Before investing in a franchise, you need to know everything about car finance franchise costs, so you can make an educated decision on whether or not it will deliver a profitable return. At Byrider, we try to outline the auto loan franchise costs as clearly as possible, so our franchisees know exactly what they’re getting into. This includes the initial franchise fee, recommended line of credit, and the monthly royalty payments. While we can’t make any guarantees or projections about how much money you can expect to make from your franchise, we can give you the best idea we can of the financial landscape going forward.
You will need approximately $1 million to invest and grow your Byrider business plus ability to obtain a $3-5 million line of credit to grow a portfolio of automotive receivables. While Byrider does not directly provide financing to it’s franchisees, we maintain relationships with many banks and lending institutions that can be of assistance. These institutions are familiar with Byrider and our 30 years of successful growth in the buy here pay here industry.
The Franchise Disclosure Document provides detailed information regarding the fees, contractual relationships with Byrider Franchising, Inc., and the corporately-owned units profit experience. Please refer to that information for a more detailed understanding of the franchise offering and business model.
The initial franchise fee is 50,000 dollars, with 35,000 dollars required for each additional franchise purchased. However, there are many other costs associated with acquiring a suitable location, such as hiring employees, and properly funding your business. As such, the capitalization needed from a new franchisee can easily reach 1 million dollars.
The monthly royalty fee is 2.5 percent of gross sales (vehicle sales price) and one percent of gross receipts (repayment of debt). Monthly royalties are capped at 12,000 dollars. Royalty caps decline with the opening of additional locations.
What do I Get in Return?
When you pay your franchise fee and royalty payments, that money doesn’t simply disappear into thin air. Your used car dealer franchise costs are reinvested in resources that will go a long way toward helping you succeed as a franchisee. Not least of which is our incredible Franchise Support Team. This team is in place to help you be as successful as possible in your small business franchise. From finance and real estate to training and technology service, Byrider provides complete support for our franchisees so that you can truly provide our customers with better used cars, affordable payments, and better car care to generate maximum profitability.
We also provide formal training at the Byrider Training Center in Carmel, Indiana, for sales, service, finance, controller, and management personnel. We also offer regional training at various sites throughout the year. For in-store training, we offer Byrider Digital University (BDU), an online opportunity for personnel with limited time. Operations manuals are provided for your reference when you sign a franchise agreement. In addition, expert advice is provided regularly by franchise consultants and functional experts.
To ensure that you are as successful as possible, our Franchise Support Team is there to assist you every step of the way. From finance and real estate to training and technology service, Byrider provides complete support for our franchisees so that you can truly provide our customers with better used cars, affordable payments, and better car care to generate maximum profitability.
You will also have full access to our proprietary Dealer Management System, Discover™. This software is the result of over 25 years of experience, and has resulted in the sale of more than 1 million cars, and seven billion dollars of retail installment contracts. Upon making the franchise investment, our franchisees cam immediately take advantage of Discover™, which fully integrates and automates information gathering from all aspects of the business, including outside sources such as banks and credit bureaus.
Here’s how it works. Data is collected into a centralized warehouse facility where it is verified, sorted, and transmitted to our franchisees as a set of useful management tools and reports. Discover™ manages every aspect of your business, including accounting, sales, customer relations management, underwriting, service department management, collections management, comparative national car buying reports, overhead cost management, and more. The Automated Risk Evaluator (A.R.E) tool is built into the underwriting module and helps you make accurate, on-the-spot underwriting decisions to improve the performance of your portfolio of contacts.
Using Discover™ has been proven to equate to hundreds of thousands of dollars per year for each store in extra collections, when compared with other used car business opportunities. The A.R.E. tool also helps you identify the most profitable potential sales to pursue in your used car franchise. It also saves you the immense expense of having to invest in a DMS yourself.
What Can I Expect to Make?
We can only give you a full breakdown of your used car dealer franchise costs. Other than the information contained in our Franchise Disclosure Document, Byrider does not make revenue or profit forecasts for any prospective franchise location. Results are subject to far too 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.