If investing in a car rental franchise sounds too good to be true, you may be right. While they may seem like good opportunities, Moran Family of Brands knows car rental franchises aren’t as profitable as you might think.
Revenue in the car rental industry is climbing. As travel resumes, people are making rental car reservations in record numbers, and the future for car rental companies appears bright. The average revenue per month of a rental car is up 11% to $1,320, compared with $1,174 in 2019, Auto Rental News reported.
High used car prices did help plump up earnings at some of the large rental car companies last year. Chip shortages limited the production of new cars, which sent the price of both new and used cars up. Rental car companies turn over approximately 92% of their inventory each year, and they pocketed extra cash in 2021 when used car prices were high.
If you lack the skills to be a mechanic and have a passion for cars, a future in the car rental business may sound like the right path. However, owning a car rental franchise can be challenging. Here are a few reasons a car rental franchise might not be the best choice for you.
High Barrier to Entry. Opening a car rental franchise comes with a high price tag. In addition to procuring a location, franchisees need to lease a fleet of cars, which is costly. While prices vary, the total initial investment for a car rental franchise starts at approximately $560,000. At the top end, estimates for different brands range from $1.5 million to as high as $12.5 million.
Limited Location Availability. Many car rental companies already cornered the market on prime rental car locations at airports. Finding a good spot for a new location can be challenging and costly. Some franchisors put company-operated locations up for sale, which can help increase location availability. Airport locations are also subject to various airport fees and guidelines.
Lack of Variety. There are a number of different brands in the car rental industry. Customers can choose a budget, luxury, or on-demand brand. This is not the case for car rental franchise opportunities. Most of the major players in the car rental industry are owned by a limited number of franchisors. For example, Avis franchises its namesake brand, as well as Budget Rent a Car, Payless Car Rental, Zipcar, and Apex Car Rentals.
Dependence on Travel. The outbreak of the pandemic in 2020 ground travel to a halt across the globe. People canceled travel plans and stayed home to flatten the curve, sending a shockwave through the travel industry. Car rental companies laid off or furloughed more than 60,000 employees, and at least one large chain declared bankruptcy. Lessons learned over the past two years are prompting many fledgling entrepreneurs to tap stable, pandemic-resistant investments.
Moran Offers Ideal Alternative
If the price tag on a car rental franchise puts it out of reach, a franchise in the aftermarket auto industry may be a better choice. Moran franchises six different brands in the aftermarket and window tinting industry, including Milex Complete Auto Care, Mr. Transmission, and Turbo Tint.
You do not need to be a mechanic to become a Moran franchise owner. We are looking for franchisees who have a thirst for entrepreneurship and a background in management and sales. Our franchisees are open-minded, driven, and committed to providing high-quality customer service. The total investment to become a Moran franchisee starts at $118,219, making it an affordable alternative to car rental franchise opportunities. Cars are an essential component in the fabric of American lives, and an auto care franchise offers a pandemic-resistant investment for savvy business owners.
Learn More About Moran
If you are considering a franchise opportunity in the auto industry, partnering with Moran may be a more profitable choice. Click here to request franchise information or to speak to one of Moran’s franchise business consultants.