The most profitable automotive franchises of 2024
The automotive sector is essential and growing, with niches for a variety of business models. One of the many advantages of investing in the automotive industry is the total addressable market – which is the 91.7 percent of US households that own a vehicle, according to the United States Census Bureau.
So, the automotive industry is huge and – even in metropolitan areas with lower rates of car ownership (like New York City-Newark-Jersey City) – is here to stay. In this article, we cover the essential components of a great auto franchise, the benefits of having an automotive franchise in your portfolio, and our top picks for the next automotive franchise you should add to your investment portfolio.
What makes a great automotive franchise?
As massive as the automotive industry is, auto franchises are still businesses, which means the criteria that make for a good automotive franchise are similar to what you’d use to evaluate other, similar businesses. Let’s examine a few of the key metrics.
Brand recognition
With so many automotive brands out there, brand recognition is one of the first hurdles for any new business owner to overcome. By franchising an existing, well-known brand, franchisees can leverage the years of marketing work and brand recognition and effectively lower their cost to market.
Franchises with strong brand recognition signal another benefit to investors: proven models. A franchise with a strong brand name almost certainly puts in the work to help franchisees succeed and provide the quality service that the brand is known for.
Strong sales and marketing systems
While a good brand name does a lot to carry a company’s sales and marketing, strong sales and marketing systems are required to pick up the baton from the branding, so to speak. For many automotive franchises, this means making it easy for customers to schedule with you and pay for services.
Equally important are strong networking and establishing yourself in the local community as the de facto source for your service. Franchisees can achieve this by tapping into their company’s marketing department to rely on graphical assets, advertising strategies, social proof and reputation management, and methods of networking and building referral partnerships with other local businesses and franchises that solve related problems. For example, franchise owners who do window repair but not oil changes should build their referral marketing muscle by building relationships with local mechanics and tire shops.
Technology
New technology definitely helps businesses lower operating costs and increase net profit, but it can also help with quickly and accurately providing the advertised service. By tapping into new technology, franchisees can triage and manage incoming work, help on-site repairs more effectively chart their routes between customers, and enable the franchise to build its reputation and advertise its services, among other benefits.
Low headcount models
One of the best things about the automotive industry is that it doesn’t require a large headcount. Unlike business sectors such as retail or fast food, the automotive industry doesn’t need 10–20 employees to report to the brick-and-mortar location every day. While it’s true that having fewer employees can make it more difficult to take on more work, thereby reducing the total earnings, a lower immediate headcount makes it easier for individual franchises to start and remain profitable – which is better in the long run.
Demonstrated growth
Forecasts have shown that the automotive industry is projected to grow in 2024 and beyond. Many franchises have built trusted, known brands on the backs of this industry, and as such, there is a large number of franchises with demonstrated growth domestically as well as abroad.
When evaluating a franchise’s ability to grow, you’ll want to ask questions like, how many locations does this franchise have? How many of those locations have opened or closed in the previous three years, and why? What kind of infrastructure does the franchise headquarters have to set new franchisees up for success?
Benefits of an automotive business
Owning an automotive business is advantageous for many reasons, all of which point to why automotive franchises make attractive investments in your portfolio.
Strong referral potential and repeat customers
Since so many people own cars, it’s safe to say that everyone knows somebody who has a car – which means there’s no shortage of referral potential and repeat customers for the average automotive franchise. As a result, it can be cheap to acquire customers (low CAC) and you can expect those customers to return to you (high LTV). Another way of looking at this is, you can expect that the LTV/CAC ratio of the typical automotive franchise will be quite high.
Not subject to seasonality
If anything, both summer and winter provide their own demons for car owners that automotive franchises can capitalize on. This inherent resilience to seasonality makes auto franchises a sustained, reliable pick for any portfolio.
Take your pick of interesting specialties
No matter what your car-related interest may be, there’s likely a franchise associated with it. Between electrical, repairs, windows, paint, tires, mechanical, and interior, franchisees can pick a business that specializes in their area of interest. Moreover, because there are so many facets to the automotive industry, franchise owners can always expand their location’s offerings, as long as headquarters allows it.
Top automotive franchises of 2024
With so many recognizable automotive brands to choose from, where does an investor begin? Here are five profitable franchises we’ve chosen for you to consider.
1-800 Radiator & A/C
1800 Radiator & A/C is a B2B auto parts business supplying local repair shops, parts stores, new and used car dealers, and body/collision shops, among others. Its website for potential franchisees regales its “cutting-edge technology, extensive buying power, and great vendor relationships with locally owned and operated franchised businesses to provide the best solution for the wholesale auto parts industry.” 1-800 Radiator & A/C is owned by Driven Brands.
Fast facts
- Locations: 194
- Founded: 2001
- Franchised: 2005
- EBITDA: $264,709
- Start-up cost: $457,500–$1,269,000
- Franchise fee: $45,000
Tint World
The auto styling franchise Tint World provides window tinting, vehicle wraps, mobile electronics, and detailing services. With more than four decades of experience and now operating in four countries, Tint World is well-positioned to capture a sizable portion of the growing automotive industry. Interested franchisees or investors should note that its website boasts an average 79 percent gross profit margin.
Fast facts
- Locations: 101
- Founded: 1982
- Franchised: 2007
- EBITDA: $252,501
- Start-up cost: $289,950–$469,950
- Franchise fee: $49,950
Meineke
With more than 50 years of successful business operating franchises, Houston, Texas-founded Meineke’s auto repair and maintenance shop offers paint jobs, collision repairs, oil changes, car washes, glass replacements, and other services. Meineke has over 700 locations across the United States. Its franchises have massive brand recognition and have proven their ability to grow, scale, and remain profitable.
Fast facts
- Locations: 705
- Founded: 1972
- Franchised: 1972
- EBITDA: $236,789
- Start-up cost: $226,774–$561,688
- Franchise fee: $45,000
MAACO
MAACO offers the same auto painting, vehicle maintenance, and collision repair services as Meineke – but because both are owned by Driven Brands, they don’t compete for the same market. With about 400 locations across the United States, MAACO is one of the most recognizable, and profitable, automotive franchises in America.
Fast facts
- Locations: 398
- Founded: 1972
- Franchised: 1972
- EBITDA: $228,184
- Start-up cost: $276,000–$1,015,500
- Franchise fee: $45,000
Strickland Brothers
Winston-Salem, North Carolina-based Strickland Brothers offers 10-minute drive-through oil-change services in 23 states across America; for larger customers, Strickland also offers emission and fleet inspection. That the company began franchising just before the COVID-19 pandemic and celebrated its 100th location in 2022 is a great signal of its growing brand, staying power, and profitability.
Fast facts
- Locations: 129
- Founded: 2016
- Franchised: 2019
- EBITDA: $162,667
- Start-up cost: $277,900–$457,900
- Franchise fee: $54,900
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Explore More Profitable Franchise Opportunities
If you’re considering expanding your business horizons, read on to learn about the most profitable franchise opportunities in each industry. Whether you’re a budding entrepreneur or a seasoned veteran in the franchise world, our curated selection will guide you toward making an informed decision.
