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Want To Own A Hertz Franchise? Here’s How Much It Will Cost You
With transportation being an essential component of commerce and leisure, car rental is indeed a lucrative business worldwide. Out of all the car rental companies, Hertz is one of the largest known brands not just across the US but also in Europe and other parts of the globe. This article will walk you through Hertz franchise cost and the training and obligations required to set up shop. So pull up a chair and get ready to learn more about what could be your next business venture.
Franchise Description
Before we dig deep into Hertz franchise cost, let’s tackle some key info about the brand. Operating and franchising since 1925, Hertz is one of the oldest and leading players in the car rental industry worldwide. With almost a century’s worth of experience in the transportation sector, it doesn’t come as a surprise that there are 12,400 units operating under the brand.
The franchisor is Hertz System, Inc, with the main office in Estero, Florida. It operates under the parent company, Hertz Global Holdings, Inc, which also handles Dollar and Thrifty vehicle rental brands. They conduct vehicle rental ventures that rent cars without drivers for transient purposes (365 days or less).
Training Overview
Aside from the Hertz franchise cost, you must also consider the time and effort needed to open a franchise. For instance, the franchisees, the manager, and key employees must complete the required initial training courses and programs. Also, the brand may require them to complete remedial programs in case assessment shows that they need to improve business operations. That said, expenses for these training programs, such as travel and accommodations, will be shouldered by the franchisee.
In addition to that, location owners must hold a training program for their employees. The said program should orient and teach the staff about the standards and procedures of the Hertz business. The franchisor also offers options and courses through its Training Management System. Location owners may choose to mandate their staff to undergo training programs as they see fit.
Obligations and Restrictions
Unlike most franchises, Hertz doesn’t guarantee an exclusive territory to its franchisees. As a result, they may face competition against other outlets either owned by Hertz or by other location owners.
Hertz expects franchisees to devote time, energy, efforts, and direction to the business. They may also choose to hire a manager who will complete the required training and devote full time and energy to operations.
Location owners must only rent out vehicles that pass Hertz’s specs. For instance, the type, quality, fuel source, size, model year, mileage, and brand should adhere to the brand’s standards. It’s also the franchisee’s duty to conform with other business procedures determined by the main office. This also includes authorized products and services for use or to be offered for rent.
The initial franchise period is five years. If the location owner meets the requirements, the franchise may be renewed for three consecutive periods of five years each.
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial License Fee | $25,000 | $100,000 |
| Training Expenses | $3,000 | $3,000 |
| Passenger Cars | $435,000 | $11,700,000 |
| Courtesy Vehicles (per location) | $55,000 | $350,000 |
| Equipment and Supplies | $5,000 | $20,000 |
| Insurance | $40,000 | $400,000 |
| Real Estate and Improvements | Varies | |
| Professional Fees | $3,000 | $10,000 |
| Computer Systems, Hardware and Software | $11,500 | $250,000 |
| Optional Software | $1,500 | $15,000 |
| Business License | $100 | $500 |
| Miscellaneous Installation Fees | $200 | $500 |
| Additional Funds – 3 months | $20,000 | $50,000 |
| ESTIMATED TOTAL (excluding real estate & improvements) | $564,300 | $12,539,000 |
Other Costs
| Type of Fee | Amount |
|---|---|
| License Fee | Airport Rental Locations: 9% of gross revenue derived from the Hertz business, subject to a minimum annual amount determined by the franchisor based on various factors including, without limitation, market size, and number and type of locations.Non-Airport Rental Locations: 7% of gross revenue derived from the Hertz business, subject to a minimum annual amount. |
| Monthly Marketing Fee | In an amount to be determined, if a marketing fund is established. |
| Program Assessments | Will vary. |
| Insurance | Cost of procuring insurance for the franchisee. |
| Reservation Charges | Fee is assessed for each reservation made through Hertz’s reservation system. Currently, the reservation charge is $3.84 to $6.30 per passenger car reservation. |
| Rate Management Services | Estimated to range from $100 to $5,500 per location per month depending on the level of service, number of users, location and fleet size and whether it is a multiple brand location and the complexity of the market. |
| Travel Industry Commissions | 0-30% of gross rental charges. |
| Travel Vouchers | Service fee presently equal to 5% of net proceeds of the voucher. |
| EDI Cost | $6.50 for TSD and $1.50 for OKC Administration for a total of $8.00 per reservation. |
| Hertz Rental Processing Fee | 2.5% for auto feed; 4.6% for manual feed for insurance and service replacement customers. |
| Guaranteed Charge Cards -Service Fees | Currently between 1% and 5% of gross rental charges. |
| Charge Cards Guaranteed by Parent – Service Feesa) Central Bill Charge Card Service Feesb) Direct Bill Charge Card Service Fees | See sub-categories below:May range from 2.5% to 6% of gross rental charges.May range from 3% to 6% of gross rental charges. |
| Inspection Fee | Cost of inspection. |
| Reservation Assignment Fee | $4-$6 per reservation made through reservation assignment system. |
| Interest and Late Fees | Interest at the lesser of the rate the franchisor prescribes, or the maximum rate allowed by law, plus a late fee of not less than 5% of the total amount overdue. |
| Supplier Testing | Will vary under circumstances. |
| Renewal Fee | $5,000 to $10,000 |
| Transfer Fee | $0 to the franchisor’s then-current initial fee (currently, our initial fee is $25,000-$55,000). |
| Holdover Fees | The then-applicable Franchise Fee and other such fees and assessments being charged by the franchisor. |
| Security Deposit | Will vary under the circumstances. |
| Early Termination Fee – Liquidated Damages | Will vary under the circumstances. |
| Audit Fee | Cost of the audit if the franchisor discovers franchisees have underreported by 2% or more or it discovers franchisees have failed to comply with any provision of the Franchise Agreement or any other agreement between franchisees and the franchisor or its affiliate(s). |
| Value Proposition Services | $0 – $150,000 depending on the franchisee’s selection of optional products and services offerings. |
Did You Know?
Here are a few factoids to know to understand the brand even further.
- Leadership is one of the perks you’ll get to enjoy when you franchise this business. They offer a brand leadership built upon innovation, a global network and brand values, superb customer service, long-term partnerships, and multi-segment business. That said, you can be sure that you’ll always have ample guidance and support as you manage your business.
- Hertz boasts over 9,000 locations in 145 countries. It’s also the number one airport car rental brand in the US as well as at 81 airports across Europe. That said, you can count nothing but the highest quality of standards from this business.
- The business has a premium rewards program called Hertz Gold Plus Rewards Service. This program allows members to skip the counter for pick up and drop off. Members can also pick the car for the best fleet and use the points that they earn for free rentals and rewards. And since Hertz operates in many countries, members can claim the rewards wherever they go.
- Though the company has no set rules on choosing franchise applicants, they prefer energetic investors who enjoy working in the travel or automotive field. They also look for persons who have an entrepreneurial spirit, solid business skills, and are active in the communities where they live and work.
- The brand has a full-time, global sales force focused on selling the car rental brand through various media. They also establish corporate accounts, partnerships with travel agencies and airports.
With its extensive experience in the industry, the brand clearly knows how to do business efficiently. So, if Hertz franchise cost is within your investment budget, it’s surely one of the top choices to consider for a car rental franchise.
Learn more franchise information here at Franchise How!