If you want to start a car wash business then the best option is to purchase a franchise of an already established company which operates in the car washing space. Buying a franchise is a good way to enter the business as an owner, but it also requires a substantial investment of both time and capital. Be sure you know what you are getting for your investment before you buy. In this post you will get complete details about buying a car wash franchise, market size, cost to buy car wash franchise and profits in car wash business.
What is the market Size of the Car Wash industry in the US?
The total market size in terms of revenue of the Car Wash & Auto Detailing industry is projected to be US $11.8 billion in 2019. The market size of the car wash industry is expected to increase by 2.1% in the year 2019 which shows that the demand for car washing in the US is growing.
What is a Car Wash Business?
A facility where cars and other automobiles are washed both exterior and interior in exchange of money is known as car wash business. Car washes can have a single washing bay or multiple, it can be self-serve, fully automated, or full-service with attendants who wash cars and other vehicles. On an average self-service car wash owners make US $48,000 – $55,000 a year.
A car wash business can be self owned or a franchise licensed by an already established car wash company. There’s no much difference between the two for customers but as a business owner, there’s a huge difference in mode of operations, finances and ownership.
Under a franchise model, you can never own 100% of the brand while a self owned car wash business is 100% yours with full rights to sell or shut down the business anytime.
How to Buy a Car Wash Franchise?
There are several well known brands in the car wash industry that offer franchise opportunities namely:
- Mr. Clean Carwash
- Tommy’s Express car wash
- Green Shine Waterless car-wash services
- Fleet Clean USA
You can buy a car wash franchise simply by getting in touch with any of the car wash companies mentioned above to initiate the process but any franchise would need a significant investment of capital. You have to figure out how you are going to meet the capital requirements to buy a car wash franchise.
Figure out the franchise fee and other investments to get an idea of how much money you have to invest in total, and how much of that you have in hand and how much you need in financing from a bank or a lender. There are several small business loans and financing options available in the US from banks and other lenders that you can try. You can also go to SBA for a loan.
How much is the Cost to buy a Car Wash Franchise?
The cost to buy a car wash franchise varies depending on various factors such as location and the brand that you want to own as franchise. However, you can expect that the average cost to buy a car wash franchise is around US $40,000 and could go up to US $300,000. If you are looking for a Mobile car wash franchise then it could cost you in the range of $30,000 to $100,000.
Things to do before buying a Car Wash Franchise?
Starting and running any business is a step by step process and there are several things that you need to do before you go ahead and buy any business. Same is the case with a car wash business and below are the steps that you must follow:
Evaluate Car Wash Franchise Opportunities
The first step towards buying a car wash franchise is to evaluate the opportunities in the business that are available to you. Car was Systems are a setup of equipment that range from single person operations which costs less compared to a multi bay car wash that costs hundreds of thousands of dollars in investments. Also, you should do some market research to understand the demographics, population, median income and competition in a location where you are planning to launch your business.
Attend franchise conferences and exhibitions to find out the best car wash franchise opportunities that you can invest in. You can interact directly with the companies’ representatives and other franchise owners in these events and clear your doubts about buying a car wash franchise. It not only helps you evaluate the pros and cons of the business but also lets you figure out the best opportunities that exist in the car wash business.
Acquire the Necessary Skills
Make sure you acquire the skills to run a car wash business successfully. You may have been in the auto industry but each business is different and therefore, learning the skills related to a business is always a good idea. We suggest you to spend some time working in a car wash establishment to learn and understand the day-to-day operations.
In case you don’t have any prior experience in car wash business then you must go through the training process thoroughly that you receive when you buy car wash franchise as it covers the basics of operating the business. You should also learn how to handle the funds, hiring process and managing workers for your franchise.
In case you feel you lack the necessary skills then you should consider either working with a partner who does have the skills, or taking training courses that can teach you the basics of running a business.
Check & Investigate about each franchise Carefully
You must be looking for the right franchise opportunity and therefore you must investigate about each franchise extensively. Evaluate their business model and operations by carefully reviewing all of the details you are given about the company. If any of the company makes any public earnings claims, the Federal Trade Commission requires it to provide earnings proof in written. This information consists of income statements for various franchisees or audited and documented earning statements of a company as a whole.
Check thoroughly as many times the income documentation includes average income amounts or gross income amounts then you should ask for more details and try to gather details about net income of a franchise owner. You should not rely on average income statements or details as it can be misleading because few franchises could doing much better than the others and averages don’t provide a clear picture about the overheads and net income after taxes.
A high gross does not necessarily mean that there are high profits in the business. It’s important that you find out what the expenses of operating the business are going to be in the long run because buying a franchise is not a short term investment. You need to consider long-term profits and business sustainability
Contact the Existing Franchise Owners of the brand in which you are interested
Get in touch with the existing franchise owners of the car wash company that you are interested in to get the insights about the business. Ask them about the pros and cons of buying a car wash franchise of the same company. Find out if they have any problems with the company regarding royalty fee, training or support. If there are serious flaws in the franchise model, you should consider a different company to work with but you need to speak to the existing franchise owners to get a clear picture about the business.
Read the Disclosure Documents thoroughly
Read carefully the company’s disclosure information, which it is required to give you before you buy a franchise. Disclosure information documents consists of information about the company and its operations in details. Company’s existing franchise locations across the nation, itemized listings of everything you will get as a franchise owner and how much will be cost of opening a new car wash franchise.
If you notice any information is mission then as for those details. You should get a clear idea about the costs involved such as non-refundable amount, miscellaneous expenses, business license costs and other construction expenses that might be involved.
The disclosure documents will also provide you very important details such as the business experience the company executives and if the company has any lawsuits files against them, foreclosures or ever filed for bankruptcy. You should also look for the company’s training program details, location where that training will be held, duration and what kind of on-site support you will get initially from the company when you open a car wash franchise.
Every company has a dedicated representative you can turn to for help with problems that you might face as you are establishing your franchise. This is especially helpful during your first year of operation as you may run into several technical glitches. It also is helpful to have a lawyer go over the franchise documents with you to ensure that all the terms and conditions are in place and there’s no fowl play.
Apply for Car Wash Franchise
After you are satisfied with the details that you had gathered and speaking with the company’s executives, you can initiate the process of buying a car wash franchise by filling out the application form and paying the initial amount as required by the company.
Before you want to make the initial deposit, ask yourself once again that it is something that you really want to do and you will get good value for your money in return. Each company has a different procedure for processing and screening franchise buyers, some a stringent and some are easy to comply with but you will need to comply with your franchiser and their requests in order to qualify. A provide proof of financial stability and net worth, references, a business plan or some other financial documents are always requested by the companies to evaluate your financial standing.
Consult with an attorney before Signing the Franchise Documents
It is advised that you should consult with an attorney and an accountant to ensure that all the paper work and documentation is fair, original and all the agreed terms and conditions are met. An attorney will do this for a fee but it will bring you complete peace of mind. Only sign any final documents after you get approval from your attorney and if you are accepted by the company to own a franchise. You will be asked to deposit franchise fee at this stage and other deposits if any. You should read everything carefully and all the T&Cs to make sure that no changes have been made to amounts or terms of the agreement.
How Profitable is a car wash business?
Car wash business is highly profitable and you can expect a sales of US $200,000 – $600,000 annually, depending on where you are located and various other factors. According to the U.S. Census Bureau, the average monthly revenue generated per bay in a self-serve car wash is nearly $1,500, while an in-bay automatic car wash generates $139,000 of revenue per year and provides a net yearly profit of approx. $86,561.
The average cost of getting your car washed in an in-bay car wash is $6.34, which yields an average profit of $4.35 per wash while the average cost of a car washed in a tunnel or conveyor car wash is $15 per vehicle, which adds up to an average annual revenue stream of $686,250 for this type of facility but it needs much more investment compared to self-serve cash wash facility.
Considering the data above, you can expect huge profits in car wash business, if you learn the necessary skills required to manage a car wash franchise.