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How Much Does it Cost to Start an Automotive Franchise?
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Almost everyone has to deal with auto maintenance. And now that people are keeping their cars for a longer period of time, they deal with it more often. For these reasons, starting an automotive franchise is a sound business decision for the aspiring entrepreneur.
You could launch a traditional, full service mechanic's shop or one that specializes in a service such as oil changes, brake repair, transmission repair or muffler service. But, the possibilities don't end there. Among the other automotive franchise opportunities are:
- Auto parts stores
- Windshield repair
- Collision repair
- Motorcycle shops
- Battery centers
- Rental car shops
- Window tinting shops
- Car washes
Cost to Start an Automotive Franchise
It is very difficult to estimate the cost of starting an automotive franchise because there are so many different types of franchise opportunities. Each has very different start-up fees, ranging from tens of thousands of dollars to $1 million or more.
One of the first payments you'll make is the initial franchise fee, which covers the cost of using the company's name. With most automotive franchises, budget anywhere from $20,000 to $50,000.
- Auto maintenance and repair shops usually have an initial franchise fee of $20,000 to $30,000.
- Tire stores often range from $25,000 to $30,000.
- Car washes usually have franchise fees ranging from $5,000 to $25,000.
Beyond just the franchise fee, startup costs can range from $25,000 to $1 million or more. Budget at least $25,000 to $150,000 for inventory alone. You'll also need to secure a location, hire staff, and purchase all the equipment necessary to operate the business.
- Auto maintenance and repair shops usually have startup fees ranging from $50,000 to $250,000.
- Tire stores often cost $300,000 to $600,000 to start.
- Car washes tend to cost $150,000 to $350,000 to start.
Other fees you can expect to pay at the outset include:
- A "grand opening" fee that pays for the company to promote your franchise
- Operating licenses
- Insurance
- Legal fees ($1,000 to $5,000)
Cost to Own an Automotive Franchise
After you've made the initial investment, you'll be required to pay regular royalties to the franchise company. These cover the cost of continuing to use the company's name, as well as services like advertising and support.
Some franchises charge royalties as a percentage of your gross operating revenues. These can range from 2% to 30%, although most fall in the range of 5% to 12%.
Other franchises charge flat fees. They range from about $100 per month to $1,000 or more, depending on the franchise. Be sure to ask for a detailed description of royalty fees before pursuing any franchise opportunity.