How Have AAMCO Centers Performed Financially?
AAMCO is a proven, top-rated auto repair franchise with a loyal base of customers and two dynamic revenue streams
One of the biggest positives in partnering with a nationally known brand with a 50-year history of expertise and customer trust is that the groundwork is already laid. We have spent decades establishing ourselves as a preeminent brand, and franchisees benefit from that legacy the day they open their doors.
As we cruise into the future, our AAMCO franchises have the opportunity to grow with a second revenue stream: the Total Car Care market. Though transmission work still generates 65% of our business revenue, that second revenue stream has been expanding at a double-digit annual pace. In 2016, 66% of our customers visited us for Total Car Care, and we expect that number to rise as we continue to advertise in national and local markets.
We calculate that the average automobile customer will spend more than $54,000 on repair during the time they own and operate a car. If that customer has two vehicles — and most households have two vehicles or more — that amount doubles. Even though the average transmission rebuild costs a customer about $2,500, total spending on transmission work is a small fraction of car care spending. Most people only consider replacing a transmission on a vehicle once. They get oil changes, brake work and tune-ups continually. The bulk of that $54,000-per-customer lifetime spending goes toward other repair services.
The real power and the direction of the AAMCO franchise opportunity going forward is that by leveraging our expertise in transmissions into Total Car Care, we increase the value of every customer to our franchisees — they become lifetime customers instead of transactional ones, and we are able to grab an increasingly large share of those customers’ car repair dollars.
Here’s a look at how AAMCO franchises are performing, taken from the Item 19 section of our 2016 Franchise Disclosure Document.
Average Gross Sales of Franchised Centers – 2016
REVENUE BY QUARTILE: The average annual gross sales of all Operating Centers were $673,746. The following table shows average annual gross sales of the Operating Centers by quartile, and the count and percentage of Operating Centers within each quartile that exceeded the quartile’s average gross sales, during the fiscal year:
|Quartile||# of Centers||% of Network||2014 Average Total Sales||# of Centers that attained or exceeded Average||% of Centers that attained or exceeded Average|
Average Gross Sales of Quadrant Centers – 2016
REVENUE BY QUADRANT: AAAMCO also groups franchisees into quadrants, using a mix of performance data as well as franchisee evaluations, which result in operations being designated part of an A, B, C or D group. Our internal formula for assigning centers to quadrants is a systematic approach based on a center’s sales, years of operation, multiple center ownership, the franchisee’s ability to expand and operate additional centers, the form of management, the level of day-to-day involvement in center operations, customer satisfaction history, and history of remaining in good standing as a franchisee, including payment and accounts receivable history and compliance with franchise obligations. The quadrants help us craft franchise support appropriate to each location.
Here’s a look at the performance of centers in each quadrant:
|Quadrant||# of Centers||% of Network||2014
Average Gross Sales
|# of Centers that attained or exceeded Average||% of Centers that attained or exceeded Average|
2016 AAMCO CENTER GROSS SALES vs. 2015 GENERAL REPAIR SHOPS AVERAGE
OUTPERFORMING THE INDUSTRY: As you can see below, the average AAMCO franchise operation far exceeds the amount of revenue generated by general repair shops overall. The “general repair shop” data is from the AutoCare Fact Book 2017, published by the Auto Care Association. The top two quadrants of AAMCO centers generate nearly twice as much revenue as an average general repair shop.
Average Center Performance Data – 2016
HOW DOES IT TRANSLATE INTO PROFITABILITY?: This financial performance representation is based on the average weekly gross sales and expense information of 165 franchised AAMCO Centers (the “P&L Centers”) operating between January 1, 2016 and December 31, 2016. In the normal course of business, a total of 254 Centers provided us actual profit and loss statements (“P&L’s”) that covered at least one week of center operations in 2016. For consistency and accuracy, we excluded from the sample any center whose P&L’s for the reported timeframe showed average weekly gross sales that varied more than 10%, whether higher or lower, from that specific center’s weekly average gross sales across the entire year (89 total centers excluded, including 47 centers with P&L’s showing revenue +10% or more above the center’s 2016 weekly average and 42 centers with P&L’s showing revenue that was -10% or lower than the center’s 2016 weekly average).
The 165 P&L Centers, each of which reflected actual weekly gross sales on its P&L’s within 10% of that center’s 2016 weekly average, were dispersed across our internal quadrants (discussed above in this Item 19) as follows: 25 centers in quadrant 1(A); 66 in quadrant 2(B); 58 in quadrant 3(C); and 16 in quadrant 4(D). Among the P&L Centers, 26 centers had actual annual gross sales of $1 million or more between January 1, 2016 and December 31, 2016 (the “Million Dollar Centers”). The average weekly gross sales of the P&L Centers for the actual weeks reported was $12,258, or $637,403 annualized average gross sales per center over 52 weekly periods.
Your individual earnings will vary depending on your market, the mix of services, how much you spend on marketing, and other factors. To learn more, fill out the form to download our franchise report and start a conversation with us.