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Multi-profit Centers

Fast lube, fast carwash, fast profits

October 11, 2010
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When the recession started to affect his carwash volumes, Todd Nelson, president of Henley Enterprises, a franchisee of Valvoline Instant Oil Change, and carwash operator, maintained a sunny disposition. “We all suffer a bit in an economic downturn like we’ve seen, but I count myself as very fortunate that I’m in a business where there’s still a need,” Nelson explained. “Especially in times like now, people are very interested in protecting and keeping their vehicle running and looking good.”

Nelson said his Milford, NH, businesses complement each other to bring in steady traffic throughout the year. “Oil change sales are generally consistent except in the dead of winter, but when December rolls around we begin heavy volume in carwashes and stay strong through March,” Nelson said.

Why a fast lube?
John Wilkinson, vice president of franchise support services for Grease Monkey, said fast lubes and carwashes make such a great combination because the profit centers have opposite seasonal peaks which allow the operator a more consistent cash flow.

John Shepanek, chairman of Oil Can Henry’s International, Inc., a franchisor of fast lubes, agreed, adding he knows of many operators who were able to fit a carwash/quick lube on a prime piece of property because the size and profits of the two businesses combined made it affordable and advantageous. “Operating a carwash and quick lube enables you to use your real estate more efficiently,” he explained.

But is now the right time?
Many operators may be kicking themselves and wishing they had installed a fast lube years ago, when money wasn’t so tight, but our experts said this isn’t the case. According to Wilkinson, start-up costs are lower in this current economy, and building costs have dropped as well as the price of commercial real estate.

“This is a very opportune time to invest in the lube business because people are now keeping their vehicles for longer periods of time,” Wilkinson continued. “Also, they are spending more maintaining their vehicles because of this.”

David Kunkel, manager of marketing and direct sales for CITGO Petroleum Corporation, said carwash operators should also be aware that thousands of car dealers are in the process of closing. “The preventive maintenance services performed by the majority of those service departments will be performed somewhere else as consumers are forced to seek alternatives,” he stated. “We feel that with the right location and the proper research, now is a great time to consider this option.”

Independent, branded or franchised?
Your next step will be to determine if your site should be independent, branded or franchised. Shepanek said it’s as easy as asking yourself these five questions:

1. How much do I know about the business?
2. How much assistance will I need?
3. Can I afford to hire experts in operations, training, marketing and finance?
4. Am I willing to follow a company's approved programs and procedures?
5. How comfortable am I going it alone?
While an independent operation will allow you the greatest level of freedom, it also requires that you know everything about the business and it is perhaps the riskiest. Shepanek stated the branded option is similar to an independent route. “In most cases, you'll receive signage and some program support, but, for the most part, you're on your own,” he said.

Franchises provide the greatest level of professional, expert support, although operators should be cautioned to choose wisely and conduct a healthy amount of research. “A good franchise provides a strong brand and proven systems that have been refined over time and offers support and resources in key areas of the business,” Shepanek explained. Keep in mind that as a franchisee, you’re effectively renting the use of that company’s brand operating systems. You will be expected to follow business practices developed by the franchisor, Shepanek said, and if you're not willing to follow approved procedures, becoming a franchisee may not be a good idea.

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