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Honest-1 Auto Care Franchise Cost & Fees

Date of Incorporation: 2003

Franchising Since: 2003

Headquarters: Scottsdale, Arizona

 

Business Description: H-1 Auto Care, LLC is the franchisor. The franchisor has developed a system and grant franchises for the retail sale of automotive repair and various automotive tune-up and brake services, lubrication, oil changes, the sale of tires and rims and other related automotive services to the general public and for assisting franchise owners in selling those products and services.

 

Franchise Offer: Honest-1 offers franchises for outlets that will offer automobile products and services like tune-ups, brakes, oil changes, tires and rims and general repair services. The franchisor offers franchises for single locations and multiple locations.

 

Financial Assistance: Honest-1 does not offer direct or indirect financing. The franchisor does not guaranty a franchisee’s note, lease or any other obligations.

 

Training and Assistance: The training will last for approximately three weeks, for up to 36 hours per week, and training will be held on Monday through Friday of each week for a total of approximately 80 hours of classroom and on-site instruction. This initial training will serve as a follow-up and emphasis of the franchisees’ review of the manuals and various meetings/discussions to be held with the instruction team immediately following the signing of the franchise agreement. Although there is no fee to attend any training program at the location designated, franchisees must pay for their and/or their employees' transportation, lodging and meal expenses, wages and employee benefits, and materials fees, including the cost of the applicable training manuals while in training programs (excluding the initial store operational training program). Franchisees must pay the franchisor for up to four weeks of on-site coaching. Franchisees may need to attend additional training programs as directed by the franchisor.

 

Territory: For single unit franchises, franchisees are granted the right, and franchisees undertake the obligation, to operate an “Honest-1” Center at a site the franchisor approves. The franchisor will not establish another “Honest-1” Center, franchised or company-owned, within a three-mile radius of the Center location as set forth in the Franchise Agreement (Protected Territory).

 

Term of Agreement and Renewal: The length of the initial franchise term is 20 years. Renewal is for one additional 10-year term, if the franchisee is in good standing and signs the current form of the Franchise Agreement.

 

Obligations and Restrictions: The franchisee must anoint a designated representative for the entity. It is recommended that the designated representative hold an ownership interest in the entity but it is not required. The designated representative must successfully complete initial training. The franchisor also recommends that the franchisee have at least one manager as an on-premises supervisor in addition to the designated representative. The franchisee must offer all required “Honest-1” products and services.

 

Estimated Number of Units: 55

 

Investment Tables:

Initial Investment

Start-Up Center

Name of Fee Low High
Initial Franchise Fee $35,000 $35,000
Leasehold Improvements $0 $120,000
Equipment Package $25,000 $120,000
Signage $8,000 $30,000
Deposits (first month's rent, utilities, sales tax) $13,000 $18,000
Opening Inventory and Supplies $3,000 $12,500
Grand Opening Advertising and Initial Marketing $15,000 $30,000
Training Expenses $5,000 $5,000
Miscellaneous Pre- Opening Costs $3,000 $7,000
Insurance $3,000 $4,000
Office Supplies, Furniture, Fixtures, Computers and Software $10,000 $20,000
Business Coach - 4 Weeks $4,000 $4,000
Accounting Service - First 3 Months $975 $975
Additional Funds - 3 months $68,000 $100,000
TOTAL ESTIMATED INITIAL INVESTMENT $192,975 $506,475

 

Conversion Center

Name of Fee Low High
Initial Fee Franchise $25,000 $25,000
Leasehold Improvements $2,000 $50,000
Signage $8,000 $22,000
Opening Inventory and Supplies $500 $7,000
Grand Opening Advertising and Initial Marketing $15,000 $30,000
Training Expenses $5,000 $5,000
Furniture, Fixtures, Computers and Software $5,000 $15,000
Accounting Service - 3 Months $975 $975
Additional Funds - 3 Months $0 $0
TOTAL ESTIMATED INITIAL INVESTMENT $56,475 $154,975

 

Other Fees

Type of Fee Amount
Royalty - Standard Franchise

6% of weekly gross sales.

For all Centers: 2% of weekly gross sales for the first 13 weeks of operation only (provided the franchisee scheduled onsite coaching), then 6% of weekly gross sales beginning on the 14th week of operation.

2% of weekly gross sales on tires and batteries only throughout the term of the franchise, however related labor is subject to the standard royalty fee.

Royalty - Conversion Franchise 2% of weekly gross sales for the first 12 months of operation; 4% of weekly gross sales for the second 12 months of operation; then 6% of weekly gross sales for the remaining term.
Business Coach Fee $4,000
National/Regional Advertising 1% of weekly gross sales
Local Advertising - Franchise Agreement $4,000 a month minimum, recommended is $6,000 to $15,000, average is $8,000 to $10,000 a month.
Advertising Cooperative Between 1% and 3% of gross sales.
Transfer/Training $12,500
Refresher Training (Franchise Agreement) No Charge.
Multi-Store Operators Then current training fees (estimated to be $150 to $1,500)
Renewal (Franchise Agreement) 25% of the then-current initial franchise fee.
Audit Cost of inspection or audit plus any deficiencies found.
Late Fees $10 per day.
Interest Lesser of 2% above prime or highest contract rate of interest allowed by law.
Costs and Attorneys' Fees Will vary under circumstances.
Indemnification Will vary under circumstances.
Relocation Expenses Costs of relocation.
Income Taxes In addition to monthly royalty fees, H-1 has the right to collect from the franchisee the cost of all income taxes, sales taxes and other taxes arising as a result of the licensing of intellectual property to the franchisee in the state where the franchise is located, as well as any assessment on the royalty fees, advertising contributions and any other income H-1 receives from the franchisee.
 Liquidated Damages See FDD.
Software Maintenance $325

The above information has been taken from the FDD of Honest-1 Auto Care. Date of FDD: 2015

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