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Multi-profit Centers

Is franchising in your future?

October 11, 2010
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It’s not often you can go into a town, no matter how small, and not see some sort of business that’s part of a franchise. Pizza Huts and 7-Elevens dot the American landscape and even in the little town of Bethlehem, NH, (which hosts a little over 2,100 people) a Burger King is only about seven miles away. Fast lubes can be mom and pop businesses and franchises as well. And while they’re not quite as well-seen as the home of the Whopper®, they are making a dent in the franchising directory.
According to Entrepreneur Magazine’s list of the top 500 franchises, Jiffy Lube International Inc. ranked #14 (7-Eleven Inc. was ranked #1). The list, known as Entrepreneur’s Franchise 500®, bases its rankings on such things as financial strength and stability, growth rate, size, years in the business, start-up costs and litigation. Also on the list was Grease Monkey Franchising LLC, of Greenwood Village, CO, and Monterrey, Nuevo León Mexico, which came in at #290 (it was ranked #415 in 2007); All Tune and Lube which placed in the #438 slot; and Oil Butler International Corp., which ranked #488.
Mike Brunetti, vice president for Grease Monkey Franchising and Monkey Shine Franchising, thinks fast lube franchises are becoming more popular because they’re based on a customer’s need, not a desire.
“To my knowledge there is no existing technology to replace it yet, at least not in a major way. The fact remains that oil changes and auto maintenance are a need, not a desire.”
Tips for starting up a fast lube
Brunetti offers the following advice to anyone thinking of starting up a fast lube:
1. Align yourself with a franchise organization that shares your views in customer service and is positioned for the future of the automotive service industry.
2. Realize that your product to the consumer is based on service, not oil and filters.
3. Be adequately funded. Brunetti says the number one reason quick lubes fail is undercapitalization. Undercapitalization leads to convenient decisions not good ones.
4. Be prepared to work. “Good things do not just happen, they have to developed, executed and then and only then realized,” Brunetti says.
The benefits of owing a franchise business, according to Brunetti, are having a support system in place. “More important,” he said, “is that you will be doing what it is you want to be doing, and for yourself, not by yourself.”
As for why franchises fail, Brunetti said it can be for a number of reasons, but the most common include under capitalization, site location and a lack of business training. “No one person can posess the necessary skills in operations, marketing, site selection, construction, finance and accounting and the initial training and on-going training necessary to effectively compete in today’s marketplace,” Brunetti said.
But, at what cost?
Brunetti said that the cost of opening a franchise fast lube can be all over the board, depending on whether you want to own the land and building. “You would need at least $200,000 to invest in order to be properly funded in most situations. Sometimes less and sometimes more,” he said. For a Grease Monkey franchise, the initial fee for the first center is $30,000. It will cost less for a second center and so on. There would be a royalty of five percent of the net sales.
According to Jiffy Lube’s website, www.jiffylube.com, the estimated amount to start a franchise is between $214,000 and $273,000. That includes a $35,000 franchise fee and in somewhere between $80,000 and $110,000 for equipment, signs and fixtures. As for Oil Butler International it offers an initial franchise start-up package for $25,000 according to its website, www.oilbutlerinternational.com.
Will the rising price of oil hurt the franchises?
But, what about the price of oil and the shaky economy? Not only do those issues affect any and every business that’s out there, but what about one that primarily deals with oil? Brunetti says not to worry about it. “I believe oil is going to be around for a long time to come,” he said. “There is too much investment in areas that depend on that resource for it to just go away in the foreseeable future ... Yes oil costs are going up and you can probably expect it to continue in one way or another.”


Debra Gorgos is the managing editor of Professional Carwashing & Detailing®. Gorgos can be reached at dgorgos@carwash.com

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