Car and Automotive Franchises – What to Know?

Schuyler "Rocky" Reidel

Schuyler "Rocky" Reidel

Schuyler is the founder and managing attorney for Reidel Law Firm. | Car and Automotive Franchises - What to Know?

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Before investing in or starting automotive franchises, education is key.

It’s also important to understand the local market and competition. And potential legal issues related to opening this franchise.

Our goal is to address your potential questions and provide simple answers.

What Are Car and Automotive Franchises and How Do They Work?

Franchise opportunities abound in one of the largest global industries.

You don’t even need to love cars or have automotive experience.

Of course, that will help increase the chance of success. Because your passion will be behind it. And it will show!

Your investment options are many. Franchisees like yourself can join this proven market using the following businesses:

  • Auto repair
  • Car rental
  • Car wash
  • Oil change

Also, your oil replacement company should add on tire and brake services. Because that’s where profitability truly rests.

Business Model for Auto Franchises

A parent company provides access to their automotive business for an initial investment.

In exchange for help with marketing, training, and support, the franchise owner sells rights to their brand. This process gives most people a real chance at early success.

Day to day management falls to the franchisee, but franchise owners are never far away. For advice, coaching, and more.

What Are the Benefits of Owning a Car or Automotive Franchise Business Instead of Starting Your Own Business From Scratch?

As we mentioned above, your locally owned automotive business doesn’t require industry experience. Just money, support, and determination.

Auto franchises are a popular choice for entrepreneurs.

Some contributing factors:

  • Travelers now prefer a road trip over flying
  • More personalized cars, trucks, and other vehicles

Franchise car services are needed to fulfill an increased demand from these customers.

After that initial investment, money can start to work for you. We’re talking about profitability. The financial metric all franchisees seek.

Besides demand, you can expect the brand to create a positive experience for customers. If you choose the right one, of course.

Combine that with marketing materials the parent company gives you. Hopefully you can see this solid recipe for success.

Reasons Automotive Franchise Opportunities Are Worth the Investment

There are two trends we want to highlight here:

  1. Increase in employees wanting to be their own boss
  2. Higher demand for auto service

Professional mechanics can provide mobile oil change services to the work-from-home market. These auto owners aren’t willing to sacrifice possible sales when they seek replacement service.

Who hasn’t popped their hood and seen a complicated mess? Electronics on modern vehicles prevents some customers from making their own repairs.

What Are Some Things To Consider Before Buying a Car or Automotive Franchise Business Opportunity?

Even top automotive franchises should always follow news across their industry. But only if they want to stay competitive.

And so should you before purchasing automotive franchises.

Examining Car Repair Selections

Ask yourself these questions:

  1. Will I have access to repair data for servicing car owners?
  2. Is there a high concentration of local competition?
  3. Are there existing locations in my desired area?
  4. With a push for electric vehicles, how could it affect future demand?
  5. How will I attract talent to provide the actual auto repair services?

There’s many more questions, but this can get you started. We recommend creating a business plan to start answering them.

Other Auto Service Industry Considerations

Also, make sure you set aside additional capital to help with startup costs. Like a tire inventory.

If the initial investment in franchise opportunities won’t leave you with any extra cash, shop around.

Perhaps the promised level of training in your franchise agreement is lacking. But you love everything else on paper.

Don’t run away from the table just yet.

Besides networking with other automotive franchises, you could think about bringing on a business coach. The investment in your development will pay dividends.

Believe that!

What Are the Risks Associated With Owning a Car or Automotive Franchise?

Here’s some advice as you conduct a franchise business review. Upfront, identify visible risks. Then figure out the rest before opening day.

Let’s look at an example from a car wash company. And we’ll focus on the safety risk.

When visiting existing locations, find out what hazards other franchises have found. Then ask the franchise owner about safety protocols. Finally, inquire about any training they’ll provide for your staff.

Managing your risks decreases the chance of a lawsuit cutting into revenue.

Additional Risks in the Automotive Industry

Maybe your company offers replacement services or other forms of repair. And you’re proud to do it.

But what happens when customer issues from another franchisee affect your reputation? Or your bottom line?

Companies that do a poor job of containing negative publicity might not be the right fit for you. Which leads to a helpful tip:

  • Only engage with automotive industry franchises that have spotless public images

You can’t wait for trust to be reestablished. Because your investment will be affected.

And not in a positive way.

Lastly, understand the need to set aside a portion of your revenue if your company is sensitive to changing seasons. This applies to our earlier example of a car wash.

What Should I Be Aware Before Choosing a Car or Automotive Franchise?

Okay, it’s time to think outside the box.

Prior to signing any franchise disclosure document, perform an assessment:

  • Make sure you align with the needs of each residential customer

Refer to the SWOT analysis in your business plan to help.

Let’s say there’s already 5 car washes in your desired town. But there aren’t any tire companies being operated.

You can fulfill this need by providing oil changes for cars and offer add-on tire services. They’ll appreciate your product during their next road trip.

Automotive Business Tools and the Environment

We know. You’d like to get away from car wash illustrations.

Just bear with us one more time.

Some communities in California have water issues. Eco-friendly options like steam cleaning may cost more up front.

But it will pay for itself as time goes on. The same is true for other services that use water saving techniques and tools.

It will also lower the risk of any future workers compensation cases. Because more natural products will further a safe environment for them.

Reidel Law Firm and the Franchise Industry

As experts in franchise law, we can help you handle the legal aspects of any automotive service issues.  

In addition, our legal team can advise you on ways to shore up gaps in the following areas:

  • Review FDD/FA
  • Review personal guaranty and real estate control docs
  • Franchisee formation, guidance, and asset protection
  • Franchise operating compliance audit and coaching

By effectively managing risk and maximizing opportunities for businesses we answer the needs of our clients wherever and whenever they arise.

Call Reidel Law Firm today at (832) 510-3292 or fill out our contact form.  And see how our advice can bring you success in the franchise industry. 

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