As an $8 billion industry, there's a lot of money to be made in the automotive service and oil change space. And the market will only keep growing. Economists expect the expansion to increase by 16.9% this year – which means more opportunities for entrepreneurs.
One of the easiest ways to break into this industry is by franchising an existing brand. The franchise business model offers some attractive options for investors. By buying into the parent company, small business owners have the autonomy to operate their shop while also enjoying the support they need to run a successful venture.
The franchisor has laid a solid foundation for franchisees by establishing the company's concept, branding, operating guidelines, and more. As a result, franchises tend to be more successful than independent businesses due to the support from the franchise and security of a ready-made business.
As you begin to explore the oil change franchise industry, we'll walk you through the different factors to consider as you review different brands, as well as some of the best opportunities for you.
Things to Consider When Selecting an Oil Change Franchise
There are a lot of well-known brands in the oil change industry. How do you know which is the right one for you? As you review each company, their financial requirements, and their reputation in the market, here are a few key areas to consider.
Services Offered
First, decide which services you want to offer through your oil change franchise. Not all brands provide their customers with the same maintenance and services. While oil changes are a given, some brands will also do tire rotations, minor repair services, and event car washes. In addition, many will do inspections or at least spot-check your brakes, windshield wipers, refrigerant, coolant, battery, and other important aspects of car maintenance.
Franchise Fees
All oil change franchises will charge you a one-time franchise fee to open a shop under that brand's name. These franchisee fees will vary depending on the company and other factors.
Total Upfront Costs
Your total initial investment to open an oil change franchise is more than just that upfront franchise fee. Your startup costs will include the cost of real estate (whether renting a space or buying property), employee wages, marketing and promotions, business licenses and registration fees, equipment, and insurance.
Royalty Fees
After you pay your franchise fee to get started, you'll owe your parent company a regular royalty fee for the length of your contract. Most franchises will charge a percentage of your profits.
Other Fees
There are other fees that you'll be responsible for paying to your parent company, as well. These could include costs for marketing and branding, technology and access to your parent company's systems, and training and educational programs.
Training Programs
Most franchisors will provide new franchise owners with a comprehensive training program to ensure they have all the information and education they need to launch their business successfully. If training and education are important to you, be sure to ask parent companies about their workshops and other programs.
Market Analysis
Before opening an oil change franchise, pay attention to your local market. What other brands are on the market, and how are their businesses doing? Is there room for your franchise to open and do well?
Best Oil Change Franchises right now
Now that you know what to consider as you enter the oil change business, here are some of the top oil change franchise opportunities on the market.
Jiffy Lube
This pioneer in the quick lube and car maintenance industry calls for a $35,000 franchise fee, and franchisees can expect to invest between $207,000 and $423,000 off the bat. There's also a 3% royalty fee. Also, qualified candidates should have a minimum net worth of $500,000 and working capital of $250,000.
Midas
Another iconic name in the car care business, Midas, has an initial franchise fee of $35,000 with an expected total investment ranging from $200,000 to $540,000. The minimum net worth requirement for a franchisee is $250,000 and a cash requirement of $75,000. The royalty fee is slightly higher than other oil change brands at 10% and includes the ad royalty fee.
Express Oil
This car maintenance services brand is a rewarding franchise opportunity for entrepreneurs. The initial franchisee fee is $50,000 for the first and $25,000 for any other shops. The company expects new franchisees to have available working capital ranging between $63,000 and $144,000 to get started.
Grease Monkey
It takes anywhere from $157,000 to $348,000 to join the Grease Monkey brand, one of the country's largest independent franchisors of automotive oil change centers. In addition, owners must pay a $35,000 franchise fee and an ongoing 5% royalty fee. Grease Monkey also expects Franchisees to have a minimum net worth of $300,000 and between $60,000 and $75,000 in liquid assets.
Dipstx Mobile Oil Change
One of the country's first quick oil change companies, Dipstx, requires a $25,000 franchise fee to join the brand. Franchisees can expect an initial investment between $54,000 and $107,000. There's also a liquid asset requirement of $10,000 to $30,000 to get started, a 7% royalty fee, and a 1% ad royalty fee.
SpeeDee Oil Change
The franchise fee for joining the SpeeDee brand is up to $30,000. Depending on various factors, the total initial investment ranges from about $200,000 to just nearly $540,000. The parent company also requires you have a minimum net worth of $300,000 and liquidity of $60,000 to $75,000. You can also expect to pay a royalty fee of 6% and an ad royalty fee of 6%.
The company offers franchisees comprehensive business planning assistance as they launch their shop and technical and marketing support.
Valvoline Instant Oil Change
Another smart choice in the auto service center industry, Valvoline, requires a minimum net worth of $1 million. In addition, franchisees can expect to pay a $30,000 franchise fee, 4 to 6% in royalty fees after that, and a 3% ad royalty fee. On top of this, there's a minimum cash requirement of $600,000. So overall, your initial investment could range from $181,000 to $3.2 million, depending on the cost of real estate and other variables.
Strickland Brothers 10 Minute Oil Change
Strickland Brothers provide franchisees with a scalable business model and the support they need to be successful. The initial franchise fee is about $55,000, and you can expect your total initial investment to range from $217,000 to $287,000. In addition, the company expects franchisees to have an approximate minimum net worth of $450,000 and cash liquidity of $250,000. And don't forget the royalty fee of 5% and an advertising royalty fee of 2.5%.
Lead Your Oil Change Franchise to Success Using Skynova's Software
As you launch your oil change franchise, Skynova is here to support your financial and business needs. Our all-in-one invoicing and accounting system make it easy for any small business to grow and succeed.
Our platform makes it easy for you to track and manage accurate records of your income and expenses. Simply plug in the most important information from your business activities to generate the important documents you need to streamline your bookkeeping.
We're here to simplify the administrative part of the job and all the boring paperwork so you can focus on doing what you love most – getting hands-on and under the hood of vehicles.
Notice to the Reader
The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Always consult with a professional accountant to ensure you're meeting accounting standards. Also, consult your financial advisor as you review each oil change franchise opportunity's financial requirements to ensure you can meet their standards.