What You Need to Know About Automotive Franchise Systems

What You Need to Know About Automotive Franchise Systems

The automotive business fits better well within a franchising framework. When we first think of franchises, many of us first think of fast food restaurants or maybe gyms. These franchise models work in clear ways. But what about automotive franchise systems? How exactly do they work? Here’s what you need to know about automotive franchise systems.

Automotive Franchise Systems

Broadly speaking, automotive franchise systems operate the same as any system for any other business. You have a franchisor who runs the company and oversees finding qualified candidates to expand the business. They do this via franchising. Opening different locations across a state, let alone large portions of the country, and keeping track of all of them is very difficult. There are benefits to keeping all your locations directly under your control. You can ensure uniformity and you can keep all the profit.

But this system requires a very slow, careful pace of expansion. In an age where market share is more important than ever, you can quickly get left behind if you don’t expand at a good pace. Franchising allows for this. Franchisors give up most of their profits to franchisees of individual locations. But by making money on franchising fees and small royalty fees on many franchise locations, they can make more money than by entirely controlling all their locations themselves. That is, of course, they execute their automotive franchise system correctly.

Communication Is Key

Communication is key for pretty much running any kind of business or organization. Except for maybe one of those monasteries where the monks don’t talk. But for an automotive franchise system to work, franchisors and franchisees need to be on the same page. It all starts with an opening educational course. Automotive franchisors need to train their franchisees properly. But no matter how complete a training course is, you can’t cover everything automotive franchises will have to deal with. That is why ongoing guidance and support whenever the franchisees need is key.

Preferred Vendor Programs

Because automotive franchise systems exist in a liminal state of not a monolithic company and not a series of unconnected businesses, they have some advantages. One such advantage concerns their buying power. A key component of any automotive franchise system is a preferred vendor program. Automotive franchisors can leverage the buying power of all their locations to get reduced prices on parts and equipment. Replacement parts comprise a huge portion of an automotive franchise’s expenditures. But you need to give your customers top quality parts in order to retain their business. The solution is a preferred vendor program. This allows automotive franchises to buy top quality parts at reduced prices.

Tuffy Tire & Auto Service

Automotive franchises are not cheap. In truth, they’re one of the more costly franchises to buy and set up. But the customer base for automotive franchises is enormous and still growing. Every automobile owner is a potential customer. But you still must choose the right franchisor if you’re going to make money. And to do that, you must do your research. At Tuffy Tire & Auto Service, we welcome any questions you have about our automotive franchise systems. Please contact us to learn more.