Is A Car Wash Franchise A Solid Business Investment?

Is A Car Wash Franchise A Solid Business Investment

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I guess the answer to the question above about a car wash franchise really depends on how much risk you like to take. Like any business, there's always going to risk involved, but car wash franchises do offer a unique opportunity for a proven cash business.

However, you need to keep some things in mind before venturing into the car wash franchise industry. You must first decide what type of car wash business do you want to own. Do you want one that's fully automated that does all the work or do you want one that is partially automated requiring employees to finish the job. At first glance the fully automated one seems like the most logical choice but having more running equipment can mean more expensive things that break down and need fixing. Also, if a machine goes down, you can't wash cars.

One of the most important things you can do is choose the right location for your car wash franchise. I'm really talking more about cities than exact locatioins. For instance, Seattle rains about 300 days per year meaning people aren't necessarily interested in clean cars there. On the contrary, the car capitol of the world, southern California, is home to some of the best weather and people enjoy having great looking cars.

In talking about cash flow for a car wash franchise, one immediate hurdle is the initial franchise start up fee which ranges anywhere from $1,000 to $100,000. Typically they are in the $20,000 - $30,000 range. Some franchise fees are even non-refundable even if you decide to not buy the franchise. Make sure you find that out before you put any money down.

Another big cost of a car wash franchise is the royalty payments which range anywhere from 3% - 6% of gross sales, not net profits. Here's the kicker... Some car wash franchises have minimum monthly royalty fees no matter what happens to the business. So if you have a horrible month where it rains every weekend and sales are dismal, you'll still have to pay a minimum fee.

Don't forget the other costs associated with a car wash franchise. You have things like heavy equipment, signage, working capital, advertising, fixed costs, variable costs, employee wages, etc. Don't forget about inventory and all the stuff that goes along with holding chemicals. It all adds up.

Bottom line is owning a car wash franchise can be a great investment, especially for cash flow considerations, as long as you are 100% aware of all the good and bad stuff that comes along with running this type of operation.

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