How to start a car repair franchise
Whether you're a mechanic or just after a good business, this could be for you.
Car repair may be a popular industry but it is also a transient one. These types of franchises make a big splash at franchise shows, attracting people with promises of big money. But you need to guard against changes in the contract – such as what happens if they are taken over.
However, with the right franchise, a lot of hard work and long hours, though, there is no reason why the returns shouldn't be substantial.
What is it?
Car repair franchises fall broadly into two categories. Firstly there is mobile repair work, fixing either mechanical problems or more superficial damage. People love their cars and they want them to look nice. ChipsAway specialise in repair to paintwork, plastic bumpers, windscreens, alloy wheels and interiors. Established in America in 1987, ChipsAway has been in the UK since 1995 and uses a paint repair process which is done on the spot. There are also mobile repair and assessment services. The main bulk of the work is on site engine tuning, servicing and general repairs.
Both ChipsAway and other mobile repair services are operated by mobile mechanics in vans who are based at home.
The second franchise is the more traditional workshop based kind. Mr Clutch is a much longer established franchise that started up in 1978. It specialises in clutch repair but has branched out to cover brakes, gear and other skilled tasks to broaden market appeal.
How does it work?
Building up a customer base and keeping it happy is key in the car repair business. Being part of a franchise with a big name can be your best advert and the franchisor will help in various ways to make you known.
Mr Clutch relies on its strong brand image and provides yellow pages listings as part of the marketing package. Though one franchisee commented that customers generally used this to find their local centre because they have heard the name.
American company ChipsAway is less well known to the general public. Method of making your franchise known to them vary according to the type of franchise package you purchase. Trade franchisees will do a leaflet drop and then go and do free demos to dealers. This is a very important way of getting a lot of business at once. These franchisees can make a living working for four or five dealerships.
Retail franchisees again give free demos perhaps in supermarket car parks and advertise during the early part of the franchise.
Franchisee Simon Benyohai has a package with all three: “When I first started I did a leaflet drop in my area. Soon I had to stop marketing in this way because I couldn't keep up with demand.”
For all three after the initial period when establishing yourself, much if not all of your work will come through referrals. Word of mouth of a good job done is still the best means of promotion.
Who is it suited to?
Franchisees for Mr Clutch will need to have some mechanical experience – although the company doesn't specify this requirement – since the franchise involves some actual car repair work. ChipsAway, on the other hand, deals more with cosmetic work.
As Zack Barrett, marketing manager at Mr Clutch says, “People tend to have technical experience if not necessarily mechanical experience: builders, electricians and so on. You really need to have some hands on experience. The one or two desk job type people haven't really worked out.”
If you haven't worked in a technical environment before this may not be the franchise for you. Although if you have enough interest and an aptitude for knowing how things work at a DIY level, you might find yourself enjoying the different challenge a car franchise brings.
For example, Neville Thurlow has a Mr Clutch franchise in Shoreham-by-Sea, West Sussex. “I do have a technical background but not a mechanical one. But I'd been interested in cars since I was young so I had some understanding and didn't find it hard to adapt to the work,” Neville now has a successful franchise and employs four mechanics.
This seems to be a male dominated sector – there are certainly not barriers to women buying franchises – though you may have to have a fairly robust nature to manage a workshop.
A ChipsAway franchise is slightly different. It is billed as being suitable for anyone – and this seems to be borne out by the variety of previous jobs done by the ChipsAway franchisees. Currently in its ranks are a former futures trader, an optician and bank managers. Obviously it appeals to people from a motoring background but ChipsAway claims it training is comprehensive enough for anyone.
But then the nature of the work is not mechanical. With ChipsAway you are working on a small area of the car, concentrating on repairing or painting that part rather than the traditional methods of replacing a whole panel. The Trim-Fix interior repairs has a number of women franchisees. And there are some husband and wife teams – often the wife will get involved first by doing the books.
Figures vary for the franchise fee and set up costs. There is obviously a big difference with a mobile business rather than a workshop based one. Though it can vary depending on which package you go for.
An initial franchise fee for a Mr Clutch franchise costs £12,500, however total investment including legal fees, plant and equipment, premises renovation and start-up promotional funds will amount to £130,000.
To purchase the ChipsAway trade package alone, the cost is £22,500 plus VAT. You also have to buy the van yourself and ChipsAway can't be run without one. If you can get hold of an outgoing franchisee's van this might be preferable, particularly as the first few months can be lean. You might be looking at as much as £30,000 for a fully kitted out new van on top of the £20,000. A second hand one can always be replaced with new when business picks up.
Similarly, at ChipsAway, you get everything but the van and the phone – including the first complete set of repair equipment. You will have to buy all subsequent equipment as you need it.
How much can I earn?
Realistically, you might expect to earn around £40,000 after a couple of years with a car repair franchise. But how much you actually make depends on how skilled you are at customer satisfaction. Of course the initial advertising and leaflet drops are important but regular work from long standing customers will be the most lucrative.
By all accounts, ChipsAway probably brings the greatest return of the two franchises. Franchisor and franchisee alike rave about the money to be made. Stuart Edwards has a West Midlands territory. In his first year, the most money he made in a week was £1,700.
“I would never have been able to afford a BMW in my previous job, and as its is I'm heading off to Barbados for my holiday in a few months' time.”
And unusually for a franchise, ChipsAway charge a flat rate each month rather than a percentage so no matter how much you earn.
Projections for Mr Clutch are not so straightforward as they will vary according to how much competition is in the area, how many staff you employ and where your workshop is situated. A prime location might bring in more trade but it will cost more.
Franchisees we spoke to certainly had to wait a few years before substantial return came in. But by the nature of the work, which is highly skilled, less jobs are done for a higher margin than in companies like Kwik-Fit. Skilled, older employees will command great salaries than younger ones.
For all franchises the amount of money made depended on the location. All three are supposed to have designated territories that other franchisees cannot cross into. Obviously there is no guard against outside competition, you will just have to rely on the franchisors initial assessment that there is enough of a consumer base for everyone. And work very hard, of course – this is not money for nothing.
Tips for success
Every car needs looking at some time in its life and this isn't likely to change. However, you still need to approach the business in a realistic manner:
- Check the product development of the franchisor. Check what they are offering and that they won't come up with something different a few months later, making you pay out more money.
- There will always be someone trying to undercut you so it's important to be good at your job. If you don't offer good service people won't come back, nor will they recommend you to their friends.
- Focus on finding quality staff. If you do expand to have people working with or for you, you may have trouble finding good ones, since there aren't as many young people wanting to come into the motor industry these days.
- Work won't roll in automatically. Second-hand car inspections volumes can have some seasonal variation. So work to get referrals as well as constant new business.
- Watch out for exaggerated claims. There are a lot of car repair franchises and some will gloss over the fact that you will also need a phenomenal amount of hard work to make a lot of money.
- Be aware that the trend in the industry is moving towards multiple task franchises. A dealer won't want to invoice eight different people if he can just go to one. So try to take on more skills without spreading yourself too thin. If you do a good on-the-spot repair and can also offer engine tuning and servicing, there is a good chance the customer will call you back when these need doing.
- Good relations with potential customers are also important and new potential clients are always better wooed face to face.
- Make sure you get a designated area to work in if you are going to be workshop based. Research the area thoroughly before you approach the franchisee – there is always going to be competition but if you start off near already established businesses, you will be giving yourself an even harder ride.
- Talk to people who are already on the ground. And concentrate more on the newer franchisees rather than the older ones. These are the people who will remember which were the best – and worst – decisions they made at the beginning and could be your most useful source.
- Customer care is also of the utmost importance. People are extremely protective of their cars, often seeing them as an extension of themselves. You must treat them that way too. If you send a car out covered in greasy handprints that customer is unlikely to come back.