Byrider Franchise: Revenue, Costs & Profits (2023)

With 148 stores in the country, Byrider is perhaps the most famous car dealership franchise in the US. Yet with a required initial investment of $1,102,000 on average, it’s unfortunately not the most affordable franchise either.

Does this mean you shouldn’t buy the franchise? Not at all. Actually we found that Byrider is one of the most profitable franchise in the automotive and car servicing industry.

Indeed, a Byrider franchise makes $5,662,000 in revenue per year on average, and we estimate its payback (4-5 years) is one of the best in the industry. Want to know more?

In this article we are looking at Byrider and its Franchise Disclosure Document to find out all you should know about this franchise. Let’s dive in!

Key stats

Franchise fee	$50,000
Royalty fee	2.90%
Marketing fee	$18,000
Investment (mid-point)	$1,102,000
Average sales	$5,662,000
Sales to investment ratio	5.1x
Payback period	4-5 years
Minimum net worth	$800,000
Minimum liquid capital	$200,000

What is Byrider?

Byrider is a leading American used car sales and finance franchise headquartered in Carmel, Indiana.

It was founded in 1979 by James F. DeVoe in Marion, Indiana.

The franchise offers a buy-here-pay-here dealership that integrates vehicle sales and service with consumer financing to give the franchisees the greatest control of the business, allowing them to function as a bank or lender.

Byrider started franchising in 1989 and currently has 148 locations in the US, of which 116 are franchised-owned.

Byrider franchise pros and cons

The Pros:

• Absentee ownership: The franchisees have the freedom to take active roles in their businesses or manage them from afar.
• Comprehensive training: The brand offers its franchisees extensive in-person, online, and onsite training programs including resources to help them learn how to start and manage their businesses. Also, they are trained in sales, service, finance, accounting and personnel management.
• Flexible business model: Franchisees can benefit from a flexible business model with different entry points that allows them the freedom to pursue what befits their budgets. 
• Real estate and site selection: Byrider provides its franchisees with site selection assistance to identify a viable business location considering customer demographics and competition. It also helps them with the lease negotiations, design layouts and construction of their centers.
• Exclusive territory protection. Byrider grants its franchisees the right to operate in a protected area. Under the agreement, it does not license any other franchise or operate a competing business in the agreed upon location.
• Financing assistance: The franchisor has relationships with third-party partners to fund its franchisees’ startup costs, franchise fees, equipment, inventory and payroll.
• Marketing and advertising: The franchisor provides its franchisees with publicity and branding tools and resources to attract customers and maintain high sustainability levels. These include local store campaigns, national media, online advertising, loyalty program apps, regional advertising and a dedicated webpage.
• Technology: The franchisor provides its franchisees with proprietary sales CRM to ensure they are backed by verified and centralized information. In addition, it continues to invest in technology upgrades to help them operate smoothly.

The cons:

• Not a home-based business. The franchise cannot be operated from a mobile unit or home. Franchisees must have an office space, warehouse or retail facility.
• Lack of global presence: Byrider does not have locations globally, making it difficult to market to franchisees outside the US.
• Competition: The franchise faces stiff competition from brands such as Sheehy Auto, Auto Sales Directory and Off Lease Only Inc.

How much does a Byrider franchise cost?

On average, the initial investment required to open a Byrider franchise is $1,102,000.

This investment amount is in line with the average investment required for automotive and other car servicing franchises. However, it’s worth noting that the investment amount can vary depending on factors such as the franchise location, its size, and other factors.

According to the latest Franchise Disclosure Document, the investment ranges between $791,000 and $1,412,000.

Startup costs

The investment covers all the startup costs needed to start a used automobile shop. You must also pay the franchisor an initial franchise fee of $50,000.

Note that if you want to buy more than 1 franchise, the initial franchise fee is $35,000 for each additional franchise. Also, if you are a veteran of the U.S. Armed Forces, the fee is $40,000.

In addition to this franchise fee, the investment also covers:

• Formation Costs: furniture, fixtures, equipment, decoration, signs, security system, technology system, security deposit, property utilities, business license, permits, etc.
• Initial Marketing: grand opening advertising
• Operating Costs: opening inventory of vehicles, first 3 months’ rent, and working capital for the first 6 months, etc.

Type of Expenditure	Low	High
Initial Franchise Fee	$50,000	$50,000
Formation Costs	$13,500	$227,500
Initial Marketing	$18,500	$30,000
Operating Costs	$708,750	$1,105,000
Total	$790,750	$1,412,500

What is the revenue of a Byrider franchise?

On average, a Byrider franchise generates $5,662,000 in revenue per year. That’s actually the median revenue for all 105 franchised locations as disclosed in the Franchise Disclosure Document.

Of course, the revenue per franchise vary from one to another: although the top 25% franchises (26 locations) had a median revenue of $8.1 million per year, the 25% lowest performing had a revenue per year of $4.5 million instead.

Quartile	Number of stores	Median Gross Sales
1st Quartile	26	$8,101,727
2nd Quartile	26	$5,999,479
3rd quartile	26	$5,017,683
4th quartile	27	$4,479,241
Total	105	$5,662,451

How profitable is a Byrider franchise?

As per the Franchise Disclosure Document, a Byrider franchise has a median profit margin of 8%. That’s a $461,000 EBITDA.

Profit and loss	Amount	% total revenue	Source
Sales Revenue	$4,235,148		as per FDD
Finance Revenue	$1,424,769		as per FDD
Total revenue	$5,662,451	100%	as per FDD
COGS	$(3,792,900)	67%	as per FDD
Gross Profit	$1,869,551	33%
Operating costs	$(1,408,692)	25%	as per FDD
EBITDA	$460,859	8%

Here again, the profits vary from one franchise to another. Here is the break down of profits per year (and the relevant EBITDA margin) by quartile (as per the FDD):

Quartile	Gross Sales	EBITDA	% margin
1st Quartile	$8,101,727	$1,152,000	14.2%
2nd Quartile	$5,999,479	$695,445	11.6%
3rd quartile	$5,017,683	$399,581	8.0%
4th quartile	$4,479,241	-$15,800	-0.4%
Total	$5,662,451	$460,859	8.1%

Are Byrider franchises good investments?

So are the profits worth the initial investment? When we compare net profits (assuming 5% of revenue) to the initial investment cost of $1,102,000 (on average), we find that Byrider has one of the best payback in the industry (the automotive and car servicing franchise industry).

Indeed, as per our estimates, we find that Byrider has a 4 to 5 years payback period which is excellent. In other words, you would repay investors and any creditors (e.g. banks) that invested in your franchise within 4 to 5 years only.

That’s a great payback period, and therefore we consider Byrider to be a great franchise investment too, from that perspective.

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