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The Cost and Profit Margin For Hertz Franchise Opportunity

The Cost and Profit Margin For Hertz Franchise Opportunity

Coming up with a new business idea isn’t always an easy task. You ought to be original, but then you find out later on that the unique idea you can think of is nothing new after all. You want to build your business out of your passion for cars, but there’s a high possibility that your new brand might get crushed in the competition. If you badly want to start your own business while avoiding this risk, your best bet is investing in a car rental franchise. Owning a car rental franchise will allow you to run your business while getting support and marketing from an already known brand. One of the top brands in car rental franchising is no other than Hertz.

To give you an idea of the earning potential of a Hertz car rental franchise business, here’s a quick overview of the company and the startup basics you need to become a franchise owner:

Why Choose a Hertz Franchise?

Hertz is a leading brand in the car rental industry, so it’s an excellent choice among many car rental franchises. It has over 90 years of tenure in providing luxury airport transportation such as SUVs and limousines. It’s also known for trucks, vans, and heavy equipment rentals. It’s a big business with a big name, and many people are familiar with it. That is why the marketing aspect isn’t too difficult anymore for a franchise owner. Although you have less of your personal name at stake in a franchise business, it doesn’t mean that there’s less responsibility to take. After all, it’s the name of an entire chain of multiple franchises you have to uphold. Hertz is known for its transport vehicle quality and customer service. For your own franchise to thrive and succeed, you also have to uphold the same standard.

Startup Cost for Hertz Franchise

Hertz has practically built a car rental empire through the years and, as such, has created its solid policies and standards that aspiring franchisees have to comply with. Failure to comply with these policies will mean forfeiture of your franchise application. One important aspect that Hertz has set is the startup costs. Any business starts with a capital, and a Hertz franchise is no different. As a franchisee, you will need an investment budget of about $150,000 to $500,000 net worth to be considered for a Hertz franchise.

On top of that, you will also be required to pay a franchise fee that ranges from $25,000 to $50,000. What follows are the 7% ongoing royalty fee and monthly 3% ad royalty fee. You will also have to consider the required business registration fees in your city or county.

Hertz is a big company, so this amount shouldn’t come as a surprise. You can come up with this investment amount from a bank loan, but you also have to prepare for the monthly payment and interest that comes with it. No matter what source of income you have, you have to strive to run your Hertz franchise in the best way you can so you can yield more profit. You have five years to do this because this is the total term of the franchise contract before it has to be renewed again.

Amount of Profit Margin

There have been many Hertz car rental franchises around so you’d expect to know how much the amount of projected return of investment is. However, coming up with one average profit margin isn’t very simple. There are a lot of factors that can affect the profit margin of your Hertz car rental franchise. These factors include:

  • Location – The location of your Hertz car rental business will matter because there are different business regulatory laws in place in each state or city that would require certain fees. Tax rates and legal business fees could also vary.

  • Labor Costs – As a franchise owner, hiring and maintaining the needed workforce falls in your hands. This also means that you will have to account for your employees’ salary and benefits when calculating your franchise’s profit.

  • Facility Maintenance – If you own the property where the physical office of your Hertz franchise will be located, you’ll have to spend on facility maintenance. If you’re only renting a commercial space, you’ll have the maintenance and rent as part of your business costs.

  • Economic Stability – A major factor that also plays a huge role in determining your profit margin is the overall performance of the economy. An economic downturn can cause many businesses to shut down, and franchises are among the most vulnerable as it can directly impact the net proceeds of your rental business.

Conclusion

Opting for a Hertz car rental franchise is an excellent choice for a rookie in the business industry. It isn’t because managing and growing it is easy. On the contrary, it requires a great deal of business acumen, balance, and management skills. For a beginner, these will help prepare you to take on your own business in the future.

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