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Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Avis Rent A Car (and Budget Rent A Car) Franchise Costs (2016 FDD)

by Franchise Chatter on August 14, 2016

in Car Rental Franchise, Franchise Costs

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Avis Rent A Car

Detailed Estimates of Avis Rent A Car (and Budget Rent A Car) Franchise Costs Based on Item 7 (Estimated Initial Investment) of Avis’s (and Budget’s) 2016 Franchise Disclosure Document

  • Avis Rent A Car is an affiliate of Budget Rent A Car. The initial investment for both franchises are identical.
  • These estimated expenditures are based on a fleet of 30 cars and cover the first three months of your Avis Franchise’s operation.

1.  Initial License Purchase Fee:  $0 to $50,000

  • The Initial License Purchase Fee usually ranges from $0 to $50,000 based on a population of 55,000, but can vary.

2.  Construction, Remodeling, Decorating, and Leasehold Improvements:  $15,000 to $50,000

  • Your Avis Franchise’s location will typically be in a commercial area that allows for adequate parking of cars.
  • Leasehold improvements may include exterior site improvements; interior site improvements like floor covering, wall treatment, counters, ceilings, painting, window coverings, electrical, carpentry, related work, and contractor’s fees.
  • Your location must distinctly appear as a vehicle rental office, and must not share premises with another business unless otherwise approved in writing by Avis.

3.  Furniture, Fixtures, Other Fixed Assets, and Equipment:  $15,000 to $28,000

  • This figure includes items like ventilation systems, tables, chairs, booths, office equipment (such as copying and facsimile machines), phone systems, desks, filing cabinets, and automation (including computer hardware and software for your general use and for your use of Wizard, and includes an estimate of your initial costs in connection with your access and use of Wizard).
  • If you lease any of these items, this segment of the initial investment would decrease.

4.  Signage:  $10,000 to $20,000

  • All signage must display proper logos and required colors. You must maintain, in a timely manner, signage, paint, lighting, and materials.
  • At the minimum, your Avis Franchise location must have one interior sign and one exterior sign (the largest size and type reasonably and lawfully permissible).

5.  3 Months’ Rent and Security Deposits:  $9,000 to $18,000

  • Security deposits usually are refundable if you comply with the lease during its term.

6.  Vehicle Insurance Premiums:  $15,000 to $37,500

  • Avis used an estimated cost of $2,000 to $5,000 per vehicle per annum to calculate these figures for the cost of obtaining insurance coverage for vehicle damage, theft, and third-party liability from vehicle accidents based on payment of your annual or semi-annual premiums in monthly installments for your first three months of operation.

7.  Grand Opening Advertising and Promotional Costs:  $2,000 to $5,000

8.  Office Supplies:  $500 to $2,000

9.  Travel and Living Expenses During Training:  $3,000 to $7,500

10.  Miscellaneous Opening Costs:  $1,000 to $3,000

  • This item covers miscellaneous opening costs and expenses such as utility installation and deposits, business licenses and certificates, and professional fees.

11.  Automobiles:  $450,000 to $1,290,000 plus interest

  • This item reflects the estimated range of payments, less interest, you would make based on the estimated acquisition cost for your 30-car rental fleet during the first three months that your Avis Franchise operates.
  • This estimate cannot take into account your cost of financing your fleet as interest rates vary. This estimate also cannot take into account the initial fleet mix you may need to serve the anticipated needs of your customers. Therefore, the extremes of this estimate represent a fleet solely composed of one class of vehicle at the extreme ends of the cost range.
  • The purchase price of your fleet, using an estimated cost of $15,000 per vehicle (for an economy car) to $43,000 per vehicle (for a luxury car), would be $450,000 to $1,290,000 for a 30-vehicle fleet composed solely of economy or luxury cars.
  • Avis expects franchisees to finance 100% of the purchase price of their fleet, and expects that you will provide security for this financing using the fleet, your (or your owner’s) personal guarantee, and, perhaps, certain of your (or your owner’s) personal assets.
  • Avis expects that your monthly fleet expenses will increase after your first three months of operation as your fleet size increases.

12.  Additional Funds – 3 Months:  $55,000 to $72,400

  • This is only an estimate of the range of initial startup expenses you may incur (other than items identified separately in the table). The estimate of additional funds is based on an owner-operated Avis Franchise and does not include any allowance for an owner’s draw.

13.  Total:  $575,500 to $1,583,400

  • Avis relied on its experience in the vehicle rental business to compile these estimates. Avis does not offer financing (directly or indirectly) for any part of the initial investment.

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