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At the beginning of the year, “PRO BRO”, the leaders in car wash services, signed contracts for the development of 10 new facilities in Vilnius, Kaunas, Klaipėda, Šiauliai, Panevėžys, and Alytus. The company has begun to search for buyers willing to purchase its franchises.
“PRO BRO” has also presented another innovation to its buyers: the option to choose from four different models of tunnel car washes.
“The construction of several facilities is already underway, while others will be launched soon. In addition, we are planning to have agreements on at least a few more facilities across Lithuania this year. And we have recently started selling franchises for the new facilities,” says Kristijonas Minelga, the Head of Business Development and Franchise at “PRO BRO”.
“PRO BRO”, which has been operating only in the major cities across Lithuania for a considerable time, is expanding its network this year with new facilities coming not just in Vilnius, Kaunas, and Klaipėda, but also in Šiauliai, Panevėžys and Alytus, with some of them opening as early as in 2021, and others, by mid-2022.
“The capabilities of mid-and smaller-sized tunnel car wash models let us take steps to enter such towns that had not been in our development plans before. However, we see the demand from people; we feel there is great potential there, and we wish to help consumers with their day-to-day car care”, Mr. Minelga shares his thoughts.
Four models of car washes
“PRO BRO” is looking for the franchisees that will take over the management of its new facilities before the facilities opened: when signing franchise agreements, the new owners pay the initial franchise fees and allocate the sum required for the car wash operations to take off.
Investors are offered options of four different models of tunnel car washes by “PRO BRO”. These fall into categories based on the size of the car wash and its capacity ranging from the smallest Smart, which can handle an average of 60 cars per hour, followed by MINI, 100 cars hourly, MIDI, 160 cars per hour, to MAXI, which can have more than 220 cars washed hourly.
According to Mr. Minelga, the ability to diversify given the advantages of different models gives flexibility, lets future owners adapt according to their financial capacity, and make a more careful evaluation of return on investment and breakeven point.
“It is easy to make the calculations: for instance, if the MAXI model with the highest capacity may have 500 thousand cars washed annually at its maximum capacity, the annual business turnover will exceed 2 million euro. This investment will pay off in 5 to 6 years”, says the expert.
What model is to be built at a particular location is determined by a detailed market analysis to be carried out in advance. It assesses car traffic and the demand for car wash services in that particular area.
“All our facilities are built on the city’s/town’s most busy car traffic arteries, in well-visible areas with convenient access. As we expand into other towns, we also offer standardized models, introduce innovative water recycling systems in all new facilities and try to achieve a friendly relationship with nature,” says Mr. Minelga.
Proven business model
According to the expert, today no doubts are remaining about the appeal of the business model. Furthermore, “PRO BRO” no longer finds the selling of its franchises to be new: four previous facilities have been sold as a going concern priced at the value of the EBITDA multiple, while the fifth facility close to Gariūnai, as a greenfield franchise for investment in a facility that is yet to be built.
“The tunnel car wash being built near Gariūnai Business Park is set to open to its customers by the middle of this year, but the facility had been sold a long time ago. The buyer of the franchise secured a bank’s financing and dedicated funds for the business to take off. They trusted our business model and invested in a completely new car wash which is yet to be built,” says Mr. Minelga.
According to the interviewee, the franchisees that had purchased the first car washes are also showing interest in the new facilities. Some of them, having seen the effective performance of the model, are considering the possibility of purchasing their second car wash.
Clear requirements for buyers
Moreover, the future franchisees are subject to individual requirements: they should be involved in the business management themselves and be business managers.
Their reputation, experience in business management, and financial capacity are also of importance as for them to be able to purchase a new business, they need to have their own funds for the initial investment. “Depending on the chosen model and the intensity of bank financing, the cost of the initial investment in the Smart model stars at 300 thousand, with the sum increasing proportionately if larger models are chosen,” says Mr. Minelga.
According to him, “PRO BRO” will lend a hand in solving key issues and coming to an agreement on the best funding terms and conditions; also, it will assist with business plans. The franchisee will hit a fully complete facility.
“We offer great support to the franchisee: a proven business model, well-known brand, shared customer pool, effective marketing opportunities, and business management training. We guarantee technical support for the equipment, introduction of innovation and technological advances, and supply of patented, franchise-only products for tunnel car washes,” comments the interviewee.
According to him, over 22 years in business, “PRO BRO” has gained a wealth of experience, which will be shared, with new buyers. The franchisor will provide strong support during and after the opening of the car wash and for the entire contract period – the buyer will come to the facility when everything is already built, designed, solved, and fully prepared for a key handover.