Franchising continues to be a popular and successful business model for many entrepreneurs across the globe. According to the International Franchise Association (IFA), a franchise is a method of distributing products or services involving a franchisor (who establishes the brand’s trademark, trade name and business system) and a franchisee (who pays a royalty for the right to do business under the franchisor’s name and business system).
It offers those wanting to get into business the opportunity to buy into a successful existing model that has a proven track record, a strong supply chain, expert technical support, and a franchisee training program. Although many big brands charge a hefty fee, some of the most well-known franchises of today (such as McDonald’s and Starbucks) demonstrate pretty impressive success rates with low chances of failure.
With this model associated with such attractive benefits, it’s no wonder more and more people are looking into buying into a car wash franchise. If you’re considering just this, then knowing both the pros and cons can help you decide if this is the right venture for you. So without further ado, let’s get started!
Advantages of a car wash franchise
Buying into a car wash franchise has several advantages such as:
1. Little to no industry experience is required
Buying a franchise enables you to work in an industry that you may not necessarily have any previous work experience. For instance, if you wanted to buy into a car wash franchise then it’s not crucial that you have experience in the car wash business. Most established businesses will offer you all the industry-specific training required to succeed in the role.
2. Lower risk
The car wash franchise business model is all about buying into an established business with a proven strategy and track record. That means, unlike going through the trials and errors of launching your own car wash business, you can feel confident that you’re going into a business that already knows how to reach success. Statistics show that 20 percent of startup businesses fail within their first year. Conversely, 95 percent of new franchises were still in business after five years (IFA).
3. Brand recognition and loyal customers
Another reason many people choose to buy a franchise is due to the ability to tap into the existing, loyal customer base and brand awareness that comes with more established companies. As a business owner, launching a company, building a brand, and attracting a loyal audience can be a hard slog. Typically with a franchise, the audience base is already standing strong as they will recognise the brand and know exactly what to expect. Existing brand recognition should also make the staffing and recruitment process much easier for you as a business owner.
4. Strong support and business assistance
By choosing to open a car wash franchise, you will be able to access excellent support to help you run a successful business. There is typically ample training given to franchisees to ensure they fully understand the business model and how the car wash stores operate. Mcdonald’s, for example, put their franchisees through a comprehensive restaurant training programme for a minimum of 26 weeks, which includes a business immersion and handover process.
5. Buying power
With franchises comes great buying power. Running a car wash business will involve investing in a variety of products and services, from digital menus and entrance and exit management signs to cashless payment terminals marketing brochures and leaflets. When launching an independent business, you’re likely to be paying a higher amount per item due to having a relatively small order.
On the other hand, franchise owners have the opportunity to get a pretty good discount on car wash products due to the collective buying power of the parent company and their existing relationship with trusted car wash suppliers.
Disadvantages of a car wash franchise
Despite the above benefits of starting a car wash franchise, it’s also important to consider the disadvantages. These include:
1. Investment costs
If you’re buying into a well-known and profitable car wash franchise, you can expect this to have a costly initial investment. You may also need to part with ongoing fees for things such as training and support provided by the franchisor, royalty fees, and advertising costs. While your initial investment is very likely to translate to larger profits, the requirement to fork out a hefty amount of money before you’ve made any is definitely a factor to consider.
2. Rules and guidelines to follow
Another thing to consider is there will be more rules and guidelines to follow when buying into a car wash franchise. From marketing guidelines and advertising to operational hours and products — depending on the franchise agreement, the franchisor has the ability to control any of these. For franchise owners, this can be frustrating as it can limit creative control and freedom.
3. Locked in with suppliers
When running any kind of business, you’re going to want to keep the costs down, finding cost-effect suppliers in order to maximise profits. As part of a franchise, you’ll be required to leverage its existing supply network. This means that even if you find a car wash product or service that was way better in terms of quality and ROI, it’s not very likely you will be able to make the switch.
4. Risk of reputation damage from others
Another disadvantage of running a carwash franchise is the risk of reputational damage. While being part of a franchise is great when brand reputation is going strong, when it’s not so good, your business may suffer too. For instance, maybe something at another franchise under the same brand happens that causes bad PR. Unfortunately, the damaged reputation could have a domino effect on your own business, impacting sales and profits.
5. Support will vary
We’ve already spoken about an advantage of buying into a franchise being the support available around you. But the important thing to understand is that the level of support you receive will greatly depend on the organisation. If you are thinking about investing in a car wash franchise in the hopes of having ongoing support and access to the knowledge of an experienced leader, then make sure you fully understand the level of support you are entitled to ahead of signing anything.
Unparalleled support with PSD Codax
If you’re thinking about starting a car wash business – whether that’s buying in on a franchise or launching your own – our brilliant team at PSD Codax will provide you with unparalleled support.
As market leaders in car wash technology, we have all the experience and know-how to provide you with all the technical support you require. For more information on any of our products, please feel free to contact us today.