Automotive Repair Franchises – The Facts

Automotive Repair Franchises - The Facts

Automotive repair franchises are a hot commodity for entrepreneurs and business people. Purchasing an automotive repair franchise is a great way to be your own boss and to earn a good living. But there are many franchises in many different industries that one could buy. Why would an automotive repair franchise be a better choice than some other options? What are the facts that underline the argument that an automotive repair franchise is a wise investment?

How Much Does It Cost?

One of the first questions prospective franchisees always ask is how much will the franchise they are looking to buy cost them? And so, they should, this is obviously an important question. Every franchisor will charge a different franchising fee and give different estimates about how much money it will cost to get an automotive repair franchise off the ground and running. You will need something in the range of $150,000 – $200,000  in liquid capital in order to buy and start running an automotive repair franchise.

That is clearly a wide range, but different markets cost different amounts. Rental costs of property vary widely across the country as do they costs of advertising. Keep in mind, the above figure does not include those expenditures that are typically financed. Thing such as equipment and inventory are usually financed, and these costs can bring the total investment needed to something in the range of $220,000-$450,000.

Financial Performance

Clearly, this is a lot of money. Automotive repair franchises are not low-cost franchises. There are many low-cost franchises that can be good investments, but many still opt for the larger investment required to buy and set up an automotive repair franchise. Why? Because automotive repair franchises offer much bigger potential financial rewards than do most franchises. In 2018, the median amount of gross sales for an established (two-years or older) Tuffy Tire & Auto Service franchise (with at least six bays) was $887,233. The highest earners grossed more than $2.7 million. Mind you, these are Tuffy Tire & Auto Service franchises. Less established brands are unlikely to gross as much.

Reasons for Success

Automotive repair franchises cost a significant amount to buy and start up but also gross a heck of a lot of money. Why? What accounts for all these sales? There are two main factors. First is just the sheer number of vehicles on the road today. There were over 300 million vehicles in use in America in 2016. The U.S. population has never been higher, and the number of vehicles corresponds with the population.

Second, these vehicles are, on average, older than they have ever been before. The typical car in America is about 11.5 years old. This is crucial because older vehicles require more repairs and more maintenance to keep running efficiently, and this means more business for automotive repair franchises.

The Forecast

The economic forecast for automotive repair franchises is also good. The automotive aftermarket is the collective amount of transactions of all business to do with vehicles after their initial sale. Globally, this market is expected to reach a valuation of over $700 million by 2020 and to surpass the $1 trillion mark by 2022.

Contact Us

To learn some more facts about automotive repair franchises, please contact us.