CARSTAR is a renowned North America’s Multi-Shop Operator Network of independently owned collision repair facilities. They provide high-quality vehicle repair with a nationwide warranty.
As per Dean Fisher, the current president of the Collision Group for Driven Brands and previous COO and president of CARSTAR, the company’s goal is to bring independent, enthusiast, auto repair franchise owners together to compete against more giant conglomerates that are moving into their markets.
CARSTAR has expanded its franchises in a short time. But are the franchises of CARSTAR running in profit?
In the third year of owning a franchise, Carstar is constantly turning over franchisees. New start-ups fail the quickest. Auto repair equipment is sold at pennies on the dollar to other franchisees. By the time a person realizes how bad a deal they’ve gotten themselves into with Carstar, they have generally lost everything. Many franchisees feel they have been prey to Churning activities done by greedy franchisors.
The unhappy franchised owners of Driven Brands’ parent company of Carstar, also alleges that the company charges them up to 20% of their gross revenue in ad fees and does not provide any in-house advertising support.
If you are thinking of buying the CARSTAR franchise, you should dig deep into the financials of all the franchisees. Like every other company, CARSTAR also puts its best-running franchise forward to manipulate people into buying its franchise.
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Carstar Franchise Business
CARSTAR opened in 1989 in Liberty, Mo. Wicklund became the first national multi-shop franchise operator in the U.S. It had expanded its network to Canada in 1994. In 1995 they announced a nationwide warranty making it one of its kind multi-shop in auto body repairs.
When you buy a Carstar franchise, the franchisors give you the name and the operating format of his established business in exchange for a fee and a percentage share in profit.
A Carstar franchisee is a great model of investment if you have enough capital and resources available. Also, buying a Carstar franchise doesn’t guarantee profits or making a million over 100k investment. There are many cons to consider before purchasing a franchise. CARSTAR is one of the companies whose franchise is not worth buying for every investor.
Can a CARSTAR Franchise Investment Fail?
Like all other businesses, Carstar franchises can also fail. It also includes its fair share of risks and heavy investment. There are many reasons why a franchise could fail. Environmental, personal, or financial problems are just a few examples. For instance, sometimes the cost of the franchise is too expensive, or the business’s location doesn’t have enough traffic. In the CARSTAR case, many franchise owners have gruntled to close their stores because they couldn’t bring in enough money.
#1 As Compared to Profits Initial Franchise Investment Cost is Costly
Setting up a new franchise involves a significant investment, and the new franchisee might face several challenges, such as raising money, paying taxes, and keeping records.
The initial investment for setting up the CARSTAR franchise is as follows:
Initial Franchise Fee: $20,000
Initial Investment: $298,200 – $804,300
Net Worth Requirement: $500,000
Cash Requirement: $300,000
Royalty Fee: 1.5%+
Ad Royalty Fee: 1%
Franchise fee is up to $20,000, with a total initial investment range of $298,200 – $804,300. The cost of setting up the Carstar franchise is very high in comparison to the return on investment. We request our reader to Watch the following Video to calculate how much a franchise owner earns in the USA. This Video will help you to
analyze franchise opportunities after assessing factors, including:
- Expenditure
- Competition
- Training
- Restrictions
- Track Record of the brand with other franchise owners, and
- Your market’s requirements
#2 CARSTAR Have to Face Pandemic Effects
Covid-19 has disrupted the economy and businesses in every sector. Collision repair service providers are also one of the sectors that got affected due to pandemics. In the pandemic, the government putting restrictions on travel and people staying at home has reduced the number of accidents. There was a decline to 50% in road collisions in some countries.
Also, due to this economic crunch, 4,000 to 5,000 collision repair centers closed within the last year, including some CARSTAR franchises. The CARSTAR management admitted that some of their stores have also fallen victim to the tough economy. It’s not relevant to invest in a franchise where existing franchisees are closing because of loss.
#3 Lawsuit Charges Against Carstar is Bad for its Reputation
CARSTAR is facing many legal accusations and allegations. Johnson County’s district attorney is suing the owner of Showroom CARSTAR LLC after multiple consumers complained that the shop stripped their cars instead of fixing them.
#4 Negative Reviews
CARSTAR has got many negative reviews from its consumers. People are not satisfied with the service of their cars and allege that they steal the parts of your vehicles. There are many horrible reviews regarding CARSTAR on the internet, making it hard to trust the brand. Buying the franchise of a brand with bad reviews makes no sense. There are many better options than CARSTAR in the market for repairing services, and people are choosing them over CARSTAR.
Conclusion
Opening a franchise is a considerable investment in terms of money and time. But if you are thinking of investing in CARSTAR as a small-term investment with huge profits, think twice. Many CARSTAR stores closed in the last two years, and many others are suffering from losses. It is safe to say that the chances of making a profit from the CARSTAR franchise are minuscule.
Sources:
https://www.unhappyfranchisee.com/maaco-franchise-complaints/comment-page-1/
https://apnews.com/article/f82dc3c407414973843068a386944663)
https://CARSTAR.pissedconsumer.com/very-upset-202101132378562.html
https://www.bodyshopbusiness.com/carstar-rises-to-78th-on-franchise-times-top-400-list/