A forum member writes:
“I researched an auto repair franchise recently and learned that you do not need to be an experienced mechanic to own/operate an auto repair franchise.
I am retired military with strong management, customer service and sales skills. However, I am not skilled at all in mechanics. How risky would purchasing an auto repair franchise be for a guy like me, and what are some of the challenges I should expect?
Is there a seasoned mechanic shop manager out there that is willing to provide some insight?
One forum member responds:
“I think that you should have some mechanical background. I have been in business for 15 years and been in the business for 23 years. I find that it is easier to sell something if you have a good understanding of how it works. I know that alot of franchises really don't want you to have experience because they want to show you their way. I also know that they say the people buying auto repair shops are not mechanics. I think most franchises have a two-day seminar to see if it's right for you. I would also ask for the names of owners who are like you and get their opinion.”
Another forum member replies:
“A franchised business is designed to put you in the business of your choice without any prior experience. Most franchisors market themselves by emphasizing that you need no actual experience in the chosen field. To be brief, that enables them to train you in the “franchise way,” eliminating the possibility of you bringing any previously learned bad habits, thereby insuring your success. That means you can investigate Midas, or Dairy Queen or Stanley Steemer—whatever. The more prominent the franchise, the higher the license and monthly franchise fees. I've worked for a few auto franchises over the years and found most franchisors to be lacking in the areas they profess to help the most. I'm sure my bosses (the franchisee) had something to do with that as well.
“Auto repair is a very volatile business, and it changes constantly. I think it increases the risk you will deviate from the franchisors way, and therefore increases your risk of becoming disenchanted with your choice. Midas, AAMCO, whatever lube, all are good franchise opportunities for someone in your position. But you have to have absolute faith in everything you're paying for or you'll suffer the consequences, including failure.
“If auto service is where you want to be, talk to franchise and non-franchise operators and ask as many questions as you can think of prior to signing over that 200K. Franchise or not, we all face the same day-to-day business issues, good and bad. Good luck in your search.”
Tom Ham writes:
“While I would not automatically rule it out, I would be very, very careful about jumping into this with zero industry experience. I would say the same for darn near any industry.
“The biggest challenge would likely be achieving anywhere near the stats you might be shown. These are often exceptions from a certain elite few. You would likely do well to do some extensive research on your own of long established franchisees who you seek out to find out the real deal.”
Another forum member replies:
“I just read your post, and here's what I'll tell you based upon almost 45 years in motor vehicle repair: Yes, you could be successful—if you're a really savvy businessman with terrific people skills. But realize you're looking at an oversaturated market in most areas, with little regulation or industry standards to help differentiate the good player from the teeming masses of incompetent competition. Quite honestly, if I were founding a new business, it's doubtful I'd choose auto repair.
“As has been mentioned, if you buy a franchise, do a complete job of researching what you'll get and what it will cost you. I looked into one several years ago that was non-automotive and it honestly looked like it would be 5 years to reach break-even. The facility standards, advertising requirements and royalties were very generous to the franchisor.”
Another forum member writes:
“I normally do not post to sites, but I feel compelled to share a few facts about the industry for your consideration. The ‘State of the Automotive Repair Industry' as I see it:
- Shortage of trained technicians;
- The average tech is 50 years old;
- Customer car count down from same time last year;
- Costs of health insurance up;
- Cost of property insurance up;
- Mindset of consumer: buy it, drive it, trade it when it starts to show signs of failure; and
- More parts (electronic) available only through dealers makes it tougher to maintain profit margins.
“There are roughly thre segments of car owners: 0-60,000 miles, 60,000-120,000 miles and 120,000 miles up. The newer cars (0 to 60K) are being serviced by dealers and/or fast lubes. The dealers are doing a good job retaining new car owners. The independents are losing ground, and the automotive aftermarket has its head in the sand. The next group (60,000 miles) would be your customer base. The last group of owners (120,000 miles) are driving vehicles that need the most work, but unfortunately are owners who can least afford repairs.
“Fewer states have annual vehicle inspections, allowing car owners to drive any vehicle in almost any condition they choose. Make no mistake, this is the most difficult time in repair history. Some say the industry is doomed. I'm not sure they are wrong. Computer repair went away, and car repair is following this trend. I believe each shop owner must decide just how far he or she is willing to go to overcome obstacles and reinvent their service structure.
“We have done this and are approaching the other side—and it is profitable with much fewer headaches. Our system is not a franchise, but it is unique to our specific shop and is working. Whatever your decision, may I suggest that you ‘test drive' a shop or any business a few weeks before buying.”
Another forum member responds:
“I operate a single-shop independent import car service facility in a depressed former-industrial city in New England. We have never had a service franchise like Midas or Jiffy Lube. I've been in business in this city for 20 years, and I have had the good fortune to meet many of the owners of our various car service establishments.
“I know some very successful people who own chains of Midas and Jiffy Lube stores. These folks are making $1 million-plus each year I'd guess, but they own fleets of stores (20-30)—not just one. Furthermore, these people own other franchise businesses that are mutually supportive. In order to achieve success, those few folks went in with substantial capital and built networks of stores. It does not sound like you are in that position.
“We also have a number of folks who own individual Meineke, Midas and Jiffy Lube type establishements. For the most part, those places grind out a modest living. From my perspective—watching those shops over 20 years—I'd say a guy who opens a Meineke, for example, is more likely to stay in business five years that the guy who opens Tony's Auto Repair, but neither one of them is going to set the world on fire.
“The franchise gives a structure, a name and national advertising. Those things can add value and increase your chance of success. If you are determined to open a car service facility, and you have no experience, then I'd say you have a better chance with a nationally known franchise. But frankly, I think you'd be nuts to do it most places.
“In most places there is already excess service capacity; the need for investment is rising as cars need more sophisticated test tools; and there is a greater need for new-product training. Car repair strikes me as a fairly mature industry that will be hard to enter and do well in without a lot of capital. Many of the existing players are struggling to remain afloat, as you will read.”
The questions and responses are posted on the Automotive Management Network website, which is operated by Deb and Tom Ham, owners of Auto Centric (formerly Ham's Automotive) in Grand Rapids, Mich. The comments have been edited for clarity and brevity.