South Africans have been forced to become more entrepreneurial in order to survive the turbulent economic climate in recent years.
Over the past four years the franchising sector has displayed resilience, consistently growing its contribution to the country’s GDP from 9.7% in 2014 to its present contribution of 13.3%, according to the Franchise Association of South Africa (FASA).
One burgeoning franchise is that of car wash services, which are increasingly dotted on the country’s landscape in recent years, dovetailing the rise in shopping centres, catering for motorists who live in complexes with strict body corporate policies.
BusinessTech contacted several car wash franchises across the country about the potential start-up costs and profits involved.
According to 082 Car Wash Franchise CEO, Mike Spratt, one of the biggest issues when looking at starting a car wash franchise is the availability of a decent site (new and existing).
“These are in very short supply and are snapped up quickly,” said Spratt. “We only open two to three branches a year because of the short supply.”
That said there is still a huge gap in the car wash market with many opportunities for franchises in the sector, he said.
According to 082 Car Wash’s website, the estimated start up cost is between R800,000-R1,200,000 excluding VAT. This includes a start-up franchise fee of R157,000 (also excluding VAT).
This is heavily dependent on the structures in place, it said, and an existing paving or tarred surface can save you up to R300,000.
This fee includes:
- A full turnkey operation
- CARWASH Café™ and all other necessary facilities (Total = +/-60 m2)
- 2 – 3 x Wash bays (72 m2 steel structure)
- 8-10 Drying Bays (Shade cloth)
- All signage
- All Equipment and furniture
- Recruited and trained staff
- Launch marketing effort & communication
- Ongoing marketing
- Weekly operations support from franchise office Ops Manager
- Dedicated customer care line
- R40,000 – R50,000 Net Profit (Owner Operator)
The amount payable for royalties is a fixed amount of 4% paid in advance. A further 1% marketing fee is levied totalling 5%.
It suggests that you have R50,000 working capital available for 3 months, after which owner operators can expect a net profit of between R40,000 – R50,000.
Speaking to BusinessTech, new business development manager at CC holdings, Alan Pottow said that the average estimated startup costs are around R675,000 (excluding VAT).
Additional cost requirements for the site for the franchise would be a store room, staff change room and toilets, as well as a grease trap and office.
There is also an average annual franchising cost of 5%.
Like Spratt, Pottow said that location and demand is vitally important when setting up a new franchise.
He warned that owners had to be resilient to low-traffic and that the high volumes of cars typically seen on the weekends is not indicative of the amount of cars being washed on the weekend or during holidays.
This meant that many of its franchises only worked with a full staff complement over the weekend, while working with a reduced staff from Tuesday – Thursday.
Given the pop-up nature of car washes, potential business owners may want to opt for starting their own “franchise” to target their local markets.
Speaking to BusinessTech, Eco Wash CEO Henry Wilkinson said that its products are currently being used in over 800 locations, including office parks, shopping malls, golf clubs and car dealerships, panel beaters and fitment centres.
It does not participate in car washing but provides the supplies to do so including a specialised mobile dispensing unit and a biodegradable cleansing formula.
- The outright purchase price of the Eco Wash Equipment MDU is R48,000 excl. VAT (price includes: installation, on-going training, site inspections, maintenance, service and warranty for 36 months).
- The product and consumables packages start at R1,400 Excl. Vat per month for 300 washes per month. The quarterly product and consumables will depend on the number of cars to be washed each day and that will determine the monthly fee.
- The higher the monthly fee, the more product and consumables supplied. Additional product and consumables can be purchased.
Users will also pay a monthly fee for microfibre cloths; cleaning cloths; the waterless Wash & Wax Tyre Shine, rim cleaner; the heavy duty cleaner; spray bottles; sponges and chamois.