Times have changed since people used to tinker under the hood of their cars or slide underneath to change their oil. Sure, there are car enthusiasts with the skill and passion to maintain their own vehicles, but as auto franchises have provided maintenance services in every corner of the country, the convenience and affordability have been too tempting for the everyday driver. Additionally, the complexity of addressing issues calling for higher technical expertise have put a premium on quality service that is widely accessible.
Most auto franchises got their start by providing a particular service, such as oil changes, brake repairs, tire sales, or in the case of AAMCO, transmission repair. The Midas franchise got its start by selling mufflers. Many franchises that once specialized in a single service or repair have expanded to provide a more robust suite of car care services. Both AAMCO and Midas have grown to national prominence, though they offer different services within the auto repair industry. For those looking to enter the auto industry as a franchisee, it’s important to know what separates the two brands.
Founded in 1954 as a muffler supplier, there are now more than 2,100 Midas franchise locations worldwide as the company brands itself as a “total car care expert” referring to services like tire and battery replacement, oil changes, and more. They do not, however, advertise expertise in transmission or other complex engine repairs.
Prospective owners need a minimum of $75,000 in liquid assets and a net worth of $250,000. According to the Midas franchise disclosure document, the initial franchise fee ranges from $10,000 to $35,000. The fee is part of a total estimated stated investment of $198,650 to $539,512. Royalties are 2% to 10% of net revenue.
Founded in the 1950s and franchising since 1963, AAMCO now has close to 600 locations across the United States. Its vast array of auto repair services includes basic maintenance like oil changes and brake work as well as complex car repairs such as transmission and engine repair.
Getting started with your own AAMCO franchise is more accessible than Midas, requiring $60,000 in liquid capital and a $250,000 net worth. AAMCO also offers a clearer financial picture for prospective franchisees to understand their true startup costs and royalties. The total investment—from $223,600 to $330,500—includes the initial franchise fee of $39,500. Royalties are 7.5% of gross sales. The company does not offer exclusive territories for franchises. The term of the franchise agreement is 15 years and may be renewed automatically for 15 years if certain requirements are met. Relationships between AAMCO and its franchisees can last for decades, proven by numerous franchisees who are on their third agreements.
The Difference in Service
The differences in car repair may not seem major to the everyday customer, but they make a world of difference to franchisees. The complexity in service provides a true differentiator in both the customer traffic as well as the expectations for quality. Customers who choose AAMCO do so because they trust the skills of AAMCO technicians.
AAMCO’s specialization in diagnosing and executing complex car repairs mean there are fewer customers but higher ticket averages. Because of the size of the job and the skill needed to complete it, AAMCO centers are not under the pressure to churn through customers at the rate of a Midas franchise or other auto franchises. They can enjoy competitive revenues without relying on a high number of small- or medium-ticket jobs. During the COVID-19 pandemic, AAMCO also proved to be an essential business for many of its customers. General repair shops suffered significant revenue decreases as consumers put off smaller repairs, but AAMCO customers continued to address complex repairs to keep their family’s vehicle on the road.
AAMCO is uniquely positioned to be the brand leader for complex repairs, specifically when it comes emerging technology in the auto industry. About 5.4 million hybrid electric cars have been sold in the U.S. as of 2019, and AAMCO franchisees are prepared to meet those new, complex demands. AAMCO opened a world-class training facility for franchisees and their technicians in 2014 that includes a state-of-the-art garage for teaching repair of hybrid and electric vehicles. “AAMCO University” further provides more than 300 hours of classes for franchisees and their staff. Those differentiators and opportunities also attract some of the brightest talent in the industry.
AAMCO is seeking single and multiple unit operators. While passion is always appreciated, you do not need automotive experience to qualify for an AAMCO franchise. AAMCO encourages on-premises management by the operator, so a head for business and a commitment to top-notch customer service is essential.
Click here to find out more about the benefits of owning an AAMCO.
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