Automotive Franchises - Good Idea? How Much can You Make?
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- Опубликовано: 23 июл 2024
- Should you buy an automotive or garage franchise, do you need mechanical experience to own one, and how much can you earn?
AAMCO, MAACO, Meineke, all iconic brand franchised models with thousands of locations across the USA. But which automotive markets make the most money? General repair, tire replacement, oil change, aftermarket parts, wholesale parts?
First, do you need automotive experience or to be a mechanic to own an automotive franchise? No, the same as you don't need to know how to cook burgers to own a McDonalds. You are hiring the mechanics and techs, so you are focused on running and growing your business.
We get many buyers here at Franchise City broker group looking for automotive franchises. Now while we know which brands are the most profitable on paper, and we'll look at that shortly, there is no simple answer as to which one will be the most profitable in your area. That takes some research.
From a general perspective, how much can you earn with an automotive franchise, and which niche markets earn the most money? For an average lets start with a major automotive repair shop. Average gross revenue across the board is about $650k, profit for an owner operated model is about $140k a year, margins of about 21%. If you have a general manager that will take your profit down to just under $100k a year and margins of 14%. If you have a million dollar grossing location, you have been running for a few years and you are one of the top performers, your margins can go up to almost 30% with a profit of $350k, if you have a general manager $270k profit with 22% margins. Your investment for a shop is around $225k-$330k, SBA finance is available with 30% down OAC.
For many people all they will hear out of all those words is "$350k a year net profit" and want to buy an automotive franchise. But keep in mind the same franchise has also closed locations, and has shops that are struggling in the system. Never buy a franchise based on what someone else is making in another city in a completely different economic environment. If you need help researching give us a call at Franchise City brokers we have free tools to help. www.franchise.city/our-services
Oil change franchises can be slightly lower investment depending on how many bays you build, ranging from $180k and up. Top performers do about 2m gross, with almost $700k EBITDAR. Top 50% of operators do just under a million, EBITDAR average of just over $300k. What is EBITDAR? Earnings before Interest, Taxes, Depreciation, Amortization and Occupancy costs/or rent. Because rent can vary widely depending on location you need to do a specific calculation directly relating to your city.
There are also new oil change franchises that focus on single bay oil changes in 10 minute locations with a lower investment from $120-$200k.
Bodyshop franchises, that repair vehicle bodies and paint, are a bit higher investment between $350k to $500k. Top 50% gross about 1.6m with income just over $300k. Average for all centers is 1.2m with income just over $200k. Again, locations have also been closing so you need to consider your own market demand.
Certain tire franchises can be very profitable but some of the more popular brands are sold out in many major cities. Now a pro tip for veterans or first responders, some automotive franchises waive the entire franchise fee, so fees of between $30-$40k, completely waived for first responders or veterans. Most franchises provide a discount of some sort but these waive the entire fee.
Most buyers go for the big automotive names because thats what they know, but hidden in the automotive sector are brands that have an average in their top 50% of almost $350k profit a year, some locations doing even more than that. Investment for this franchise ranges between $220k to $300k. Again, those top numbers are great but many locations are below that.
The secret to making maximum revenue is to find the best fit for your investor profile and demographic. In every franchise you have franchisees at the top, and those at the bottom. You need to understand local market demand, competition, demographics, operator capabilities, local staffing challenges and a lot more. Franchise City brokers can help you with that and we have hundreds of resale franchises and new units listed in dozens of sectors including automotive.
Need Help Finding a Franchise? Franchise City Brokers: www.franchise.city/our-services
#franchisecity #automotivefranchise
Thanks for the great points about expertise or lack-there-of when it comes to owning an automotive franchise. It's a really good recession-proof business. People need their cars fixed whether the economy is up or down
Your videos are amazingly relevant and useful. I'm looking forward to hearing your thoughts on car dealership franchises..
Thank you! If you are currently looking for a franchise you can call us anytime for personalized reports (free) rather than having to wait wait on a video 🙂 ruclips.net/video/HDrFegUMSZI/видео.html
I would like to hear about car washes. They do very well around my neck of the woods.
Love to hear about a whataburger franchise. Fantastic information on these videos!
Thanks for watching! If you are looking at buying a franchise you can get reviews, reports, consulting and more , free for any franchise: ruclips.net/video/HDrFegUMSZI/видео.html
Excellent video.
Thanks for watching!
21% is very good. Even 14% with a GM is great (though I’d probably pay a GM more in exchange for loyalty- anyone who can run an auto shop well is gonna want to advance). I kind of wonder- would sparsely populated areas actually do better? Less saturation/more demand, at least theoretically.
Well, I wouldn’t own just one with numbers like this, but I’d consider multi units in a multi brand strategy.
Very good
I am a 20 year old I’m the military and I’m looking to franchise when I get out, but I don’t know what education I may need or where to start.
Have you heard of any of those tire franchises where they install on-site basically work off a truck?
Yes, we work with them as well. Revenue potential not as high as most brick and mortar but lower overhead and investment, and scalable. Thanks for asking!
@@FranchiseCityOnline how about car wash franchise , can you do a video for us ?
My mechanic says the garage only made $20,000 profit/year off of each bay in the building (they have 2)
Bad location maybe?
@@nalgas5569 a rural location
@@derekbury7262 rough
what do you think of Bosch Car Service? your opinion and feedback is essential
If you value our opinion contact us! That way we we can provide informed recommendations. Without knowing your budget, skills, goals, market demand, demographics etc. it is impossible to say which franchise could be good or bad. www.franchise.city/our-services
EBITDAR? Never heard of that one before... Earnings has rent already calculated in it (gross revenue minus all operating costs, thus including rent)
Guess I wont mention EBITDARM then :-)
@@FranchiseCityOnline yep i was confused a bit. Of course any letter added after ebitda would substract that cost from earnings. Ebitda was invented to compare companies in stock value and the m&a world, to show deleveraged earnings. Seeing the term being used for small businesses valuations now i can understand more variations are being invented
I'm a disabled vet that is working to start a shop are there any franchises that can do both body and tech where I can do more things then just what they offer?
No. Virtually no franchises will permit any services be provided outside of their areas of expertise. The point of franchising is to provide a consistent experience for customers, and a replicable system for the franchisees. They wouldn't want to jeopardize that. Thanks for the question.
Very honest opinion. Thank you for sharing
Thanks Hassan!
Want to know why they wave the fee? You will be building a name for them. I started an automotive shop and cleared 600k the first year minus rent. I did it cause I know cars and boats.
This year I will start selling sandwiches while you wait and maybe a car wash. I charge $120 an hour on labor. Parts are extra.
Man where do you find employees to work in these franchises? Nobody wants to work. Employees are keeping employers hostage nowadays
Most mechanics make crappy pay (not pandemic related)
You can find them, the hard part is keeping them. There are lots of high-turn-around problems now, everyone keeps changing jobs.
If your business has customers like so many places say they do then raise your wages. That's it...raise your wages. Now is not the time to be frugal with salaries especially with all the free money going around
@@midnightalley4586 exactly nobody is holding anyone hostage pay better and good people will come.
Yep - with any business that is the challenge right now. But as noted if you pay well and create a nice work environment you'll become the place to be.
Isnt it incredibly difficult to find proper auto mechanics nowadays? Also electric cars are a major threat
electric cars break down too and require maintenance. Just like any business model, you shift to accommodate the changes.
As a 35 yr tech , I can tell you dont go into the automotive business with out automotive knowledge, Employees know inexperienced owners and take full advantage of that
Thanks for the comment! As a 25 year franchise guy I have seen hundreds of owners with zero experience build successful businesses :-)
@@FranchiseCityOnline how they did it? Did they hire experienced mechanic and put him as manager?
@@romyvasir9249 Yes. Training for recruiting the right employees is a big part of franchise onboarding. If you drive by any of the big franchised shops most of their franchisees did not come from an automotive background. The same as most McDonalds owners aren't professional cooks! If you need help looking at franchises give us a call www.franchise.city/our-services
How many are here? Is it better to buy existing business?
In some cases however there are advantages and disadvantages to both. ruclips.net/video/owfXX6t5Ca8/видео.html
Homegirl can fix my car anytime!
@@user-dl7yp6iz1m nice try.
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