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. https://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: https://www.franchise.city/our-services