Self-service car washes

Depending on the number of stands the entire cost of constructing a 3-stand self-service car wash (hiring building workers by oneself) is about PLN 500,000, however partners have to make their own contribution in the amount of only 30% of the total amount.
 
"Franchisees may increasingly count on financial support for investments.  BZ WBK Bank has offered loans to its potential franchisees to open partnership offices. Auto-Spa in Wroclaw is a new player on the franchise market; it offers its partners the financing of investments by means of loans taken on its own behalf. It is the first case on the Polish franchise market where a loanee is the organiser of a system."

Source: http://www.inwestycje.pl/franchising/raport_o_rynku_franczyzy_w_polsce_2011;119902;0.html

System participation costs:

• Input (single) payment from PLN 10,000 to PLN 14,000 net per one wash stand (design project, preliminary staff trainings, marketing materials and advertising campaign for opening),
• Current (monthly) payment PLN 500 – 700 per one wash stand,
• Car wash costs - contingent on the size of a car wash, the way it is built, selected supplier of facilities, equipment option and way of financing - from PLN 150,000 (which constitutes 30% of contribution made into investment).

Self-service car washes generate very low fixed costs. It is neither necessary to employ a lot of people, specialists nor to use highly complicated, automated machines. The car wash may operate with only one employee - a person coordinating its operation and ensuring the continuity of its functioning by means of proper maintenance, refilling chemical agents and providing help to potential clients.
 
We can help you minimise the costs of current operation of a car wash and obtain preferential prices for the purchase of machines and chemical agents. We are equipped with experience and business contacts which will allow you to solve many issues and facilitate many processes. You may also obtain help and support from us in the scope of both financing and building process.
 
Auto-Spa Franchise Program Offer has been examined and tested on the basis of personal experience and already erected and functioning car washes.  Detailed financial calculations as far as the profitability of the car wash is concerned are in our possession, as well as loan simulations.

Running a self-service jet car wash is characterised by high EBITDA profitability. According to the estimates of the company, the operation of a 3-stand wash brings more than 50% of profit. It means that if we assume that the revenue constitutes the amount of PLN 10,000 per stand, the income generated will be about PLN 15,000 per month. An estimated cost structure is presented in the graph below.



3-stand car wash - forecast of financial results with external financing (leasing)

	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8
Net sales	202 064	394 272	394 272	394 272	394 272	394 272	394 272	394 272
Operating costs	99 345	267 062	262 317	262 987	263 675	264 379	265 102	175 565
Leasing	-	90 277	90 277	90 277	90 277	90 277	90 277	-
Space rental	18 726	26 174	26 829	27 499	28 187	28 892	29 614	30 354
Chemical agents & utilities	48 210	94 068	94 068	94 068	94 068	94 068	94 068	94 068
Maintenance & repairs	5 200	7 800	2 400	2 400	2 400	2 400	2 400	2 400
Salaries and administration	8 000	12 000	12 000	12 000	12 000	12 000	12 000	12 000
Insurance and security	1 600	2 400	2 400	2 400	2 400	2 400	2 400	2 400
Collection and bank charges	808	1 577	1 577	1 577	1 577	1 577	1 577	1 577
Property tax	-	7 566	7 566	7 566	7 566	7 566	7 566	7 566
Franchise fee	16 800	25 200	25 200	25 200	25 200	25 200	25 200	25 200
Leasing: interest, fee	43 558	39 272	32 186	25 099	18 012	10 925	3 839	-
Net profit (loss)	47 797	71 229	80 814	86 011	91 194	96 363	101 519	177 152
Cumulative net profit (loss)	47 797	119 026	199 840	285 851	377 045	473 408	574 927	752 079
Return on own funds invested **	17,44%	43,42%	72,90%	104,27%	137,54%	172,69%	209,72%	274,34%
Lease repayment (including interest)	43 558	129 549	122 462	115 375	108 289	101 202	94 115	-
Cash after leasing repayment	47 797	119 026	199 840	285 851	377 045	473 408	574 927	752 079

* lease payments with interest                                
** own contribution 30%  

* interest rate based on WIBOR 1M of 26.05.2011, amounting to 4.35%
* lease fee

Assumptions

- 39 cars/stand
- 8 minutes/average washing
- investment cost: PLN 249,000 (30%)

Comments on the financial results

A full return on own funds invested in a car wash with 70% share of external financing will be achieved within 3 years after its purchase. In this case, the own investment amounts to 34% of the entire investment.  After 8 years, the return on own funds invested will exceed 280%.

After 8 years, when the lease instalments and loan interest have been paid in full, cash in the amount of PLN 730 thousand will be generated.

The loan constitutes 66% of the investment and is repaid at variable interest rate. The loan simulation was based on a WIBOR 1M rate of May 26, 2011.

Loan interest is paid at the end of each month. At the end of the first year, the interest amounts to PLN 3,332, after two years it will be PLN 2,823, after three years - PLN 2,268; after four years - PLN 1,712; after five years - PLN 1,157; after six - PLN 601.  Loan origination fee is payable within the first period in the amount of PLN 7,641.

The principal instalments of PLN 7,075 will be paid after one year from the commencement of the business, for the period of 6 years.

It should be noted that the cash earned in the first period of the car wash operations allows paying off the loan earlier than within the assumed 72 months. This will result in lower interest costs and will translate into an improvement of financial result of the project and higher return on own funds invested.
 
The above information does not constitute an offer within the meaning of the Civil Code.