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Profit Margin
Typical repair price in North America:
High volume wholesale (RQ3 quality – smart or blend in repair and refinish) - $55.00
Insurance companies – (RQ1 quality - full face paint and clearcoat) - $125.00
Partner Program – RQ1quality - service department) - $100.00
Overseas in China, India, Mexico and similar countries, repair price is equal to $25.00 - $40.00 USD.
Europe ranges from $40.00 - $80.00 Euros
Typical Material Cost:
Wheel repair and refinishing – The franchisee consumes sanding discs and pads, cleaners, paint prep products, our patented chemical bonder (which is used in the pre-paint phase), paints and clear coat. Expect costs generally equal to 5% of the repair price or $3 - $5 USD per wheel.
Wheel Straightening - Unless repair to the paint is required, most wheel straightening repairs consume only time. No material is consumed.
Typical Labor Costs:
If the franchisee provides the repair service, then the labor costs are whatever they pay themselves. If the franchisee hires a technician, he pays commissions in the US of 30-40% of the gross sale. Overseas it varies depending on the country. In China, India, or Mexico, a technician may earn an hourly wage of $2-4.00 per hour. In Europe, it may be $10-15.00 per hour. The typical repair time ranges from as little as 20 minutes for an RQ3 repair and 45 min to an hour for an RQ1 repair. Wheel straightening ranges from 10 minutes for a simple bend to 1 hour for multiple wheel bends.
Proforma Template provided in the downloads section
Revenue Remanufacturing
Many of our franchisees will ultimately open a remanufacturing facility. To understand the business model and revenue potential, we explain it as follows. Remanufacturing is required when a wheel is cracked or leaking air or a CNC lathe is required to re-machine the wheel face. To accomplish an RQ1 remanufacturing repair, the wheel must undergo a production process that requires the original wheel finish to be stripped back to cast metal; then it is repaired, machined, primed, painted, and powder coated. The standard charge in North America is generally $125.00 and up depending if it is done for an insurance company or a partner. A franchisee who opens a reman facility can expect other franchisees to ship wheels to him. Wholesale cost to another franchisee is $85.00 USD. Although this is a lower margin, the reman owner enjoys immediate volume to help him during the start-up phase. When a franchisee outsources to another franchisee, he typically resells the remanufacturing service for $125.00 and up.
Gross Profit
Material and labor costs go up dramatically. Costs for material and labor vary based on volume but range from $40.00 USD per wheel in high volume shops (100 wheels per day), to and as much as $60-70 USD per wheel in lower volume shops (25 wheels per day.) Our franchise sales department will help you understand all job descriptions required to run a successful remanufacturing business.
Retail/Remanufacturing
A remanufacturing facility may also sell chrome wheels, tires, and related services. Retail margins on chrome wheels and tires range from 25-100%. As an AWRS franchisee, you are given special prices by our network of tire and chrome wheel wholesalers.
Replacement Wheels
An AWRS franchisee in North America has many options available when he encounters a wheel that is un-repairable due to the condition or location of the crack. In some cases, it just isn’t safe to repair the wheel or, due to time sensitivity, they can’t ship the wheel and wait for the production cycle to be completed. In these cases, replacement cores are an option. AWRS reman shops stock wheels accumulated from exchanges or the purchase of damaged cores from salvage yards that are subsequently repaired. If the AWRS location doesn’t have the wheel, then there are 20 major wholesalers that have established their most favorable prices for AWRS franchisees. Resale pricing for replacement cores range from $85.00 - $100.00. These wheels are then marked up 25-30% when selling to an insurance company. Retail mark-up might be as much as 100%.
Other Products and Services
Vertical integration of other products and services are part of the AWRS culture. AWRS corporate is seeking out the newest technologies to maintain or protect tires and wheels. We offer our Franchisees the opportunity to participate in the following exciting products:
Nitrogen Inflation and Cap Kit Program - This program distributes equipment or loan nitrogen generators to your accounts. Nitrogen is known to enhance tire life as it stabilizes air pressure. We market the nitrogen by offering the consumers a free membership into the NitroFill Motor Club. The consumer is provided a cap kit that provides him with free roadside rescue, $200.00 tire repair or replacement due to hitting a road hazard, and up to $600.00 wheel repair from hitting a road hazard. The AWRS franchisee purchases these kits wholesale and resells them for a 100-300% mark up. Ask your sales representative for more details.
Wheel Barrier Coating - Brake dust, road salts, and road film left on the wheel may cause pitting or corrosion or simply looks bad. The AWRS Franchisee can participate in the distribution of wheel warranties that provide the consumer free repair should they hit a curb or if brake dust causes pitting once the product is applied. An AWRS Franchisee makes money applying the coating and selling the warranties. He also makes money repairing wheels for the insurance company.
F&I Products
In North America and around the world, dealerships have finance departments with special insurance products that can be offered in conjunction with the purchase of a new car. The AWRS network member directly sells our products or participates in selling our products by providing claims to many other road hazard insurance sellers. It is estimated over 2 million road hazard plans are sold each year. Ask your franchisee sales representative for more details on these programs. |
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