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How Much Does It Cost to Open Rent a Wreck Franchise?

If you are looking towards opening a Rent a Wreck Franchise, it will be nice for you to have a preview of what the company represents before going ahead to enquire about the total cost of opening the franchise in your location.

Rent a Wreck was founded in 1970 and they began franchising in 1977, about 43 years ago. The current CEO of the company is Jack Fitzgerald and they have their corporate head office at 13900 Laurel Lakes Ave., #100 Laurel, MD 20707, USA. As of the 2013 Franchise Disclosure Document, there are 82 franchised Rent-A-Wreck locations in the USA. The company has franchise locations in 31 states. The largest region is the Northeast with 36 franchise locations

Rent-a-Wreck is the smart alternative to all tourists car rental needs. They are one of the best-known neighborhood car rental companies in the U.S. and global market. Rest assured, their vehicles are more like the cars people drive every day.

They keep their fleet of cars, trucks, and vans clean and well maintained; they are far from wrecks! They hope that their funny name helps clients to remember them, and their low cost rentals and high quality customer service will earn and keep their business. Here are areas where you are expected to spend money and the cost associated with it;

Financial Investment Required to Open Rent a Wreck Franchise

  1. Initial Investment Range – $159,105 – $459,607.

Except for security deposits, these payments are non-refundable. Please note that except for the initial fee installment payment and fleet leasing program described above, neither Rent-A-Wreck nor any affiliate will finance any part of the initial investment.

Please note that the franchisor relied on its experience from opening a location in the past and its experience in the Used auto rentals and leasing business and related business.

  1. Initial Franchise Fee – $18,000 to $75,000

The Initial Franchise Fee is due when the Franchise Agreement is signed; or 1/2 is due when the Franchise Agreement is signed and 1/2 is due at the beginning of Operations Training. The full Initial Franchise Fee is due 180 days after you sign the Franchise Agreement, even if you have not attended Operations Training.

  1. Royalty Fee

$34/car/mo and the Due Date for this fee is Paid by electronic funds transfer every Friday for the preceding Reporting Period. The amount of the Royalty Fee for any renewal term will be that provided in the Franchise Agreement executed for such renewal term.

  1. Real Estate

You may locate the Rent-A-Wreck Business in a free-standing location, a garage facility, an existing vehicle sales or repair facility, or any other location conducive to a vehicle rental business, as long as the location meets any applicable zoning restrictions. You may lease or already own the premises.

Please note that the rent or mortgage payments, if any, will vary depending on the size of your fleet, the type of site used for the Rent-A-Wreck Business and the availability of financing. For these reasons, Rent-A-Wreck cannot accurately estimate your occupancy expenses.

  1. Leasehold Improvements – $0 to $10,000

  2. Equipment, Fixtures, Furniture, and Signs – $2,000 to $20,000.

These costs are primarily affected by the type of location and whether you are converting an existing vehicle rental business to a Franchised Business. In particular, the higher amounts apply to stand-alone sites or new businesses that do not already have furniture, fixtures, and equipment, such as desks, chairs, and rental counters that meet Rent-A-Wreck’s standards.

The lower range covers Franchised Businesses operated within another existing business, such as a new or used car dealership, auto repair shop, or gas station.

The location, size, and condition of the premises also will affect these costs. Rent-A-Wreck provides an interior sign that is suitable for hanging behind or adjacent to the rental counter.

Please note that the franchisor does not currently require illuminated outdoor signage, but recommends it. Outdoor signage sign requirements are determined following a site survey and vary from site to site, depending upon location, zoning requirements, and other similar factors.

  1. Rental Vehicles (12 vehicles is the minimum fleet requirement): $120,000 to $300,000

The costs and the number of rental vehicles will vary significantly depending on the location of the Rent-A-Wreck Business, availability of vehicles, the cost of purchasing and reconditioning vehicles, and the availability of fleet financing.

Please note that as described in Item 10, Rent-A-Wreck’s affiliate, KFL, LLC, may lease up to 50 vehicles to qualified Rent-A-Wreck franchisees.

  1. Training and Travel Expenses: $1,000 to $2,000

You and/or your general manager must attend the initial training program — either at Rent-A-Wreck’s offices in Laurel, Maryland, or you may request that the franchisor send a trainer to your location. Please note that if you attend the training at the franchisor’s offices, you are responsible for your own travel and living expenses while training.

If you choose to have the franchisor send a trainer to your location, you must pay the trainer’s airfare and per diem living expenses. The per diem living expenses are based on the federal government’s rate of compensation of its employees when traveling on government business. The rate will vary depending upon your location.

  1. Computer Equipment: $1,594 to $4,257

To access Web Rent, you will need the following computer hardware:  a minimum of 1 computer, a current operating system, and a printer that is compatible with Web Rent, along with a broadband internet connection. Please note that Broadband connection could cost upwards of $60 per month.

  1. Computer Software: $1,712 to $2,830

Please note that your initial software expenses will include an initial Web Rent startup fee ranging from $1,711.50 to $2,829.50 ($696.50 for one user license and $346.50 for each additional user license plus $1,015 for accounting system, signature pad, browser interfaces, and cloud hosting fees).

The low end of the computer hardware and software estimates are based on the purchase and use of one computer with Web Rent access, and the high end of the estimates are based on the purchase and use of 3 computers with Web Rent access for simultaneous use of Web Rent by 3 users. The high end of the estimate also includes optional signature pad mounts for 3 users ($125 per mount).

  1. Additional Onsite Computer Software Training: $0 to $3,300

Please note that initial phone training on Web Rent is included in the Initial Operations Training Program that Rent-A-Wreck provides.

At your request, Bluebird Auto Rental Systems will provide additional onsite training at the Franchised Business for an additional fee of $650 per day for 1-2 days of training, plus travel and living expenses for the trainer (based on the same per diem rates described in number 6 above).

The additional training is not mandatory. The high end of the estimate is based on 2 days of training plus travel and living expenses for one trainer.

  1. Opening Advertising and Miscellaneous Costs: $2,500 to $5,000

This item includes grand opening advertising and promotions, legal and accounting fees, one set of vehicle hand controls, security deposits, rental agreement forms, telephone installation, road service set-up costs, and credit card processing arrangements.

  1. Vehicle Insurance: $7,000 to $12,000

Insurance costs vary depending on the size and age of your fleet and the location of the Rent-A-Wreck Business. Please note that Insurance carriers may require you to pay a premium deposit in advance. The deposit usually varies from 2-12 months’ premium. The estimated cost assumes that you will start with at least 12 vehicles.

  1. Additional Funds (3 months operating capital): $5,000 to $25,000

Additional funds include salaries and benefits for employees (other than any draw or salary for the owner/manager), business insurance costs, and miscellaneous ongoing expenses. Please note that this range of expenses is Rent-A-Wreck’s estimate based on its own experience and the experience of its wholly-owned subsidiaries, and the anecdotal evidence given to it by its current franchisees.

  1. Attorneys’ Fees and Costs: Will vary under circumstances. (Due Date:  As incurred.)

Payable to Rent a Wreck if it is forced to retain independent counsel and seek damages or injunctive relief to enforce the Franchise Agreement (whether or not suit is filed) or if Real Deals is required to defend your unsuccessful claim against it.

  1. Veteran Incentives: $2,000 off franchise fee
  2. Term of Agreement and Renewal: The length of the initial franchise term is 5 years. If requirements are met, franchisees can renew for one additional term of 5 years.
  3. Financial Assistance: Rent-A-Wreck offers in-house financing to cover the following: franchise fee, startup costs, equipment, and inventory. Rent-A-Wreck also has relationships with third-party sources which offer financing to cover the following: franchise fee, startup costs, equipment, inventory, accounts receivable, and payroll et al.

In Summary,

  • Initial Investment: $159,105 – $459,607
  • Net-worth Requirement: $250,000
  • Liquid Cash Requirement: $50,000
  • Ongoing Initial Franchise Fee: $18,000 – $75,000
  • Ongoing Royalty Fee: $34/car/mo.
  • Ad Royalty Fee: $8/car/mo.