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Auto Masters Franchise Loan

Finance your own auto repair and service business

The demand for mechanics and auto repair services is continuing to grow.

More and more customers want competitively-priced options outside of car dealerships. Meanwhile small mechanical workshops simply can’t keep up with changing automotive technologies.

With an Auto Masters franchise loan, you can buy your own workshop and leverage the support and resources of a major Australian brand.

How much can I borrow?

  • New Auto Masters store: Borrow up to 50-70% of the franchise costs or up to 100% using a residential property as security.
  • Loan term: 10 years.
  • Loan term with property as security: 25 to 30 years (standard loan term).
  • Interest rate: Discounts available depending on the strength of your application.
  • Interest only: 2 years or more depending on whether you’re using a residential property as security.
  • Business plan: You’ll be required to have an accountant-approved business plan which shows revenue and cash flow forecasts.
  • Business experience: The bank and the franchisor would like to see that you have at least 2-3 years experience managing a similar-sized operation.
  • Good asset position: This means a strong income and low debt-to-income ratio.
  • Low doc options: Not available.

Every application is assessed on its merits!

Auto Masters is one of a number of franchise businesses that a few major banks and lenders have listed as strong franchise models.

However, you still need to build a strong case to get approved and there can be huge differences in the interest rates and loan terms on offer.

Call us on 1300 889 743 or complete our free assessment form to discover if you qualify for an Auto Masters franchise loan.

Presenting a strong case is key

Overall, getting approved comes down to your deposit, your security and your character as a borrower and future business owner.

As a general rule, the bank wants you to:

  • Be in a good financial position: You can show this with your last 2-3 years personal tax returns and/or business transaction statements if you’re currently running a similar-sized operation. The typical debt-to-income ratio (DSCR) required is 1.5x.
  • Have a clear credit history: The lender will run a credit check to ensure your credit file is free of black marks like defaults and previous bankruptcy.
  • Have previous business experience: Ideally, you should have at least 3 years experience as a manager in a similar field and some technical skills when it comes to car mechanics.
  • Provide a business plan: The bank wants to see that you’ve done your due diligence on the franchise system and the store location that you’ve decided on. Cash flow forecasts will need to be discussed and signed off with help from your accountant.
  • To have a good security to support the loan: Specifically, cash or equity in a existing residential property such as your home or an investment property.

If you’re buying an existing store, one of our lenders would like to see that the store is generating 1.50x earnings before interest, tax, depreciation and amortisation (EBITDA).

How much does the franchise cost?

The initial capital investment for an Auto Masters franchise ranges from $200,000 to $500,000 (plus GST) but this will vary depending store size and location.

The investment covers the workshop and store fit-out as well as all plant, equipment, tools, machinery and signage stock.

What other costs are there?

  • Franchise fee: $50,000 (plus GST)which covers the franchise system and training. This makes up the capital investment.
  • Royalty fees: 7% of gross monthly sales.
  • Advertising and marketing: 6% of the gross monthly sales.
  • Transfer fee: $3,000 payable if you decide to sell the business at the end of the term.

You’ll get a full breakdown of the costs in Auto Masters’ franchise kit or uniform franchise offering circular (UFOC).

Can I get revenue estimates?

Once you sign the disclosure document, Auto Masters will provide sales figures on an existing workshops.

Under the disclosure agreement, Auto Masters are also required to provide you with the contact details of current franchisees.

Take the opportunity to call them and ask them what their experiences have been.

It can provide valuable insight into what strategies you can employ to also run a successful business.

The great thing about the motor vehicle engine and parts repair and maintenance sector is that there isn’t one dominant market player.

In addition to this, the sector has continued to grow over the past 5-10 years in line with new car sales.

There is a lot of opportunity for the right franchisee.

What training will be provided?

Although training will vary depending on your skillset and experience, the course itself runs for 4 weeks at Auto Masters’ head office and with in-store work experience.

Following training, a business development manager will assist in your store opening as well as in the first weeks of operation.

What about ongoing support?

Bookkeeping and accounting

This will be by way of technical support. Auto Masters doesn’t offer accounting software or management systems so it’s important that you have a good accountant.

Advertising

Auto Masters mostly promote on the west coast, covering television, radio, classified and local and state press. Any in-store merchandising needs to be approved by head office, while local advertising will be at your own cost.

Buying power

Auto Masters has purchasing agreements with Valvoline, Bosch, Repco and other auto parts suppliers.

As part of the turnkey, you will have accounts set up with the local branches of various parts suppliers. Some suppliers deliver up to 8 times a day.

Auto Masters’ buying power not only means sharp pricing but negotiated delivery, warranty, refunds, rebates, product knowledge and technical training.

What if I want to sell the franchise?

If you want to sell the franchise at the end of the 10-year agreement, the buyer has to be approved by Auto Masters.

The franchise transfer comes at a cost of $3,000.

Who is Auto Masters?

The first Auto Masters opened its doors in Perth in 1975 and originally only provided engine tuning.

It later became a one-stop auto repair and service model and today offers:

  • Brake replacement and repair.
  • Suspension repair.
  • Basic servicing.
  • Other repairs and replacements.

Although it mainly services car owners in Perth, Albany, Busselton, Bunbury and Mandurah, the past few years has seen the model expand into the east coast.

There are now more than 6 auto repair shops in New South Wales.

Auto Masters is also a member of the Franchise Council of Australia (FCA) which means their franchise agreement meets current industry standards and principles.

Get financial advice before signing the agreement

It’s essential that you speak to a financial adviser and accountant to ensure that you are in a strong financial position to be running a business.

That means having a strong business plan and good cash flow on standby to help you with working capital. This is crucial in the early stages of running your Auto Masters franchise.

Seeking help from an independent solicitor that specialises in business transactions, in particular franchises, is also crucial.

They can help ensure that the franchise agreement is in your best interest.

Do you qualify for an Auto Masters franchise loan?

Speak with one of our experience mortgage brokers by calling 1300 889 743 today.

Alternatively, complete our online enquiry form and we’ll get back to you with some lender recommendations.

  • 32ADStones

    How long do defaults stay on our credit files? I had a few defaults some time back and I hope they don’t affect my chances to get a good Auto Masters franchise loan deal…

  • Hi, defaults stay on your credit file for 5 years from the date they were lodged. Do note that paying a default doesn’t mean it’s removed from your credit file. It simply updates the file to show that the default was paid. To have a default removed, you’ll need the consent of the company that lodged the default on your credit file in the first place.