Franchising hasn’t had much of a presence in the car wash industry. According to a list of the top 100 car wash chains, only three of the companies listed offer a franchise opportunity: Tommy’s, Mr. Clean, and Shine Express.
In fact, the number of franchise opportunities for on-demand mobile car washing far outnumber those for free-standing car washes. Other car wash franchise opportunities I came across included Spot-Not, Victory Lane, Super Wash, and Cactus.
Considering there are more than 62,000 car wash establishments in the country, the total number of franchised operations is literally a drop in the bucket.
If franchising is popular with other types of businesses, why hasn’t it made much of a splash in the car wash industry?
I’ve talked about this with start-ups and operators for years. My findings indicate most people believe the value proposition of a car wash franchise isn’t strong enough.
For example, besides an upfront franchise fee and the equity required for a store is monthly royalties of, say, 5 percent of sales. If average annual gross sales are $1.2 million, royalties over a 20-year term would equal $1.2 million.
So, one question might be: Is franchise rights worth $5,000 a month as in the example? Unfortunately, there isn’t a good way to answer this.
Obviously, franchise has worked for some folks. Otherwise, there would not be a car wash company on the franchise 500 list or list of fastest growing franchises. Conversely, there are a lot of car wash operators who are making robust profits without paying royalties.
Training and technical support is considered an important attribute for franchise start-ups.
However, professional training in car wash management, maintenance and repairs, and operations is more available than ever. This includes equipment manufacturers that offer online and classroom instruction, authorized dealers that provide on-site training, and consultants.
Having a proven system is another franchise attribute. System refers to procedures involved with day-to-day operation of the business. This includes production, employee management, financial controls, customer service, and advertising.
However, there is nothing unique about the car wash system in terms of competitive advantage (proven). Consequently, the ability of competitors to duplicate is quite high (e.g., express exterior).
Moreover, a car wash franchise is subject to the same constraints and limitations as its competitors in terms of seasonality, employee turnover, and repairs and maintenance.
Finally, there are some alternatives to the traditional franchise model. For example, NASCAR Car Wash has a “not-a-franchise” program to build a NASCAR-branded car wash or convert an existing car wash to the NASCAR brand.
Shown above is Autec’s In-Bay Express business model that is operated entirely by the customer, which allows the wash to operate 24/7 without labor and minimal overhead. Autec assists in site selection, demographic and competitive studies, site layouts, stamped building drawings, complete MEP drawings, and financing resources without any franchise fees.
More recently, I came across the WASHSCAPE Freechise™ Carwash Investing website. WASHSCAPE isn’t a car wash product per se but rather it is described as a turnkey system for investing in the car wash industry. The website lists partners as Sonny’s The Carwash Factory and Wash Equity Advisors.
In the final analysis, there is no shortage of ways to invest in the car wash industry. However, regardless of the approach, the fundamentals remain the same: Is there an excellent market opportunity? Does the management team have the knowledge and skills to deliver the business model? Does the cost of development match the potential of the market?
Bob Roman is a car wash consultant. You can reach Bob via e-mail at bob@carwashplan.com or by visiting www.carwashplan.com.