Starting a used car dealer franchise is a huge decision, and before making the investment you should have all the facts. While you probably have a myriad of questions, the most pressing is likely, “what is this going to cost me?” or “what will I get out of my investment?” At Byrider, we want the auto franchise investment to be as transparent as possible, and that means giving franchisees a clear outline of the investment costs – including the franchise fee, royalty payments, and financing information. Here’s what you need to know about an auto franchise investment with Byrider.
As with all franchises, you will be required to make an initial payment of a franchise fee. This amounts to 50,000 dollars, with 35,000 dollars required for each additional franchise purchased, if you do choose to go the multi-unit route. There are also other costs you should keep in mind, like those associated with acquiring a suitable location, hiring employees, and properly funding your business. You will also need approximately $1,000,000 liquidity, and a credit line of approximately $5,000,000 when your portfolio of receivables reaches maturity — normally a three-year time frame.
It’s also important to keep in mind the monthly royalty fee. This fee is 2.5% of gross sales (vehicle sales price) and 1% of gross receipts (repayment of debts), paid monthly to the franchisor. Monthly royalties are capped at 12,000 dollars. Note that royalties can decline with the opening of additional locations.
While Byrider does not directly provide financing to its franchisees, we do maintain relationships with many banks and lending institutions who can be of assistance. These institutions are familiar with both the financing of subprime automotive receivables, as well as our particular business model, and we are happy to facilitate conversations between our franchisees and those lenders.
Return on Investment
Unfortunately, we are unable to make any guarantees regarding your expected profits, as it varies depending on several factors. Your profitability will be reliant upon many variables, such as market demographics, competition, the level of capitalization in the business, and the effectiveness of management in executing the business plan to provide an accurate prognosis (see item 19 in the Franchise Disclosure Document for more details). You will, however, be given substantial value for your auto franchise investment. Your franchise fee and royalty payments are reinvested in resources that will help you succeed as a franchisee. This includes our incredible Franchise Support Team, which is in place to help you be as successful as possible. From finance and real estate to training and technology service, Byrider provides complete support for our franchisees so you can truly offer our customers better used cars, affordable payments, and quality car care to generate maximum profitability.
To learn more about the Byrider auto franchise investment, contact us today.