes creates an additional layer of responsibility absent in self serve.
Which carwash is the most profitable?
@@AlexMendoza69 The one that corners the market and does the most business. A touchless tunnel wash on a monthly subscription. You'll go through more water, but that's why you have water reclaim systems. Less moving parts and repairs than friction washes. You want a Tunnel as long as you can afford. You can do a car an hour per foot. So 100 ft equals 100 cars per hour. You want a subscription model. You can pump out the things for like 20-30 a month. I've seen washes where that were bringing in 100k a month Gross. After all said and done, netting 350-400k a yr after taxes. Subscription model is the best for you but destroys a lot of markets and independents. Because everyone would rather pay 20-30 bucks a month and be able to use it anytime rather than paying that for 2-3 washes. You can do cheaper packages also. The best part is when it rains you're still getting paid. You know exactly what you're bringing in every month.
@@AlexMendoza69 Not sure about individual washes but for marketshare Mister Car Wash has 4.5% of the market, Autobell 1.3% of the market, Mikes Car Wash 0.1%. Doesnt sound like much but it's a billion $ industry. Thanks for watching!
@@rich8381 sir please me a call, I would like some insight. Currently looking at a tunnel, just had a few questions.
I own restaurants I’m not sure there’s a harder business so this doesn’t scare me.
They're opening up all over Florida.
I own a mobile Fleet washing franchise myself. It is a great business model. The biggest struggle honestly is staff. It’s not hard to find business, and it’s easy to profit. Just the staffing is tough.
Thanks for the comment! Hopefully the staffing gets easier in the not too distant future :-)
Facts
I learned more about how a car wash works then I wanted to know. Thanks! LOVE, just LOVE how you break it down
Thanks for watching!
Great video, was looking at this idea months ago then thought about most of the reasons named in this video.
Thanks for watching!
This guy is has so much insight!!! Very knowledgeable..
Thanks for watching!
Thank you for your valuable information. I have owned a gas station with a car wash. It was pre owned and the nightmares I have encountered. Lots of sensors and it was the brushless type. I had to learn working it since I found myself calling the maintenance once a week. The other business was with brushes that was also a nightmare. The maker of the car wash advised us on not to let the Mustang cars in since it will literally suck the rear bumper out of the car and I witnessed it myself and that was the end of that business. Thank you for sharing and Happy New year to all.
Thanks Hassan! And happy 2022 :-)
A whole bunch of car washes have opened recently here in San Diego for some reason. The market does seem saturated, so to speak.
10:20 you are genius and really thinking out of the box with all business possibilities here
Can some one tell me what car wash is going through 2-300 employees a year... or an employee every other day? If any business is going through that number of employees and isn't the size of Walmart they have serious issues for that matter...
Very helpful- thank you!
Thanks for watching!
A traditional "full service" car wash, with all the employees, would be hard to staff, very true.
As a carwash distributer I can tell you from the other side of the coin, the biggest single bad trend in the industry is investors buying carwashes. They no nothing about it, do not want to run it properly and do not want to get their hands dirty. Owner operators are much in a much better position as the eliminate 90 percent of the down time at a wash by doing the repairs and maintenance needed. They will actually stock the parts they are likely to need on hand so they don't have to wait. When a passive investor breaks down, I get a phone call and they believe that i should drop the rest of the service i have to go get them back in service, and then the want to complain about my service call rates. A little time and money invested in learning how your wash works is money very well spent.
Great comment - thanks! Very similar in other industries. Investors seeking semi passive situations put little to no effort into running the businesses yet still expect to make a fortune
Jon, what city are you in?
There’s a guy in Australia who used to mow lawns as a teenager in Australia, I’am talking about the late seventies. He opened a lawn mowing franchise “Jims Mowing” (His christian name being James). By the mid nineties he was worth sixty million dollars. Back then that was a ton of money. But his franchisees never made much money. Their average lifespan was about six months and then they were replaced by a new set of enthusiastic small business owners.
We actually have them in Canada as well. Seems they expanded to NZ,UK and here. Interesting story - thanks for the comment.
I have a family who owns a car wash in my hometown they hate it so much its not easy as it used to be you still need to repair the vacuums and the electricity and plumbing and other things that need to be replaced or repaired and you have to clean up on top of it their car wash went under after that I told they should've stuck to retail instead they had vacuums vandalized and broken or ran over by crazy people
Walter White begs to differ !
I knew WW was going to show up somewhere in the comments
@@FranchiseCityOnline 😁Love your vids pal,---take care.
you so professional
1:29 Does anyone know the origin of this video? It looks like a car wash in Newington, CT I used to use 😮
Thanks for your comment. However any businesses require maintenance, cost, staff, etc and etc.
And wouldn't you agree that some industries are naturally less work with higher profit?
@@FranchiseCityOnline yes
Please make a video about bicycle industry. What is not profitable and what is. Thank you ❤️
Thanks! Do you mean like retail bicycle sales /repairs?
Depends on your business model and demographics. Number one business growth in States . Yes getting to many , but know a lot of people have made a fortune!
There is one nation wide company that is attempting to open one new wash a week, 50 per year.
@@jonslagter hi Jon , I here you , but luckily Iam not in States .
What is the website to find business on sale
bizbuysell
What about some positives of opening a car wash?
Pretty well everyone else on RUclips tells you the positives 🙂 It can be a decent money-maker, many owners have done well but buyers (particularly inexperienced) should be aware of the downsides.
The Express Exterior market is on fire! Technology is light years ahead if where is used to be. Getting together with the right group up front will put you into the right property and the right platform to create a very successful car wash. Great tools available for site analysis. Expensive yes but properly done can be very profitable. Car washing franchises has never worked probably never will. Its not a consistent recipe based on Geographic's. Self serve washes are fading quickly making room for automated washes. Touchless washes are to slow and do not clean as well as a Foam friction tunnel. They do not use Cloth anymore, its closed cell foam which is very safe. Car Wash chemistry has dramatically improved. All electric systems are clean and efficient. Water treatment technology has also come a long way. I would certainly not dismiss a car wash as a profitable business. I think now I video on 6 reason why you should consider it.😁
Thanks for the comment! The sellers of the businesses give all the positive points so we focus mostly on the potential pitfalls :-)
@@FranchiseCityOnline As someone who sells and services car washes in an extremally expensive market for land and labor we do not see many new self serve washes being built as the cost of the land exceeds the potential return. We have also seen a massive shift away for the old hand wash or full service exterior model as mandated minimum wages have increased substantially. The most important factor is the location of the wash as that can influence the numbers of washes per day sometimes by 100percent which by itself can make or break the wash. One other item is the the owner used to be a very involved hands on person and it has steadily changed to investors who have to call in a service tech for the easiest things. The amount of maintenance required is perhaps the most miss understood and under appreciated aspect to these large complex packages of equipment.
Biggest scam is buying a franchise, particularly a car wash
Hopefully that does not happen but if it does I will be the one to buy it.
He’s not accurate people. Own a car wash you’ll get paid
If anyone loses their investment based on your inanely broad advice, can I send them to you for a refund? A simple 3 second search yields the numbers of car wash closures that validate that indeed you may in fact *not get paid. Some fail, some succeed, knowing why is what counts. Thanks for the comment.
But what if I have a lot of cash that I won "gambling" that I need to launder? ;-)
Buy realestate in Toronto!!🤔
lol
@@FranchiseCityOnline one of the unfortunate aspects to the sale of self serve car washes that have been open for a hile is the "unreported income". invariably the present owner is asking for n amount based upon what he claims he has removed weekly and not the amount he has reported. The buyer will or should only negotiate upon the amount reported as that is what is verifiable.
@@jonslagter Absolutely right - we covered that topic on the channel previously - there are several industries that are notorious for unreported income :-) Thanks for the comment!
Perhaps a laundromat to launder.
My buddy of mine open a high tech car wash but is going out of business now so it was sad it was like 10million investment
They were great people but sadly nobody cared
Probably could have had a gas station with the wash
So sad
I would say the name of the company but you could easily find it on a website that buys and sells businesses they're trying to get there investment back
Unfortunately the carwash industry has a great many companies on the supply side that put making the sale ahead of making successful customers. It also happens the other way around. I own a company that sells and installs carwash equipment and we have always strived to do what is right and in the customers best interest. Strangely to a lot of customers having a supplier they can trust is less important than the guy who goes in and offers them things that are just misleading to save a few pennies.
most of ur video is all about not to buy franchise!!
Check the playlists :-) But yes, we like to offer both sides not just the good, no franchise is perfect. ruclips.net/video/1yunaxZKyFE/видео.html Thanks for watching!
Homie it’s in the title 😂