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Franchise Options For The Independent Dealer A Look At Payless And Thrifty Car Sales Cont'd

“After the brand, it’s undoubtedly dealer support,” added Harley about the benefits of a franchise deal. “If you’re the prospect and you become the franchisee, we don’t say ‘Good luck.  Send us a check every month.’”

Dealers have a chance to tap into business relationships Payless has negotiated on behalf of all of its dealers. And those kinds of numbers can deliver a significant advantage.  “The relationships we bring to these dealers are second to none,” said Harley.

But dealers can still pick and choose among the after-sales products as they please.  “You can’t make franchisees do anything,” said Harley. “You have to entice them. About half of the dealers in the U.S., for example, are signed with CitiFinancial Auto for the service side of the business.”

With franchises all over the country, the dealers routinely get together by phone or over the Internet. “We get over 100,000 unique visitors a month looking for a car,” said Harley about the corporate Web site. “Behind the Web site we built an intranet for the dealers. If one of them had a successful tent sale, they can write that up and other dealers can respond to it.”

A remodeled Thrifty

With 39 franchises around the country, six years after Thrifty Car Sales started actively seeking out new dealers, it’s fair to say that the used car franchise isn’t where the company expected to be at the beginning of 2007. However, Thrifty has also been refurbishing the brand by adding some powerful new incentives as it plans a rapid scale-up through the year ahead.

“Over the last two years we have spent a lot of time remodeling Thrifty Car Sales, reestablishing the business model, adding value,” said Vice President and General Manager Jeff Cerefice. “We think it’s a great opportunity, but we needed to tweak the business model. We even took a pause selling franchises and in ‘06 we’ve come out full blast selling franchises again, and we think now we’ll see a much faster growth pace.

“At the end of next year we’d like to be 60 to 65 locations,” added Cerefice. “That might sound conservative, but we do want to take a deliberate, measured approach to selling franchises.”

One of the new features that have attracted a lot of positive buzz from its franchise dealers is the business development center run out of its corporate call center. Franchise dealers can freely use the center as much as they like, putting a corporate 800 number in their ads and letting the call group field queries and set up appointments.

Thrifty has also been working to create better relations with lenders and other vendors. Its Web site has been revamped to help generate leads, and the company has begun to bring in a preferred event sales vendor to whip up the kind of special events that can juice a dealer’s sales. Franchise dealers can get a preferred rate for the service and the rental firm trucks in loads of its used cars in the region to beef up inventory and really bring in the crowds.

Would-be franchise owners need to come to the table with $500,000 in equity and $100,000 to $300,000 in liquidity. The first franchise costs $35,000 but drops to $20,000 to add a franchise. The per-car sales royalty starts at $150 and can slide down to $100 based on sales volume. Franchise dealers get a territory of their own, but it’s flexible in size – smaller in big cities and bigger in rural areas.

Experience in the field is non-negotiable, said Cerefice. Prospects need five years in the car business to qualify for a franchise, and if a Thrifty prospect doesn’t have it, he or she needs a partner who does.

 

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 Vol 4, Issue 3

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