Service Franchise vs. Product Franchise: A Guide to Choosing
If you’re exploring opportunities in the auto franchise industry, a service franchise can offer many benefits over a product franchise. Learn more about each and how to choose the best opportunity for you.
Experts anticipate the U.S. aftermarket auto industry will reach $400 billion over the next three years, according to Statista. High new car costs and rising interest rates are making the purchase of a new car unattainable for many Americans. The average age of cars on the road reached a record high of 12.5 years this year, creating increasing demand for aftermarket auto services.
Despite the industry’s strong outlook, choosing between a service or a product franchise can be daunting. Let’s get started by learning the basics about the best automotive franchise model.
What Is a Product Franchise?
A product franchise revolves around the sale of tangible goods. An automotive parts store that stocks items like oil filters, batteries, and tires is a classic product franchise. While these franchises can leverage retail sales and product markups, they also grapple with challenges like inventory management, higher initial investments, and the looming competition from e-commerce platforms. But, if you have a passion for sales, a product franchise may provide a fulfilling future.
What Is a Service Franchise?
Do you enjoy interacting with customers and solving problems? A service franchise focuses on providing services rather than selling physical products. Picture an auto repair shop where the primary service is vehicle maintenance — that's your quintessential service business. The resilience of a service-based model is evident; services like those offered by auto care franchises are essential and irreplaceable by online alternatives.
In the automotive sector, a franchise such as Milex Complete Auto Care, which is part of Moran Family of Brands, is a prime example of the service model, offering comprehensive car care services. The support and flexibility of the service business opportunity, combined with the constant demand for automotive services, make it an attractive option.
Understanding the Pros and Cons
Service opportunities often have lower overheads with no extensive inventory requirements. They're nimble, adapting quickly to market changes, and they build strong customer relationships through personalized service. In the automotive industry, you'll find that customer-centric franchises, like repair or maintenance shops, benefit from the consistent need for their services — cars will always require upkeep. Yet, they demand expertise and can be competitive.
Product franchises can ride on brand recognition and establish customer demand for specific products. They offer the potential for high sales volumes but also carry the risks of inventory depreciation and the need for more significant initial capital. A product franchise might be a specialty parts store catering to a niche market, such as performance vehicle enthusiasts.
Drive into the Future with Moran
Moran distinguishes itself as a leading service franchisor in the automotive industry. We’re the franchisor of six brands in the aftermarket auto and window tinting industry, including Milex Complete Auto Care, Mr. Transmission, and Turbo Tint. Our dedication to excellence, robust training, and support systems set us apart.
We recognize that the strength of the service business model lies in the quality of service, which is why we invest in continuous training for our franchisees and staff. All Moran franchisees receive two weeks of online pre-training, an intensive one-week classroom where we provide ownership guidance and customer service management support, and a one-week field training program.
We also offer a diversified business model that enables franchisees to provide a variety of services under one roof, making it a convenient one-stop shop for customers. We focus on giving our franchisees the opportunity to co-brand to further extend the services they provide customers.
Learn More about Franchising with Moran
To learn more about the benefits of partnering with Moran to become a franchisee, get started by connecting with someone from our team.