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The Real CARSTAR Franchise Cost
Many prospective franchisees consider an auto service because of the demand for repairs and general automotive services. With over hundreds of millions of vehicles in the United States, an automotive service could address any issues and challenges consumers face. With that said, one of the many services that franchisees keep in mind is CARSTAR.
So, in this article, know more about the franchise and the CARSTAR franchise cost to get you started.
CARSTAR Franchise Overview
CARSTAR started its operations in 1989 and began franchising in the same year. They celebrated a significant milestone in 1994 when they expanded operations in Canada by setting up centers there. And in 2013, Driven Brands acquired CARSTAR. Other Driven Brands companies include Meineke, MAACO, and ABRA Auto Body Repair of America.
To date, there are 700 stores in 35 states and 10 Canadian provinces.
Here are the services offered by CARSTAR:
- Auto-Body and Auto Collision Repair
- Paintless Dent Repair
- Hail Damage Car Repair
- 24/7 Accident Assistance
- Fleet Services
They guarantee a national warranty on several repairs and services. Moreover, they ensure that they have qualified technicians ready to work on any repair that comes to their store. Their technicians are I-CAR and OEM certified. This gives them an advantage over other automotive services. Plus, it will ensure they provide high-quality services at fast speeds.
So far, CARSTAR has locations in some of these states:
- California
- Massachusetts
- New Jersey
- New York
- Texas
Despite their growing numbers, CARSTAR faces competition from Service King Collision, Fix Auto, and Collision Works, among many others.
So, if you’re interested in starting a CARSTAR franchise, you can start by filling out this form. Then you’ll receive a franchise disclosure document that you can review. Then, you’ll have to attend discovery day, and if you’ve decided, you can sign the franchise agreement (FA).
CARSTAR finds that most of their franchises have a 20.20% revenue increase from the first up to the second year.
Before discussing the CARSTAR franchise cost, know what to expect when franchising the automotive service chain.
Training
A franchisee will designate a training administrator. This will then allow them to receive training materials from CARSTAR Franchisor SPV LLC (the franchisor) via the CARSTAR-U. The CARSTAR-U is their online training program. The training administrator can access their resources anytime. The franchisor requires the franchisee or the general manager to attend the mandatory initial training program; this training lasts for 2.5 days. Topics covered by the orientation are:
- Operations
- CARSTAR Facility image
- Customer service
- Purchase procedures
- Productivity reporting
- CARSTAR Communications
Territory and Obligations
The franchisee can only operate in the territory granted by the franchisor. Apart from that condition, other franchisees or affiliates may not set up another CARSTAR franchise in a one-mile radius in an existing franchise. However, that may be subject to change depending on some factors.
The franchisor grants an initial 10-year term to all franchisees. However, if a franchisee is interested in renewing, they can do so, so long as they’re not in default under the FA. Plus, they should also fulfill any provision related to renewal. If they meet the criteria, the franchisor will grant an additional 10-year term.
Franchisees should remember to manage the facility and business. But a general manager should dedicate their time to managing and operating the business. Franchisees must keep in mind to sell only authorized products and services that the franchisor has allowed. Any unauthorized goods and services may not be permitted.
CARSTAR Franchise Cost
The initial CARSTAR franchise cost ranges from $298,200 to $804,300. The initial cost includes training, inventory, and signage. At the same time, some other fees will consist of annual training, monthly franchising, and insurance and marketing fees.
The franchisor doesn’t offer any financial assistance, direct or indirect. They also don’t guarantee any loans or obligations.
Check the tables below for the initial franchise cost and other costs associated with opening a CARSTAR franchise.
Your Investments
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $10,000 | $10,000 |
| Integration Fee | $10,000 | $10,000 |
| Facility | $50,000 | $200,000 |
| Furniture, Fixtures, Equipment | $200,000 | $400,000 |
| Computer Hardware/Software | $9,000 | $27,000 |
| Training | $0 | $3,300 |
| Initial Inventory | $5,000 | $50,000 |
| Signage | $4,200 | $20,000 |
| Additional Funds – 3 months | $10,000 | $84,000 |
| ESTIMATED TOTAL (for new facility) | $298,200 | $804,300 |
Other Costs
| Type of Fee | Amount |
|---|---|
| Monthly Franchise Fee | Monthly base franchise fee. It is greater of $1,000 or 1.5% of gross sales. Plus monthly growth franchise fee, which is 4% of gross sales. In certain markets and under certain circumstances, the franchisor may negotiate the percentage of the monthly franchise fee. |
| Insurance and Marketing Fund Fee | Greater of $500 or 1% of monthly gross sales. This fee increases to 1.5% if franchisees are not in compliance with IMF guidelines. Or fail to maintain the franchisor’s image program. Or fail to timely submit monthly fee reports, until they comply with each of these requirements. |
| Non-reporting Fee | $750 per month. |
| Training Fee | $299 per year. |
| CCC One Innovate Management and Estimation System Fees | One-time $1,800 installation and training fee on new installations. Additional fees dependent on option the franchisee chooses. |
| CCC One Perform with Mitchell Repair Center Management and Estimation System Fees | $599 base fee for one user plus $33 for each additional user. There is a one-time $400 installation and training fee on new installations. MRC is an additional cost of $345 per month for 1-5 users, plus a one-time $3,450 set-up and training fee. |
| Central Review Fee | 0.5% of all gross sales generated by corporately-managed insurance programs that require CARSTAR central review oversight. |
| Renewal Fee | $5,000 |
| Supplemental Training | $45 to $150 |
| Resale Assistance Program Fee | $6,000 |
| Audit | Cost of audit. This includes the charges of any independent accountant and attorneys’ fees, and per diem fees. Other costs include the franchisor’s employees, related travel and lodging and other out-of-pocket costs, plus interest. |
| Interest | 1.5% per month or the maximum rate permitted by law. |
| Annual Business Conference | $845 |
| Optional Marketing Programs | Varies. |
| CARSTARUSA.com E-mail Address Fee | $10 per month per additional e-mail address after the first e-mail address. |
| New or Additional Fees | TBD |
Did You Know?
- They rank 120 in the Entrepreneur Franchise 500 2020 Ranking. They also secured a place in the 2018 and 2019 list. For 2019, they were 96, while in 2018, they were 255. Aside from the Entrepreneur list, they also bagged a spot on the FranchiseTimes Top 200+. They’re number 92 on that list.
- They raised $2 million for the Cystic Fibrosis Foundation in 2012. They chose the foundation back in 1997. Besides partnering with the Cystic Fibrosis Foundation, they have also partnered with the National Auto Body Council and the Women’s Industry Network.
- CARSTAR reached one of its most significant milestones in 2018 and 2019. They opened their 600th and 700th stores, respectively.
- Customers can avail the Driven Brands Credit Card. In doing so, they can go to any CARSTAR store to apply. This can ease their expenses on any service that CARSTAR provides. They have two financing partners: Synchrony Financial and Easypay Finance.
- A Franchise Development Director will act as a franchisee’s primary contact during the franchising process. So far, five directors handle different states.
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