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Franchise Costs: Detailed Estimates of Rent-A-Wreck Franchise Costs (2014 FDD)

by Franchise Chatter on March 27, 2015

in Car Rental Franchise, Franchise Costs

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Rent-A-Wreck Photo from citysearch.com

Detailed Estimates of Rent-A-Wreck Franchise Costs Based on Item 7 (Estimated Initial Investment) of Rent-A-Wreck’s 2014 Franchise Disclosure Document

1.  Initial Franchise Fee:  $12,000 to $15,000

  • The Initial Franchise Fee is due when the Franchise Agreement is signed; or 1/2 is due when the Franchise Agreement is signed and 1/2 is due at the beginning of Operations Training.
  • The full Initial Franchise Fee is due 180 days after you sign the Franchise Agreement, even if you have not attended Operations Training.

2.  Real Estate:  Varies

  • You may locate the Rent-A-Wreck Business in a free-standing location, a garage facility, an existing vehicle sales or repair facility, or any other location conducive to a vehicle rental business, as long as the location meets any applicable zoning restrictions.
  • You may lease or already own the premises.
  • The rent or mortgage payments, if any, will vary depending on the size of your fleet, the type of site used for the Rent-A-Wreck Business and the availability of financing. For these reasons, Rent-A-Wreck cannot accurately estimate your occupancy expenses.

3.  Leasehold Improvements:  $0 to $10,000

4.  Equipment, Fixtures, Furniture, and Signs:  $2,000 to $20,000

  • These costs are primarily affected by the type of location and whether you are converting an existing vehicle rental business to a Franchised Business. In particular, the higher amounts apply to stand-alone sites or new businesses that do not already have furniture, fixtures, and equipment, such as desks, chairs, and rental counters that meet Rent-A-Wreck’s standards.
  • The lower range covers Franchised Businesses operated within another existing business, such as a new or used car dealership, auto repair shop, or gas station.
  • The location, size, and condition of the premises also will affect these costs.
  • Rent-A-Wreck provides an interior sign that is suitable for hanging behind or adjacent to the rental counter.
  • The franchisor does not currently require illuminated outdoor signage, but recommends it. Outdoor signage sign requirements are determined following a site survey and vary from site to site, depending upon location, zoning requirements, and other similar factors.

5.  Rental Vehicles (12 vehicles is the minimum fleet requirement):  $120,000 to $300,000

  • The costs and the number of rental vehicles will vary significantly depending on the location of the Rent-A-Wreck Business, availability of vehicles, the cost of purchasing and reconditioning vehicles, and the availability of fleet financing.
  • As described in Item 10, Rent-A-Wreck’s affiliate, KFL, LLC, may lease up to 50 vehicles to qualified Rent-A-Wreck franchisees.

6.  Training and Travel Expenses:  $1,000 to $2,000

  • You and/or your general manager must attend the initial training program — either at Rent-A-Wreck’s offices in Laurel, Maryland, or you may request that the franchisor send a trainer to your location.
  • If you attend the training at the franchisor’s offices, you are responsible for your own travel and living expenses while training. If you choose to have the franchisor send a trainer to your location, you must pay the trainer’s airfare and per diem living expenses.
  • The per diem living expenses are based on the federal government’s rate of compensation of its employees when traveling on government business. The rate will vary depending upon your location.

7.  Computer Equipment:  $1,594 to $4,257

  • To access Web Rent, you will need the following computer hardware:  a minimum of 1 computer, a current operating system, and a printer that is compatible with Web Rent, along with a broadband internet connection.
  • Broadband connection could cost upwards of $60 per month.

8.  Computer Software:  $1,712 to $2,830

  • Your initial software expenses will include an initial Web Rent startup fee ranging from $1,711.50 to $2,829.50 ($696.50 for one user license and $346.50 for each additional user license plus $1,015 for accounting system, signature pad, browser interfaces, and cloud hosting fees).
  • The low end of the computer hardware and software estimates are based on the purchase and use of one computer with Web Rent access, and the high end of the estimates are based on the purchase and use of 3 computers with Web Rent access for simultaneous use of Web Rent by 3 users.
  • The high end of the estimate also includes optional signature pad mounts for 3 users ($125 per mount).

9.  Additional Onsite Computer Software Training:  $0 to $3,300

  • Initial phone training on Web Rent is included in the Initial Operations Training Program that Rent-A-Wreck provides.
  • At your request, Bluebird Auto Rental Systems will provide additional onsite training at the Franchised Business for an additional fee of $650 per day for 1-2 days of training, plus travel and living expenses for the trainer (based on the same per diem rates described in number 6 above).
  • The additional training is not mandatory.
  • The high end of the estimate is based on 2 days of training plus travel and living expenses for one trainer.

10.  Opening Advertising and Miscellaneous Costs:  $2,500 to $5,000

  • This item includes grand opening advertising and promotions, legal and accounting fees, one set of vehicle hand controls, security deposits, rental agreement forms, telephone installation, road service set-up costs, and credit card processing arrangements.

11.  Vehicle Insurance:  $7,000 to $12,000

  • Insurance costs vary depending on the size and age of your fleet and the location of the Rent-A-Wreck Business.
  • Insurance carriers may require you to pay a premium deposit in advance. The deposit usually varies from 2-12 months’ premium.
  • The estimated cost assumes that you will start with at least 12 vehicles.

12.  Additional Funds (3 months operating capital):  $5,000 to $25,000

  • Additional funds include salaries and benefits for employees (other than any draw or salary for the owner/manager), business insurance costs, and miscellaneous ongoing expenses.
  • This range of expenses is Rent-A-Wreck’s estimate based on its own experience and the experience of its wholly-owned subsidiaries, and the anecdotal evidence given to it by its current franchisees.

13.  Total Estimated Initial Investment:  $152,806 to $399,387

  • Except for security deposits, these payments are non-refundable.
  • Except for the initial fee installment payment and fleet leasing program described above, neither Rent-A-Wreck nor any affiliate will finance any part of the initial investment.

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