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While many people thought that cars would have been superseded by hovercrafts or teleportation by now, the reality has proven otherwise. More so than ever, motor vehicles are our primary means of transportation. The 2011 figures from Allianz show that there are 0.72 vehicles per person nationwide. Of this figure, passenger cars make up 77% of the total amount of vehicles.
With more and more vehicles on the road, demand for automotive services continues to rise. People are no longer content to allow their car dealership to service their vehicles and are keen to trust their vehicles with automotive franchises willing to compete on both price and service.
Automotive franchises have proven to be a steady business model in an industry with ever increasing demand. If you have ever dreamed of turning your passion for cars into a career, you may want to consider investing in an automotive franchise.
As with any type of franchise in Australia, the cost of an automotive franchise will vary significantly depending on its location and whether you are looking to start your own franchise in a new location or purchase an existing franchise as a going concern.
As a guide, an Autobarn franchise will cost between $250,000 and $500,000, while an Auto Masters franchise has a similar range of between $200,000 and $500,000. A Bridgestone Select franchise will cost approximately $350,000, while a Midas Australia franchise requires an initial investment of $120,000. If you are interested in a car detailing franchise, the initial investment will be around $66,000 for a mobile detailing franchise like Waves DETAIL PRO.
As with all franchise arrangements, an automotive franchise will incur ongoing royalties and other fees. Royalties are typically calculated as a percentage of ongoing business takings, with different types of franchises charging fees ranging from 2-15%.
An additional franchise expense that many people don't consider is the transfer fee should you decide to sell your franchise. In the case of Auto Masters, a $3,000 transfer fee applies should you wish to sell your franchise after the initial ten year contract is over. Keep in mind that the potential buyer will need to go through the same approval process as you did when you first purchased your automotive franchise.
Setting up your automotive franchise could also incur the following expenses:
The car manufacturing industry in Australia may be going through some tough times, especially following the closure of big name manufacturers like Holden, but aftermarket retailers and other automotive franchises are going from strength to strength. After all, regardless of whether a car was manufactured in Australia or overseas, Australian car owners will always look locally for car repairs and ongoing servicing.
Similarly, the ongoing economic downturn that has persisted for the past decade has caused more people to turn to automotive franchises to repair and service their existing cars rather than purchasing new cars.
As with any type of franchise, the individual profit levels will depend to a small extent on the location of the franchise and to a large extent on the passion and motivation of the franchisee. As a guide, keep in mind that when you begin negotiations with an automotive franchisor, the franchisor is required to provide you with details of current franchisees. The best way to determine the profitability of your chosen automotive franchise is to get in contact with existing franchisees in a similar location and ask them about their experiences.
Automotive franchises often appear on lenders' lists of approved franchises, making it much easier to obtain finance and even giving you access to lower interest rates and favourable loan terms. Autobarn, for example, has previously been on the approved franchise list of some of Australia's largest lenders.
Keep in mind that the approved franchises for different lenders will change over time, so it is a good idea to make enquiries as to which lenders, if any, are currently looking favourably upon automotive franchise finance applicants.
Finance your automotive franchise with one of the following options:
When applying for finance for an automotive franchise, consider the process as being similar to applying for a job. Not only must you sell the idea of the franchise business, you must convince the lender that you have the knowledge, experience and qualifications necessary to successfully manage the business, turn a profit and ultimately meet your loan repayments.
Plan well in advance for the finance application process and ensure that you have detailed financial information for yourself and for the new franchise business in addition to the completed loan application form and a comprehensive business plan for the new business.
Australia may be in an ongoing financial downturn, but if there is one industry that has benefited from this, it is the automotive industry. In tough financial times, Australians are more likely to move away from having a car dealership regularly service their car and will look to nearby automotive franchises who are willing to compete on price and service. If you've ever dreamed of building a career around your love of all things automotive, consider investing in an automotive franchise.
Pictures: Shutterstock
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