CARSTAR Franchise FDD, Profits, Costs & Fees (2024)
CARSTAR, a leading franchise in the collision repair industry, was founded in 1989 in Liberty, Missouri.
It quickly grew from a single store into a prominent brand with over 446 locations across North America, making it one of the largest multi-store operators of independently owned and operated collision repair facilities. The headquarters is now located in Charlotte, North Carolina.
The franchise started expanding into Canada just five years after its inception, solidifying its presence in both the United States and Canada.
CARSTAR’s services include auto-collision repair, paintless dent repair, hail damage repair, fleet services, and 24/7 accident assistance. These services are backed by a national warranty, ensuring high-quality and reliable repair work for customers.
CARSTAR differentiates itself through its robust operational support and cutting-edge training programs. The CARSTAR University offers extensive training modules, keeping franchisees and their staff up-to-date with the latest industry trends and repair technologies.
CARSTAR Franchise Stats
Number of units: 416 franchises
Initial investment: $298,000 - $804,000
Average revenue (AUV): $2,265,000
Initial Investment
How much does it cost to start a CARSTAR franchise? It costs on average between $298,000 – $804,000 to start a CARSTAR franchised location.
This includes costs for construction, equipment, inventory, and initial operating expenses. The exact amount depends on various factors, including the location, and whether the franchisee chooses to lease or purchase the property.
| Type of Expenditure | Low Estimate (NEW CARSTAR Facility) | High Estimate (NEW CARSTAR Facility) |
|---|---|---|
| Initial Franchise Fee | $10,000 | $10,000 |
| Integration Fee | $10,000 | $10,000 |
| Facility | $50,000 | $200,000 |
| Furniture, Fixtures, Equipment | $200,000 | $400,000 |
| Computer Hardware/Software | $9,000 | $27,000 |
| Training | $0 | $3,300 |
| Initial Inventory | $5,000 | $50,000 |
| Signage | $4,200 | $20,000 |
| Additional Funds – 3 Months | $10,000 | $84,000 |
| TOTAL ESTIMATED INITIAL INVESTMENT | $298,200 | $804,300 |
Average Revenue (AUV)
How much revenue can you make with a CARSTAR franchise? A CARSTAR franchised center makes on average $2,265,000 in revenue (AUV) per year.
Here is the extract from the Franchise Disclosure Document:
This compares to $1,149,000 yearly revenue for similar auto repair franchises. Below are 10 CARSTAR competitors as a comparison:
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Carstar Franchise Disclosure Document
Recent Legal Disputes and Litigation
CARSTAR has faced several legal disputes with its franchisees in recent years. One notable case involves Wilson Auto Collision, Inc., which operated as a CARSTAR franchisee under the names Wilson CARSTAR Niagara and Wilson CARSTAR Green Bay West.
Filed in March 2024, this lawsuit centers around contractual disagreements between CARSTAR Franchisor SPV LLC and Wilson Auto Collision regarding the franchise agreement’s terms and obligations. This case is being litigated in the U.S. District Court for the Western District of North Carolina.
Another significant lawsuit involved Alice Motor Company, LLC, which operated as Carstar Collision of Alice. This case, filed in August 2019, centered on disputes over franchise contract violations, leading to the termination of the franchise agreement. The lawsuit was filed in the Southern District of Texas, with CARSTAR alleging breach of the franchise contract and seeking damages.
Additionally, in 2020, CARSTAR brought a legal action against Collision Express of Ohio, Inc., citing breach of the franchise agreement. This lawsuit, filed in the Southern District of Ohio, sought to recover damages related to unpaid fees and violations of operational standards set by the franchisor.
These legal actions reflect the ongoing challenges between CARSTAR and its franchisees, often arising from contractual disputes and the enforcement of franchise obligations. Franchisees typically face claims related to non-payment of fees or failure to meet the operational guidelines outlined in their agreements.
Frequently Asked Questions
How many CARSTAR locations are there?
As of the latest data, CARSTAR operates over 750 locations across the United States and Canada. Out of these, 440 locations are in the U.S., spread across 39 states and territories. The majority of these centers are franchise-owned, with only a small number, approximately 2 locations, being company-owned.
What is the total investment required to open a CARSTAR franchise?
The total investment required to open a CARSTAR franchise ranges from $298,000 to $804,000.
What are the ongoing fees for a CARSTAR franchise?
For a CARSTAR franchise, the ongoing fees include a royalty fee and a marketing fee. The royalty fee is typically set at 5.5% of gross sales, which is paid to the franchisor in exchange for continued use of the CARSTAR brand and access to operational support.
In addition, franchisees are required to contribute to a marketing fund, with the marketing/advertising fee usually around 2% of gross sales. This fee supports national and regional advertising campaigns, helping to promote the CARSTAR brand across markets and drive business to individual franchise locations.
What are the financial requirements to become a CARSTAR franchisee?
To become a CARSTAR franchisee, you need a minimum net worth of $500,000 and liquid capital of at least $200,000. These financial requirements are in place to ensure that franchisees have the resources necessary to cover initial investments and ongoing operational costs.
How much can a CARSTAR franchise owner expect to earn?
The average gross sales for a CARSTAR franchise are approximately $ 2.27 million per location. Assuming a 15% operating profit margin, $2.27 million yearly revenue can result in $340,500 EBITDA annually.
Who owns CARSTAR?
CARSTAR is owned by Driven Brands, a large automotive services company based in Charlotte, North Carolina. Driven Brands operates several well-known brands in the automotive industry, including Maaco, Meineke, and Take 5 Oil Change.
CARSTAR was acquired by Driven Brands in 2015, expanding its portfolio in the collision repair sector and leveraging the resources of a large corporate group to provide operational and marketing support to its franchisees.
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