Automotive Franchise Industry Report

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Auto Franchise Industry Overview

There are more cars on the road than ever.

Over 286 million light-duty vehicles are in operation in the United States. (“Light-duty vehicle” covers passenger cars, medium-to-full size pickup trucks, mini vans, CUVs, SUVs, step vans and cargo vans.) All of those vehicles will need servicing on a somewhat regular basis. Not to mention, many cars on the roadways aren’t brand-new. The average car in operation in the U.S. is just under 12 years old.

To service all of these vehicles is where the companies that make up the automotive franchise industry come in.

Auto franchises are part of the automotive aftermarket industry. The automotive aftermarket includes all products and services purchased after the first sale of an automobile. This includes replacement parts, accessories, lubricants, appearance products, tires, collision repairs, the tools and equipment necessary to perform the work, etc.

Because of that breadth of product and service offerings, prospective auto franchisees have a diverse set of options to choose from, including franchises that can be run without a traditional, retail location. Franchises can be found in the following service areas and subsets of these areas:

The Current Auto Franchise Industry Landscape

Though most franchise industries were significantly impacted by the pandemic in a negative way, auto franchising didn’t sustain as hard of a hit.

As the hard lockdowns of spring 2020 faded away into summer, Americans largely turned to road trips to scratch their travel itch. Per a study conducted by OnePoll on behalf of Cooper Tires, 44% of U.S. drivers were taking more road trips in summer 2020.

Maybe of even more intrigue: “46 percent said the pandemic has them relying on their cars and driving more than usual in general” and “58 percent [said] they plan to continue taking more road trips even after the pandemic ends.”

More car driving for recreation = a sustained need for service and repair.

The International Franchise Association agrees. In an editorial from the IFA, it was noted that “Travelers will likely keep automotive repair franchises humming in 2021.” The same editorial noted that “the automotive repair market is expected to grow from $691.7 billion in 2020 to $828.6 billion [globally] in 2023 at a CAGR of 7% starting in 2021.”

But the optimism isn’t all travel/recreation-based.

As Tuffy Tire & Auto Service says, “Many still rely on their vehicles, if not for work, then at least for errands. Some people have actually increased their driving; it’s safer than taking public transport… any drop in demand looks paltry compared to the long-term trends.”

Auto Franchise Trends to Watch For

There are an estimated 38,000 auto franchise locations in the United States. Then add in all of the non-franchised chains and independent auto shops.

How does an auto franchise stand out not only in the minds of potential customers, but to potential franchisees too?

Below are a couple of ways auto franchises are seeking to differentiate themselves in an industry that’s traffic-laden.

Using Proprietary Technology to Improve Financial Performance

In the 2018 version of our auto report, we highlighted the way technology was changing the way auto franchises train their franchisees. In this report, we’re focusing on how technology is also being used for improved operations and better profitability. To do so, we’re focusing on two brands under the Driven Brands umbrella: Meineke and Maaco.

Meineke, per its franchisees, is a “data-driven brand.” To that point, the nearly 50-year-old car care franchise introduced a tool dubbed the “Meineke Profitability Portal.” Through the portal, franchisees receive monthly financial metrics comparing their franchise’s production to key performance indicators (commonly referred to as KPIs) such as other franchisees’ average financial performance over that time period as well as overall network averages.

According to a company news release, “Franchisees benefit from having real-time data of their store’s financial performance against key benchmarks that also link to a performance correction plan, and coaching support to execute that plan.” Once the correction—or improvement—plan is in place, the franchisee and coach from the Meineke Operations team work together to bring “performance and profitability back in line with expectations.”

The portal is especially helpful to multi-unit franchisees, who have a complex setup for accounting and benefit from any program that assists them in managing their portfolio.

Sibling brand Maaco is using three levels in its certification program to “ensure that each center is equipped with the right tools and technology, and to ensure that technicians are prepared to service their specific type of business.” The three levels are Gold, Platinum and Diamond. Franchisees that have a Gold certified center primarily serve the traditional customer. While Platinum and Diamond certified centers can service national fleet accounts and perform insurance work.

Of the levels, specifically the top two, Dave Gross, VP of certification and strategic development for Maaco, says “Keeping up with the changes in technology requires a real commitment of time and resources from anyone in the automotive industry, and our Platinum and Diamond centers have made that decision and that commitment so that they can service all customers at the level required to stay ahead in today’s competitive environment.”

Forming Community Around Cars

Being a “car guy” or a “car gal” is inherently social. However, many auto franchises haven’t been. Detail Garage wants to change that. “Nobody in the auto industry retails the way we do,” explains Chad Zani, leader of national franchise development for the auto franchise. “In most ‘other automotive’ stores it is hard enough to get someone to acknowledge you, let alone provide personal care and attention. We are more like an Apple store than an auto parts store.”

In speaking about how Detail Garage accomplishes building community within the confines of the franchise model, he told us about the day-to-day experience for a Detail Garage franchisee. “Every day our franchisees prepare their store and plan their upcoming events, classes and workshops while providing honest, professional advice to car owners who come to the store, says Zani. “The store reflects their personality with music choices and customized posters, graphics and merchandising displays.”

This perspective is evidence of a shift happening across the business world, where companies are finding out putting people before profit in their planning and execution can be financially rewarding. To this point, Zani adds, “If you are not building a community around your brand, your brand is in trouble.”

Buying an Auto Franchise

Prior to investing, prospective franchisees should do their research as well as carefully review the franchisor’s Franchise Disclosure Document (FDD) for more detailed information on all systems, procedures and costs associated with that franchise. It’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.

What makes a good auto franchisee?

“A good franchisee is a person that wants to be an owner, understands team leadership, and is enthusiastic about executing a proven business model,” says Michael Riley, senior vice president of Ziebart, a vehicle appearance and protection service franchise.

He continues, “This person desires to be a successful entrepreneur and understands that they need key people to help them achieve their goals. Successful franchisees understand the business environment and the competitive market they wish to own. They are driven, passionate, eager and constantly working to improve themselves, they treat people with courtesy, are empathetic and understanding, always wanting to lead and encourage. The successful franchisee is responsible and understands their financial position and the investment level needed to sustain the business to achieve the R.O.I they desire.”

Notice something missing from that listing of desired attributes? Prior automotive experience isn’t a requirement to be an auto franchisee.

Get started with your auto franchise search today by searching our listing of some of the top auto franchise brands. You also find advanced investment information for a number of auto franchises for sale in our FDD Research Hub.

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