INDUSTRY BENCHMARK · 19 SYSTEMS · FISCAL 2023–2025
Are automotive franchises a good investment?
Across 19 automotive franchise systems (5,323 franchised units), franchisees exited at an annualized rate of 5.5% in their latest FDD Item 20 filings, while new outlets opened at 7.4%. The median buy-in: a $45K franchise fee, 6.0% royalty, and a total investment of $230K–$1.2M.
People search for a “automotive franchise failure rate,” but no such official number exists. What franchisors must disclose — in the Item 20 outlet tables of the FDD — is how many franchised outlets were terminated, not renewed, or “ceased operations — other reasons” each year. That annualized exit rate is the honest, measurable proxy: it slightly overstates failure (some exits are retirements or sales) and slightly understates distress (struggling units often sell before they close), but unlike survey numbers it comes from legally mandated disclosures.
5.5%
285 exits / 5,229 units at start
7.4%
386 outlets opened
19
verified FDD extractions
5,323
at latest fiscal year end
$45K
FDD Item 5
6.0%
FDD Item 6
$230K–$1.2M
FDD Item 7
10/19
systems disclosing an FPR
SOURCE: FDD ITEM 20 OUTLET TABLES FILED WITH STATE REGULATORS (MINNESOTA CARDS) · 19 SYSTEMS · 19 FILINGS · FISCAL 2023–2025
| Signal | Brand | Index | Grade |
|---|---|---|---|
| STRONGEST | Take 5 | Proven & strong | |
| STRONGEST | Tommy's Express Car Wash | Proven & strong | |
| STRONGEST | Black Optix Tint | Proven & strong | |
| WEAKEST | ProColor Collision | Too new to judge | |
| WEAKEST | Wag N Wash | Too new to judge | |
| WEAKEST | Tire Pros | Showing strain |
HEALTH INDEX: SOURCED 0–100 SCORE FROM EACH BRAND'S OWN FDD ITEM 20 · METHODOLOGY
Automotive franchise questions, answered from the filings
What percentage of automotive franchises fail?
There is no official failure rate, but FDD Item 20 filings show the honest proxy: across 19 automotive franchise systems, 285 franchised outlets left their systems (terminations, non-renewals, and "ceased operations — other") out of 5,229 open at the start of the year — an annualized exit rate of 5.5% in fiscal 2023–2025. Not every exit is a failure (some are retirements or sales), but it is the measurable floor.
How much does a automotive franchise cost?
Across the latest FDD filings of 19 automotive systems, the median initial franchise fee is $45K (Item 5) and the median total investment range is $230K–$1.2M (Item 7).
What royalty do automotive franchises charge?
The median ongoing royalty across 19 automotive franchise systems is 6.0% of gross sales, per Item 6 of their latest FDD filings.
Are automotive franchises growing or shrinking?
In the latest Item 20 filings, automotive systems opened new franchised outlets at an annualized rate of 7.4% while franchisees exited at 5.5%. Openings currently outpace exits in this industry.
What is the healthiest automotive franchise?
By the Watch Desk verdict system (computed from FDD Item 20 with an evidence gate), the strongest verified automotive system tracked is Take 5.
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