In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Honest-1 Auto Care franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for an Honest-1 Auto Care franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Honest-1 Auto Care franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Honest-1 Auto Care outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Honest-1 Auto Care’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average, median, high, and low annual and monthly gross sales for the 46 Honest-1 Auto Care centers that have been operating continuously for at least 2 years as of December 31, 2017 under the same owner
- 2016 average, median, high, and low annual and monthly gross sales for the 38 Honest-1 Auto Care centers that have been operating continuously for at least 2 years as of December 31, 2016 under the same owner
Section I – Background Information
16 Things You Need to Know About the Honest-1 Auto Care Franchise
Launches Valentine’s Day Campaign
1. According to Rick Sage, vice president of marketing and brand strategy for Honest-1 Auto Care, his team tries to come up with seasonally appropriate messages throughout the year to promote the company’s shop owners and reach its core audience. However, Sage said that “the automotive industry and Valentine’s Day is often a tricky pairing.” He added, “Trying to somehow connect that to a vehicle is not an easy thing to do. In the past we had done showing love to your car, but this year we wanted to do something different.”
2. In 2018, Sage noticed that seven franchisees in the Honest-1 system were married couples. So, ahead of Valentine’s Day, Honest-1 Auto Care built a “Love in the Shop” campaign centering around married couples throughout its system and how they “maintain a marriage while maintaining vehicles.” Sage says it was just a simple way to promote Honest-1’s family-friendly shop atmosphere. “It’s more of just an awareness campaign,” Sage said. “The underlying theme is that the franchisees are just like you and your families.”
3. In the weeks leading up to Valentine’s Day, Honest-1 promoted the stories of its married repair shop owners on Twitter and Facebook. One of the featured couples was Marie and Leighton C. of Honest-1 Auto Care in Orlando, Florida, who have used owning a franchise together as an opportunity to grow both as individuals and as a couple. According to the couple, “Making regular ‘we’ time keeps the relationship fresh and will also allow you to come back to the business rested with a new focus.”
4. After Valentine’s Day, Honest-1 continued to promote its married franchisees through the shops’ individual social media accounts, and boosted the posts locally.
Franchisees Drawn to Female-Friendly Atmosphere
5. While the automotive service industry has been a male-dominated industry in the past, Honest-1 Auto Care set out to change that and has presented itself as a family and female-friendly company. This has drawn several married couples and women to the company as franchise owners.
6. In early March 2018, Tiku and Smita Patel opened a new Honest-1 Auto Care franchise in Carrollton, Texas. With a background in hospitality, Smita was intrigued by the opportunity to own a franchise in the auto industry. Smita said, “As a female, I always dreaded when I had to take my car in for service. I felt like I was taken advantage of because I didn’t know the terminology, and just not an overall good experience.”
7. The Honest-1 Auto Care franchise intrigued Smita and her husband because it is very woman-friendly with an upscale lobby, complimentary refreshments, and even a kids’ play area. Creating a “female-friendly” environment was important to Smita and her husband. With a keen eye for setting out a welcoming atmosphere, Smita shared what you can expect as you walk in the door. “We take you back and show you exactly what’s wrong with your car. We don’t try to sell you anything you don’t need,” said Smita.
8. Smita added that Honest-1 Auto Care encourages franchise owners to hire female mechanics. She said, “Women can do the same job as their male counterparts, they have the same skills and training. We definitely promote that here to give them the opportunity to highlight those skills.” Additionally, Smita said that customers “think it’s really neat to see a female tech working on their car.”
Offering 3-Year, 36,000-Mile Warranty
9. Another way that Honest-1 Auto Care stands above the competition is by being the first national full-service auto care company to institute a nationwide 3-year, 36,000-mile warranty on repairs. The company launched this revolutionary warranty back in late 2015.
10. Honest-1 Auto Care’s warranty gives customers warranty coverage and service at over 35,000 authorized repair facilities across the country. This added assurance further demonstrates Honest-1’s focus on innovation aimed at enhancing the customer experience.
11. Every Honest-1 Auto Care location across the country offers this 3-year, 36,000-mile warranty program free of charge. To use the warranty if a select part does not perform as expected, the customer can call a toll-free number and be referred to a nearby repair shop where the part will be replaced at no cost.
Company History
12. Honest-1 Auto Care was founded in 2003 in Scottsdale, Arizona and began franchising that same year. To differentiate itself from its competitors in the automotive service industry, Honest-1 Auto Care is the nation’s only 100 percent ESA® Certified Eco-Friendly company. The company also says that it is passionate about putting its customers first by being honest and transparent with its services.
13. In 2011, Honest-1 Auto Care underwent a strategic ownership change within the company designed to further increase support for its growing franchise system. Then-president and CEO Jack Keilt assumed the majority interest in Honest-1 Auto Care, with COO Rissy Sutherland and new investors rounding out the ownership.
14. The ownership transaction was financed by New York-based private equity fund, SLC Capital Partners, LP (SLC), which brought new partners to Honest-1 Auto Care. Among these partners were numerous active and retired operating executives, including investor Mike Cowan, a founding partner of SLC. Cowan is now the CEO of Honest-1 Auto Care.
15. Over the past decade and a half, Honest-1 Auto Care has grown slowly but steadily, and now has locations across 21 states.
Entrepreneur’s Franchise 500
16. Honest-1 Auto Care did not rank on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Honest-1 Auto Care franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Honest-1 Auto Care’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
Franchised
2015
- Outlets at the Start of the Year: 44
- Outlets at the End of the Year: 56
- Net Change: +12
2016
- Outlets at the Start of the Year: 56
- Outlets at the End of the Year: 61
- Net Change: +5
2017
- Outlets at the Start of the Year: 61
- Outlets at the End of the Year: 69
- Net Change: +8
Company-Owned
2015
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
2016
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
2017
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
Part 1 – 2017 Information
- The following chart represents the average annual gross sales and average monthly gross sales achieved by the Honest-1 Centers that have been operating continuously for at least 2 years as of December 31, 2017 under the same owner. There were 46 locations that met these criteria.
- There were 56 locations as of January 1, 2016 and there were 69 locations as of December 31, 2017.
- Two shops closed in 2017. One location was part of the 38 shops listed for 2016.
- Three shops closed in 2016 that are not included in the 46 shops below.
- There were four shops that transferred ownership in 2017 and two shops that transferred ownership in 2016 and these are not included in the 46 shops below.
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