There are currently over 30 million motor vehicles in Canada and this number continues to grow. The average length of time the car remains on the road in our country is approximately 11 years; while the vast majority of people only take their vehicles to the dealership for as long as the warranty is in force (usually 2 to 4 years), once the warranty has expired, most Canadians stop paying the high dealership service rates and seek lower service rates that the automotive franchise industry offers – this is the ongoing pattern that continues to fuel strong demand for this business category.
As a result of the above, it’s no wonder that the automotive service industry continues to perform well in the franchise sector; some franchisors even report that their Canadian franchisees outperform their US franchisees, thus this can be a great choice for potential business owners. It often surprises people that automotive experience is not required, however being comfortable with the category is a definite plus. It is more critical that potential owners have a track record of being able to hire and manage technical staff, and who understand how to continually deliver a strong customer service experience.
One of the strong drivers of this industry is the fact that any kind of transportation vehicle requires regular maintenance; Canadians like voting with their wallets – they go where they feel safe. Strong franchisors bring collective branding, marketing, business systems and processes to the equation, thus enabling their franchisees to consistently out-market and outperform their non-franchised competitors. There are plenty of reasons to get involved in this lucrative industry, but before you do so make sure you know the basics of what it has to offer.
There are plenty of different business opportunities
With services focusing on a variety of things such as light maintenance (lube/oil/filter change), full service automotive, paint/collision repair, aftermarket parts supply, etc., the automotive industry offers numerous business choices for those interested in both essential fixes and luxury upgrades. While it is regularly argued that the maintenance and repair side of the automotive industry is more stable and lucrative because this sector enjoys regular, repeat clients, it would be prudent not to overlook other options in the automotive category as they are sometimes more profitable – it’s just a matter of understanding what the critical roles are required of the owner to drive the business. Some businesses have high per-transaction values, but the purchasing frequency is lower so you will want to know how to drive that business. As well, aftermarket parts and luxury upgrades are more susceptible to downward shifts in economic cycles.
Technological progression increases the necessity of the automotive industry
The technology of the automotive industry is always evolving, which makes it harder for consumers to keep up with this change. It’s also more difficult for independent shops to continually upgrade to the latest technology, while this is an ongoing requirement for most good automotive franchises – not just to get the new technology, but also to ensure that the technicians are regularly trained and remain current. For people who lack the time to keep up with how to fix the cars of the modern age, automotive franchises are the best options to keep their vehicles in good shape once their warranties expire.
Insurance companies recognize automotive franchises
Insurance companies deem automotive franchises as their recommended facilities more often than they will to independent automotive franchises (especially collision repair). The reason for this lies in the fact that franchised automotive shops are nationally recognized brands, which will increase the insurance companies’ trust in your services. This is a great benefit that will provide your business with additional customers.
Pay attention to your agreement
Automotive franchisors will typically require that you sign an agreement indicating that you will purchase your equipment, parts and materials from specific franchisor-approved vendors. Additionally, you may be asked to enter long-term leases so you will want to make sure that the timing of your lease agreements and franchise agreements remain aligned. Make sure you understand the specifics of the agreements that you are entering; failing to do so can result in unpleasant surprises and missed expectations.
The automotive industry enjoys a strong history of consistent performance and continues to show plenty of future optimism. Automobiles will always require regular fixing, so this industry can bank on having a steady demand for the foreseeable future. The various benefits mentioned above make automotive franchising an attractive option for potential business owners, especially when compared to the alternative of starting your own independent automotive business.
Gary Prenevost is one of Canada’s leading franchise experts and has been an entrepreneur for more than a quarter century. He has been involved in a variety of successful non-franchised and franchised self-employed businesses. By exploring the ideal solutions that fit an individual’s desires and strengths, Gary helps senior and mid-level executives take a step back and objectively look at whether franchise ownership would be a viable and positive career choice. By playing to the individual’s transferable skills and passions, the franchise owner can enjoy less stress, greater success, more fun, and improved quality of life. For more information visit www.CanadaFranchiseExpert.ca or call 905-405-6300. In addition to being one of Canada’s top franchise matchmaking experts, also co-owns a master franchise and unit franchise for Alair homes, a custom home building and renovation company, so he is intimately familiar with the home improvement marketplace.