Verified — real FDD extraction
SBA-eligible · directory code S2138 since 2017
Carstar
Automotive · independent · est. —
CARSTAR is a network of collision-repair and auto-body shops that fix vehicle damage from accidents, handling bodywork, painting, and insurance claims coordination. Shops restore damaged cars to pre-accident condition. A franchisee owns and operates a body shop, managing technicians and insurer relationships.
Carstar net unit count grew +5.6% from 2022–2024 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Proven & steady
Distress
A real track record with an unremarkable region of the ledger: neither the growth nor the exits stand out, for better or worse. The main concern in the record: too many owners are failing outright rather than selling.
Exit rate · latest year
7.0%
vs 5.5% across 19 automotive systems
Cost to open
$24K–$804K
Item 7 total investment range
SBA loan defaults
6.1%
vs 14.8% avg across rated brands
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2022–2024
Survival record
FDD Item 20 · outlet status by year
In fiscal 2024, 32 of 455 franchised outlets left the system — a 7.0% annualized exit rate, vs 5.5% across 19 automotive systems. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Outlets at start | 429 | 446 | 455 |
| Opened | 59 | 41 | 48 |
| Transfers | 26 | 8 | 16 |
| Terminations | 29 | 30 | 31 |
| Non-renewals | 3 | 2 | 1 |
| Reacquired by franchisor | 0 | 0 | 0 |
| Ceased — other reasons | 0 | 0 | 0 |
| Outlets at end | 446 | 455 | 471 |
| Net change | +17 | +9 | +16 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 122 SBA-backed loans to Carstar franchisees since 1992. Of the 66 that have resolved, 6.1% were charged off (defaulted) rather than paid in full, versus 14.8% across 576 rated brands.
6.1%
4 of 66 resolved defaulted
67.9%
avg. charged-off $ ÷ approved $
4.1%
default rate × loss severity
$1,147,450
what recent franchisees borrowed
100 mo
approval → charge-off, defaulted loans
22 vs 15
distinct banks still lending
Charge-off rate by loan approval year (%)
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO CARSTAR BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
The owner's side of the deal
FDD × federal loan record
Who finances it
First Commonwealth Bank
6.0% of this brand's loans
Who buys it
77.8%
first-time franchise owners
The rest already owned at least one other franchise. Across the corpus, brands bought mostly by repeat operators charge off at roughly 10% versus 17% for brands sold mostly to newcomers.
Does experience help here?
Not enough resolved loans to split
Computed from 122 SBA 7(a)/504 loans to Carstar franchisees joined to the brand's own FDD. Debt service assumes level amortization at the average disclosed term and rate. A lender's rate excludes its loans to this brand, so it reads the lender, not the brand.
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $10K franchise fee (Item 5) and a total investment of $24K–$804K (Item 7). The franchisor publishes an earnings claim (Item 19) — read its methodology closely.
To open (Item 7)
$24K–$804K
all-in investment range
Franchise fee (Item 5)
$10K
upfront, one-time
Royalty (Item 6)
1.5%
of sales, ongoing
Your figure — cross-check against this brand's Item 19 and current-owner validation.
Royalty you'd pay / yr
$15K
1.5% of sales, before profit
Over a 10-yr term
$150K
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for Carstar with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 7 wage cases against operators of this system, recovering $47K in back wages for 38 workers. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
7
Back wages owed
$47K
Employees affected
38
Since 2020
4
Read this carefully. The employers in these cases are individual Carstar franchisees — separately owned businesses operating under the brand name — not Carstar itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2025.
Modeled risk
FDD Risk Score · modeled from the public record
Modeled from the public record, this brand looks safer than 62% of systems we score.
Risk percentile
38 / 100
Loan-corroborated
Modeled SBA charge-off
11.1%
Observed SBA charge-off
6.1%
Top drivers: System size (log units) (lowers) · Share financed by high-loss lenders (lowers) · Single-lender dependence (raises) · Investment ceiling (log) (lowers). 15+ resolved loans stand behind this estimate. A linear scorecard built from this brand's own disclosure figures plus the federal loan record behind its franchisees; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
CourtListener/RECAP · 7mo ago
CourtListener/RECAP · 7mo ago
CourtListener/RECAP · 18mo ago
CourtListener/RECAP · 21mo ago
CourtListener/RECAP · 23mo ago
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing Carstar's numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →Carstar franchise questions, answered from the filings
What percentage of Carstar franchises closed last year?
In Carstar's latest FDD Item 20 (fiscal 2024), 32 of 455 franchised outlets left the system — an annualized exit rate of 7.0% — compared with 5.5% across 19 automotive systems tracked here. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a Carstar franchise cost?
Per Carstar's 2025 FDD, buying in requires an initial franchise fee of $10K (Item 5) and a total initial investment of $24K–$804K (Item 7).
What royalty does Carstar charge?
Carstar charges an ongoing royalty of 1.5% of gross sales, per Item 6 of its 2025 FDD.
Does Carstar disclose earnings (Item 19)?
Yes — Carstar makes a financial performance representation in Item 19 of its 2025 FDD. Read it closely: franchisors choose which units and which metrics to include.
How often do SBA loans for Carstar franchises default?
Across 122 SBA-backed loans to Carstar franchisees since 1992, 4 of the 66 that have resolved were charged off — a 6.1% default rate, versus about 14.8% across all rated franchise brands. This is the lender's-eye view of franchisee failure, drawn from public SBA 7(a)/504 FOIA data and independent of the franchisor's own disclosures.