Tommy’s Express Franchise: Revenue, Costs & Profits (2023)

Since it started franchising in 2016, Tommy’s Express has expanded aggressively and now has 116 car wash locations in the US, of which 110 are franchise-owned. One of the leading car wash brand in the country, Tommy’s Express is a very popular option for those who can afford the price.

Indeed, as a franchisee you would have to invest on average $6,232,000 to open a new franchise. Is this worth the profits?

In this article we are looking at Tommy’s Express and its Franchise Disclosure Document. We will see how much the franchise really costs, how profitable it really is, and whether it’s a good investment. Let’s dive in!

Key stats

Franchise fee	$50,000
Royalty fee	4.0%
Marketing fee	3.0%
Investment (mid-point)	$6,232,000
Average sales	$3,094,000
Sales to investment ratio	0.3x
Payback period	10 years
Minimum net worth	$2,000,000
Minimum liquid capital	$1,000,000

What is Tommy’s Express?

Tommy’s Express is a chain of car wash professionals focused on providing franchisees with an opportunity in the car care industry.

The franchise operates luxuriously designed car wash centers, offering services such as Tommy Guard® and Ceramic Body Wax®, wheel cleaning and tire gloss and underbody flush and spot-free rinse.

It was founded in 1969 in Holland, Michigan, where it is still based.

Tommy’s Express’s franchising journey began in 2016 and it currently has 147 locations in the US.

Tommy’s Express franchise: pros and cons

The Pros:

• Quality training: Tommy’s Express offers its franchisees 180 hours of on-the-job training and 60 hours of classroom training to equip them with the basics of the business. Franchisees are also trained in hospitality, including hiring and training qualified staff. 
• Marketing and social media: The brand has established aggressive marketing tools to help franchisees spread the word about their locations and increase leads. Franchisees can leverage nationwide brand popularity, regional advertising, loyalty program apps, social media, email marketing, digital ads and local area marketing campaigns.
• Exclusive territory protection: Tommy’s Express grants its franchisees rights to operate in a protected territory. As long as the franchisees comply with the franchise agreement, the franchisor does not license any other franchise or operate competing brands in the protected location.
• Third-party financing: Tommy’s Express has relationships with third-party partners to fund its franchisees for startup costs, franchise fees, development and ongoing costs.
• Site selection and real estate: The brand has a dedicated real estate team to help franchisees with site selection guidance to locate the best car wash location.It also helps with lease negotiations, design and development.
• Flexible design models: The franchisor offers its franchisees different franchise designs to choose what fits their budgets and make the best out of the available real estate opportunities in their locations. These include the express tunnel wash, which caters to higher traffic, the flex or multi-profit gas/C-store/wash model for larger investments or the mini model for smaller sites.
• Technology suite: The franchise utilizes the latest technology to help franchisees stand out from the competition and improve sales. Franchisees get access to modern technology such as a proprietary license plate reader system, advanced point-of-sale programs, dashboard and manager apps and a user-friendly retail app.

The cons:

• Not a passive investment: The Tommy’s Express franchise does not allow for absentee ownership. Franchisees must be actively involved in the day-to-day activities of their businesses.
• Not a home-based or mobile business: The franchise cannot be operated from home or a mobile unit. Franchisees must have an established office space.
• No global presence: The franchise does not have locations globally. It may not be attractive to franchisees outside the US.

How much does a Tommy’s Express franchise cost?

Tommy’s Express is a car wash franchise that requires a significant initial investment upfront. Indeed, the average investment to open a Tommy’s Express franchise is $6,232,000. This includes an initial franchise fee of $50,000.

The investment amount is higher than the average investment required for other automotive franchises. However, it’s worth noting that the investment amount can vary depending on factors such as the franchise location, size, and other factors. As per the Franchise Disclosure Document, the initial investment ranges from $5,296,000 to $7,167,000.

Startup costs

The investment covers all the startup costs you may need to start a car wash center. You must pay the franchisor an initial franchise fee of $50,000. If you want to buy more than 1 franchise, the franchise fee is $40,000 for each additional franchise. If you are a veteran of the U.S. Armed Forces, you will get a 20% discount.

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

• Formation Costs: civil engineering, water tap fee, site report & testing, developer, professional fees, building, construction, business permits & license,  training expense, furniture, fixture, etc.
• Essential Equipment: equipment package, POS, wash club app, vacuums, guardian control system, 
• Initial Marketing: Tommy marketing kit, grand opening marketing
• Operating Costs: supplies, insurance, first 3 months’ mortgage rent, and working capital, etc.

Type of Expenditure	Low	High
Initial Franchise Fee	$50,000	$50,000
Formation Costs	$2,120,850	$3,551,211
Essential Equipment	$2,918,621	$3,277,515
Initial Marketing	$15,000	$15,000
Operating Costs	$192,000	$273,000
Total	$5,296,471	$7,166,726

What is the turnover of a Tommy’s Express franchise?

A Tommy’s Express car wash makes $3,094,000 in revenue per year on average.

It’s important to note though that this is the median revenue for all “mature” car washes i.e. those that were opened for more than 3 years.

Indeed, unsurprisingly there is a positive correlation between the age of a car wash and its turnover as you can see below.

Yet, unlike other similar franchises, Tommy’s Express has a remarkable feat: the revenue per car wash is pretty much the same for all franchises as you can see in the table below.

Indeed, the difference between the lowest and highest revenue is rather small (at least for “mature” car wash franchises). In other words, if you were to open a new Tommy’s Express franchise, you can expect your revenue to be in these ranges too with a high degree of confidence.

How profitable is a Tommy’s Express franchise?

We estimate that the average Tommy’s Express franchise makes $804,220 in profits per year (26% EBITDA margin).

Note that Tommy’s Express provides a detailed profit and loss in its Franchise Disclosure Document down to EBITDAR. Therefore the numbers presented below are directly taken from the FDD, yet we:

• Used the median revenue for mature franchises of $3,093,558; and
• used the average rent per franchise (from Item 7) to calculate EBITDA

It’s important to note that unlike other automotive franchises like car repairs, car wash companies have very high EBITDA margins (~25% vs. 10-15% for car repair). This makes a lot of sense since car wash businesses have rather low operating costs (especially low staff costs and COGS).

In other words, Tommy’s Express, like any other car wash business, is a very profitable franchise.

Profit and loss	Amount	% revenue	Source
Revenue	$3,093,558	100%	as per FDD
COGS (detergents)	$(228,153)	7%	as per FDD
Repair & maintenance	$(99,075)	3%	as per FDD
Gross Profit	$2,766,330	89%	as per FDD
Staff	$(453,445)	15%	as per FDD
Utilities	$(194,245)	6%	as per FDD
Royalty fees	$(123,742)	4%	as per FDD
Marketing*	$(154,678)*	5%	as per FDD*
Other operating costs	$(466,000)	15%	as per FDD
EBITDAR	$1,374,220	44%	as per FDD
Rent	$(570,000)	18%	as per FDD**
EBITDA	$804,220	26%

Is a Tommy’s Express franchise a good investment?

So does this mean you should buy the franchise? Not necessarily. Profitability is only one part of the equation. In addition to profits we must look at the initial investment, and more especially how it compares vs. profits. In other words: are the profits worth the initial investment?

Remember: Tommy’s Express is a rather expensive franchise. Indeed, as the franchisee you would have to fund (from banks and/or investors) an initial investment cost of $6,232,000 on average. That’s one of the highest required investment we found amongst all the franchises we analysed.

But the profits are high too right?

In conclusion, we estimate that Tommy’s Express has a payback of 10 years: you would repay investors within 10 years if you were to invest and open a new car wash today.

That’s a good payback period especially for a low-risk, recession-proof franchise liek Tommy’s Express.

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