You might not think there was a lot of profit in oil changes, but as the old adage goes: where there’s muck, there’s brass.
Indeed, oil change franchises do the dirty work that the rest of us don't have the time or the skill to do. Most of us can drive a car, but the vast majority of us wouldn't know what to do under the hood.
Oil change businesses do particularly well in urban and suburban residential areas, as families tend to own more vehicles and are prepared to spend more money on maintenance. In rural communities, people tend to learn how to change their own oil - possibly because there are fewer oil change franchises in those areas.
Oil change franchises change the oil in all motor vehicles; not just cars. So, that includes motorbikes and scooters, vans and trucks, and recreational vehicles such as coaches and trailers.
There are 254 million cars on the roads in the United States - that's 254 million potential customers. And while there are plenty of new cars on the street, the average age of the American automobile is 11.4 years old - the older the car, the more maintenance it requires to keep it roadworthy.
So, with all this potential custom, the US automotive oil change industry is booming, with an annual revenue of $7 billion.
Oil changes account for 24% of services performed at general automotive repair businesses, which is why many oil change franchises offer supplementary services such as windshield wiper changes, offering impressive profit margins.
So, if you're looking to go into business for yourself, consider an oil change franchise for the opportunity to hit the ground running with your new venture.
Franchising
Franchising is often considered THE common-sense way of going into business for yourself, especially if you have never run your own business before.
Starting up an independent business is fraught with peril - establishing your new business amongst the competition takes time and many independent companies go bankrupt before they achieve a return on their initial investment.
Franchises are different. When you invest in a franchise, you inherit a fully-formed business that has evolved to cater to its specific customer base, with an existing supply chain, a marketing function, and a business infrastructure that complies with financial-, employment-, and business regulations.
Of course, one of the most attractive aspects of franchising is the inheritance of the logo and branding and the associated reputation for customer satisfaction. An instantly recognizable logo offers immediate curb appeal for your business, providing access to the established customer base of the parent company.
When you invest in an oil change franchise, your parent company will usually provide expert training to ensure that you meet the expected standards of competence for their brand. In addition to excellent training, most parent companies offer their franchisees ongoing business- and HR support.
Facts About Oil Change Franchises
Demand for oil change services has increased substantially in recent years as the average age of each vehicle has increased. While there's a significant rise of new cars on the road, most people are holding onto their older vehicles for longer, meaning that they need to rely on the services of oil change franchises to keep them running.
Older cars require more regular maintenance, which is good news for oil change franchises.
While there's plenty of work in oil changing, it's the businesses that expand their service portfolio that really make the big profits. Additional services include windshield wiper changes, general tuning, tire changes, and general servicing - all of which maximize profits. There's a hefty markup to be made in mechanics services, so the broader your service offering, the more likely you are to make more significant profits.
According to National Oil & Lube, the average car owner takes their car in for servicing and oil change every 4,858 miles. And with more Americans driving their cars longer and further, this is an excellent turnover rate for oil change franchises.
Oil change franchises make an average of $600,000 in annual revenue, according to Hoover's Business Research Information. A typical oil change franchise location can expect to perform around 1200 jobs each month.
Some oil change franchises rely on brick-and-mortar locations, while others provide mobile services, traveling to customer's addresses to complete the work. There's a significant difference in outlay for mobile businesses, of course, meaning greater potential profits.
Franchising Vs. Independent
Like all franchise opportunities, oil change franchises require an initial investment ranging from around $50,000 upward of several hundred thousand dollars. Of course, most people looking to start up a business wouldn’t be able to enter their chosen industry without funding from a moneylender.
This is where franchising comes into its own because banks and moneylenders often favor the franchise business model. Franchises come with a ready-built reputation and a proven history of profit, sustainability, and growth. Lenders calculate interest rates based on the likelihood that they'll see a safe return on their investment, and franchises often receive favorable rates because they're starting a business with the support of an established, proven partnership.
Independent companies, on the other hand, often struggle to achieve reasonable rates of interest on startup loans because they represent a much larger financial risk. Indies lack the reputation of franchise parent companies, and indies can rarely prove that their business model is viable.
Independent companies are more likely to fail than franchise businesses. According to Forbes, around half of all small businesses fail within the first five years, and only one in three survive a decade. One of the principal reasons for failure is a lack of market penetration or the discovery that there is no market need for the business.
Franchise businesses survive for much longer than indies because their business model has already been proven - there IS a demonstrable market need for the business.
So, if you’re looking to go into business for yourself, then an oil change franchise really could be the path to a successful business (and the pleasures of being your own boss).
Oil change Franchises
Check out Franchise Direct's excellent selection of oil change franchises, and get Americans on the road with smoothly running vehicles.
You can also check out many more exciting opportunities, such as Automotive Franchises and Car Wash Franchises, here on Franchise Direct.