AAMCO is a proven, top-rated brand with a clear path toward a profitable future
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 already is laid. We have spent decades establishing ourselves as a preeminent brand, and franchisees benefit from that legacy the day they open their doors.
AAMCO enjoys overwhelming brand recognition in the lucrative transmission segment, which is the direct result of our winning the nation’s trust to fix the most complicated part of the car. This ability is a huge boon to our franchisees, as transmission repair is one of the most expensive parts to fix. It ranges from $2,800 to $3,800 for a rebuilt transmission and up to $8,000 for a transmission replacement, according to Angie’s List, which notes that wear and tear is common in vehicles after crossing the 80,000- to 90,000-mile mark.
This is a tremendous advantage that helps AAMCO franchise owners enjoy much higher margins than traditional auto repair shops that specialize in oil changes — which means they need a much higher customer volume to thrive. AAMCO, as the industry specialist in transmission repair, requires a low volume of customers in comparison.
“The average age of the vehicles that come into our shop is 11-13 years old or older,” says Rob Rajkowski, COO with AAMCO. “Consumers want to hang onto their vehicles longer, and those vehicles need to be repaired. The good news for AAMCO is that we are widely known for complex repair. We fix the powertrain, the engine and, of course, the transmission. We’re a 55-year-old brand, and we’ve fixed over 45 million transmissions in that time. As the car industry shifts toward electric and hybrid vehicles, we have the high ground in that we already are known for complex repair. We are poised to dominate this fast-growing segment.”
According to Hybrid Cars, there are 4 million hybrids on the road, and this number is poised to go up. A new AAA survey reports that 20% of car owners want to buy an electric car or a hybrid in the future, citing environmental accountability and better gas mileage among their reasons. When their warranty runs out at the dealership, owners of these vehicles will have very few repair options outside of the expensive and inconvenient dealerships. This is where AAMCO is primed to thrive.
The cost of repairing hybrid and electric vehicles is one of the most promising revenue streams for AAMCO franchise owners. Replacing the battery of a Nissan Leaf will cost $5,499, and only a qualified and skilled technician will be able to do the job safely. AAMCO invested in hybrid and electric vehicles for technicians to receive hands-on training at our state-of-the-art training facility, AAMCO University. Since we launched the program, we already have trained hundreds of technicians and are introducing marketing campaigns to get the word out that AAMCO is ready, qualified and competent in hybrid and electric vehicle repair.
“We are extremely well positioned in today’s marketplace,” Rajkowski says. “We’ve spent over $800 million in advertising in marketing the brand over 55 years, and no other brand even comes close to matching that or matching our reputation for complex repair.”
The investments AAMCO made in new technologies extend directly to our franchisees, who now have industry-leading tools to help manage their businesses and increase profitability. Our new Point of Sale system provides AAMCO franchisees with executive-class analytics that are updated to the minute and are accessible from anywhere in the world. AAMCO also launched a consumer financing platform, which allows franchise owners to make more high-ticket sales without burdening their customers.
“We are a data-driven company,” says Brian O’Donnell, Senior Vice President of Franchise Development with AAMCO. “While technology has been a challenge to our competitors, it is an advantage for AAMCO because we do have the skill set and capability inside our franchise centers. We have the ability to diagnose electric problems and perform high-quality repairs. Most importantly, we have the capability to be the specialist in the consumer’s mind, because they understand that their vehicles are so complicated that they require a specialist. Our POS system provides KPIs that allow our franchisees to make good business decisions based on real data. Technology is a part of our growth, and we’re able to see the benefits of it today.”
A look at how AAMCO locations are performing, taken from Item 19 of our 2021 FDD
Average Gross Sales of Franchised Centers – 2020
REVENUE BY QUARTILE: The average annual gross sales of the Operating Centers were $713,092, and the median annual gross sales of the Operating Centers per year were $665,791. The following table shows average annual and median gross sales of the Operating Centers by quartile, the count of Operating Centers within each quartile that exceeded the quartile’s average gross sales, and the percentage of those Operating Centers within each quartile that exceeded the quartile’s average gross sales during the fiscal year:
|Quartile||# of Operating Centers||% of Operating Centers||2020 Average Total Sales||2020 Median Total Sales||# of Centers that attained or exceeded Average||% of Centers that attained or exceeded Average|
Average Gross Sales of Quadrant Centers – 2020
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 Operating Centers||% Of Operating Centers||2020 Average Total Sales||2020 Median Total Sales||# of Centers that attained or exceeded Average||% of Centers that attained or exceeded Average|
2020 AAMCO CENTER GROSS SALES VS. 2019 GENERAL REPAIR SHOPS AVERAGE
REVENUE BY QUARTILE: The average annual gross sales of the Operating Centers were $713,092, and the median annual gross sales of the Operating Centers per year were $665,791. The following table shows average annual
and median gross sales of the Operating Centers by quartile, the count of Operating Centers within each
quartile that exceeded the quartile’s average gross sales, and the percentage of those Operating Centers
within each quartile that exceeded the quartile’s average gross sales during the fiscal year:
AVERAGE CENTER PERFORMANCE DATA – 2017
HOW DOES IT TRANSLATE INTO PROFITABILITY?: This financial performance representation is based on the average weekly gross sales and expense
information of 166 total franchised AAMCO Centers (the “P&L Centers”) that operated continuously and reported revenue data throughout the 2017 fiscal year. We provide franchisees’ 2017-reported information in this section because we have not received a sufficient volume of profit-and-loss reports from franchisees since that time in order to be able to synthesize and present such information (including their operating costs) for a more recent fiscal year.
In the normal course of business, 242 among 595 franchised AAMCO Centers that operated continuously throughout fiscal year 2017 provided us actual, detailed profit and loss statements (“P&L’s”)
covering at least one week of their individualized center operations during that year. For consistency and accuracy, we then excluded from the sample any franchisee whose center 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 2017 year (76 total centers excluded, including 39 centers with P&L’s showing revenue +10% or more above the center’s 2017 weekly average, and 37 centers with P&L’s showing revenue -10% or lower than the center’s 2017 weekly average), to arrive at the cohort of 166 P&L Centers for 2017.
The 166 P&L Centers, each of which reflected actual weekly gross sales on its P&L’s within 10% of that center’s weekly average for the year, were dispersed across our internal quadrants for that 2017 year as follows: 27 centers in quadrant 1(A); 46 in quadrant 2(B); 65 in quadrant 3(C); and 28 in quadrant 4(D). Among the P&L Centers, 19 centers had actual annual gross sales of $1 million or more for the 2017 year (the “Million Dollar Centers”). The average 2017 weekly gross sales of the P&L Centers for the actual weeks reported were $12,515, or $650,788 annualized average gross sales per center over 52 weekly periods. The median 2017 weekly gross sales of the P&L Centers for the actual weeks reported were $11,198, or $582,295 annualized median 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.