How to Open a Green Car Wash

Buying a Green Car Wash Franchise

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   Find green car wash franchise opportunities. With a franchise, you sign an agreement to license a franchisor's trademarks and business methods. You regularly pay royalties and other fees to the franchisor, but they help train you and get your business open. Franchise opportunities are available for mobile and site-specific car washes. You can find green car wash franchises in the following ways:

   1. Look online. Type 'green car wash franchise' and go through the results.
   2. Check out a the 'Franchise Opportunities Handbook' from your local library and see if there are any green car wash franchises listed. This handbook is published by the U.S. Department of Commerce.^[1]
   3. Hire a franchise broker. For a fee, you could hire someone to find franchise opportunities for you. Franchise brokers typically advertise online or in trade magazines. They don't work for free but instead typically charge a percentage of the sale as a commission.^[2]
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   Consider if a franchise is right for you. A franchise has many advantages and disadvantages. You should think them through before deciding to go ahead with buying one. If you don't open a franchise, then you will need to research how to open a green car wash from scratch.

   1. One advantage is the support the franchisor gives you. Because they want to protect their brand reputation, they have an incentive to make sure you succeed. A franchise can help you find a location for your business, get necessary permits, and train you so that you are ready to hit the ground running when you open.^[3]
   2. A disadvantage of running a franchise is that they can put limits on how you run the business. For example, if the franchisor wants to offer a discount in the month of August, you may have no choice but to offer the discount.
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   Submit an application. Once you find a green franchise, you can apply, usually with an online application. By applying, you don't lock yourself into buying the franchise. However, the application gives the franchisor necessary information about you so they can analyze whether you are a good candidate and whether they want to proceed.
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   Read the Franchise Disclosure Document (FDD). The franchisor must give you a copy of this document. It contains a wealth of information about the franchise that can help you make a decision about whether you want to go forward. Pay attention to the following information:^[4]

   1. A list of the initial and ongoing costs. You typically have to pay franchise fees upfront. The FDD should tell you how much.
   2. Background information on the franchise's executives.
   3. Litigation history. You will receive a list of lawsuits the franchisor has been involved in. Look to see if the franchisor has ever sued a franchisee. Also look for lawsuits against the franchisor alleging fraud, deceptive trade practices, or violations of the franchise law.
   4. Audited financial statements.
   5. Training programs provided by the franchisor.
   6. Your obligations with respect to advertising. Most franchisors require that you contribute a percentage of your sales to local, regional, and national advertisement.
   7. Any representation of how much its franchises make. The FDD must explain the basis for this information.
   8. The names of former franchisees. You should contact them and ask why they left the business and whether they would work with the franchisor again.
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   Obtain the necessary professional help. You will probably not be able to understand some of the information in the FDD. Accordingly, you should find professional help. Look for the following:

   1. A franchise lawyer. A lawyer can help you understand the FDD and can also help you throughout the life of your business. You should ask for a referral to a franchise lawyer by contacting your local or state bar association.
   2. An accountant. Your accountant can analyze the financial disclosures in the FDD and help you understand if the car wash is a solid investment. You can get a referral to an accountant by asking another business owner or contacting your state's Society of Certified Public Accountants.^[5]
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   Secure financing. Franchises require quite a bit in start-up capital. The FDD should tell you the amount you need to pay in franchise fees, as well as how much you will probably have to spend in total to start your green car wash business. You have different financing options:^[6]

   1. Get an SBA loan. The Small Business Administration can guarantee loans for qualifying borrowers. You usually need excellent credit and a large down payment. You also must present a business plan before a bank will finance you. The business plan will describe your products or services, your market, and your marketing plan. You can use the franchise's FDD to help draft your business plan.^[7]
   2. Ask for a commercial bank loan. Banks may extend a loan even if the SBA doesn't guarantee it. However, you can expect to pay higher interest rates and have less favorable terms than with an SBA loan.
   3. Check if franchisor financing is available. Some franchisors are willing to offer financing.
   4. Fund the purchase with a second mortgage or by using money saved in your retirement accounts.
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   Review the franchise agreement. The franchise agreement is usually quite lengthy. You should review it with your attorney.^[8] You generally can't negotiate changes to a franchise agreement, although some franchisors might be open to negotiating some parts. Pay attention to the following clauses in the agreement:

   1. Your obligations. The franchise agreement will spell out in detail what you can and can't do as a franchisee. Make sure you understand all of your obligations.
   2. How the franchisor can terminate your business.
   3. How disputes will be resolved. Often, the franchise agreement will require that you arbitrate or mediate any disputes. Arbitration is like a trial but private. With mediation, you and the franchisor meet with a neutral third party to try and reach agreement.
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   Sign the agreement. Only sign if you agree with everything. If you didn't understand something, then call or write a letter to the franchisor and ask for clarification in writing. When everything is in order, sign the franchise agreement.

   1. Keep a copy of the agreement with you at your place of business. You will need to meet all obligations under your agreement.