An oil change franchise enables you, the investor or “franchisee”, to operate a well-known oil change business from a larger company, or “franchisor”. This allows the franchisee to use the franchisor’s name for limited time, along with some assistance and possibly limitations.
You will find that some oil change franchisor’s are not very picky about who buys into their oil change franchise. Most of the time, all an oil change franchisor will care about is whether or not you can pay the fees, and, assuming you have a spotless legal record, they will usually trust you to do the work. These particular oil change franchisors will give the oil change franchisee a lot of freedom to develop his or her branch of the business their way, but they may not offer too much help when a great need arises. Then there is the other extreme of an oil change franchisor who will constantly micro-manage the franchisee, and will go to great lengths to insure a great number of checklists and communication are taking place.
Oil Change Franchise Cost
You will have to pay a franchise fee, and you will then be given a system developed by the company, or “franchisor”. Any oil change franchise (as well as any franchise, in general) are required, by law, to present the franchisee a document called the Uniform Franchise Circular Offering (UFOC). The UFOC outlines the franchisee’s fees, as well as their individual rights and restrictions.
The franchise fee is really only the beginning cost, as you will also need to pay for real estate deposits, utilities, supplies, insurance, office equipment, site preparation, site building, advertising, licenses, permits, legal, plus operating capital. All these costs plus expenses can equal two to three hundred thousand dollars or higher. A buyer should consider a lawyer if he or she wishes to negotiate the contract of the franchisor. If a buyer needs to apply for a loan, there are many SBA loans that are easily available for those in the market for an oil change franchise.
As you can see, you will definitely need a lot of money before you buy into an oil change franchise. However, you should be able to make up for the expense with the percentage of gross profits. It may take a while before you make some “real money” from this investment.
Therefore, in order to maximize on your profits of your oil change franchise, there are a few factors you need to consider: market, name-recognition, and staff.
The Current Market
Look at where you want to open your oil change franchise, and ask yourself if there are already plenty of places where customers can get their oil changed. You don’t want to open up an oil change franchise where there are already several available. After all, most people in that area will have already developed a relationship with their current oil change station. However, this may be a love/hate relationship. If you want to start your oil change franchise in an area surrounded by “healthy competition”, you should ask the people in the area what they think about the oil change businesses that they use. Keep your ears open to the usual complaints, such as: “they charge too much”, or “the service wasn’t good”, or “they take too long”. One of the favorite complaints of oil change franchises is when a customer takes the car in for what he or she believes to be a simple oil change, but the mechanic ends up recommending other high-priced (and sometimes unnecessary) repairs to the vehicle.
Once you know the weaknesses of the other oil change businesses, ask yourself a few questions to see if you can fill a need that your competition can’t.
Can you do an oil change in less time? Most customers want to be in-and-out of their oil change in less than an hour, some as soon as ten or fifteen minutes. If you know a way that you can do a quality job and shave off a few minutes less than the competition, then you have a definite edge.
Can you perform an oil change at a substantially lower price? If Wal-Mart has taught us anything, it’s that customers are most attracted to the product that dents their pocketbooks the least. You might be surprised how quickly the word gets out if your prices are substantially lower than your competition.
Can you offer a customer friendlier service? Believe it or not, customer service is often the least emphasized aspect of most businesses, but the one that actually brings in the most sales. You would be surprised at how much repeat business you will receive if you show a customer that you care about them. Even businesses that charge higher and do a bad job can succeed if they have friendly people working there.
Before choosing an oil change franchise, you should check the name and reputation of the company. Feel free to call other businesses of that oil change franchise. Talk to the franchisor, and listen to their experiences. If they seem like they don’t want to talk about it, or seem rather discouraging, better move on to the next oil change franchise on the list.
If you haven’t learned this real-world business lesson yet, then listen now: a great name is no guarantee of high earnings. If you want to view the earnings of a particular oil change franchise, many of the oil change franchises will have earnings claims on their UFOC.
Name recognition is also helpful as a market strategy. If location is not important when starting your oil change franchise, you should consider starting one in an area where there are several successful oil change franchises of the same company. You should then establish your oil change franchise of same name somewhere on the outer edge, away from the other oil change franchises. The reputation of the other franchises will automatically boost your oil change franchise even before your base of operations is built.
Once you have franchising rights, you are probably going to have to hire the talent on your own. You are more than likely going to have to hire from whoever is the best in your immediate area. Unless you’re willing to go to other oil change businesses and head-hunt, you might have to resort to inexperienced labor. Fortunately, an oil change isn’t something that requires too much training, but many oil change franchises are also full-service businesses as well. You might need some prime mechanics, if you can get them. Hopefully, you know a few trustworthy people who know the ins and outs of a car, and would have no problem adapting to oil change for a living.