Features

FAQ - The Car Wash Show Back-Up

By Robert Roman

05/01/14

Frequently Asked Questions (FAQ) are designed to provide a better understanding of ideas, basic information, and sometimes fairly complex topics — and will often link to more detailed information. The format is commonly used where certain common questions tend to recur.

Undoubtedly, many of the following questions — and a few more — were answered at The Car Wash Show held last month in Chicago.

 

Historically, number of cars has been between 0.2 percent and 1.5 percent of the highway traffic passing the property daily. However, experience shows it may be necessary to evaluate 100 variables or more to accurately predict wash volume at any particular site.

 

How much does it cost?

Cost varies from $150,000 to buy a self-serve wash in the middle of Iowa to $10 million or more to build a multiple-facilities car wash with detail services, convenience store, food services, and gasoline.

 

Is financing available?

Yes, but requirements are more stringent and changing year-to-year. Interest rates are favorable, but loan-to-value rates are lower, and debt service coverage higher.

 

How much does it cost to operate?

Benchmarks for operating expenses as a percentage of gross sales are 40 percent self-serve, 50 percent express, and 65 percent full-service. Under the Affordable Care Act, operators with the equivalent of over 50 full-time employees face the prospect by 2015 of purchasing health insurance for workers or paying a penalty.

 

Is passive ownership possible?

Express exterior, self-serve, and car wash at gas sites are typically absentee owner. Cost of passive ownership is greatest for express and includes expense for management, technology to monitor operations, and increased business operating risk.

 

What about marketing?

Actively marketing a wash is more crucial today because people are making less shopping trips and driving fewer miles. So, customer loyalty programs and public outreach have become the mantra for many operators.

 

Where should I locate a wash?

Experts recommend three miles as minimum distance a wash should be located from another. However, other experts suggest it can be an advantage to locate a new store close to the market’s most formidable competitor.

 

How can I protect my trade area?

No one can guarantee future financial performance of a wash. It is important to acknowledge markets can be very different and your new wash may not evidence customer-choice patterns seen in other areas and regions.

 

How can I obtain training?

Suppliers provide customers with a variety of business aids vital to the efficient operation of a wash. There are also third-party sources that provide professional training in management, operations, maintenance, and repairs. This may include up to four weeks of classroom instruction plus field training.

 

Is continuing education and guidance available?

Since it’s difficult to operate any retail business by reading a manual, membership in industry associations, hiring field consultants, attending seminars and trade shows, and reading trade journals provide invaluable advice.

 

How long does it take to open for business?

Average time to market is roughly two years, depending on construction methods, permitting requirements, and weather conditions.

 

Are car wash franchises available?

Franchises are available. To get specific information, franchisors require that prospective investors first provide specific information that is then reviewed by a selection committee before providing the Uniform Franchise Offering Circular.

 

How long does it take to sell a car wash?

Typically, a car wash is not considered seasoned until the end of the third year in operation. Marketing period for a car wash with a history of increasing sales and impeccable records is 12 months.

 

Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at bob@carwashplan.com.



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