Autobarn Franchise Loan
Do all banks offer franchise finance?
If you have management experience, a passion for every automotive and a desire to achieve your next business challenge, you may qualify for an Autobarn franchise loan.
As Australia’s largest franchised automotive parts and accessories retailer, some banks have special lending arrangements in place with Autobarn.
However, getting approved still requires you to have a good deposit and a solid business plan. Do you qualify for an Autobarn franchise loan?
How much can I borrow?
As an accredited franchise with a couple of our lenders, you may qualify for the following:
- New or existing Autobarn store: Borrow up to 60% of the franchise costs or 100% using an existing residential property as security.
- Loan term: Typically 10 years or the length of the franchise agreement.
- Loan term with property as security: 25 to 30 years (standard loan term).
- Interest rate discounts: Available by negotiation by your mortgage broker.
- Must be of good character: Low doc and bad credit options not available.
- Past experience and business plan needed. Actual requirements vary from lender to lender.
Why speak to us?
We’re specialists in franchise loans and know which lenders will help you finance an Autobarn franchise.
Other than negotiating a sharp interest rate on your behalf, we can also help you to borrow at the maximum Loan to Value Ratio (LVR) in order to maximise your cash flow.
Discover if you qualify by calling 1300 889 743 or by filling in our free assessment form today.
How do I get approved?
Like any other type of business loan, you have to present a strong case in order to qualify for finance. The application has to make sense.
As a minimum, you need to be of good character, in a good financial position and at least 2-3 years experience in a management position at a retail of a similar size.
Knowledge of cars, spare parts and accessories will also help your application.
As far as loan application documents, you usually need to provide the following:
- 2-3 years personal and/or business financials including tax returns if you were previously running your own business.
- A strong business plan that you’ve discussed with your accountant and financial adviser.
- You’ll typically need to show evidence of a Debt To Service Cover Ratio (DSCR) of around 1.5 times.
- Some lenders have specific requirements for an existing Autobarn store in relation to earnings before interest, tax, depreciation and amortisation (EBITDA). However, not every lender has this requirement.
How much does an Autobarn franchise cost?
The costs can vary depending on the size of the store, its location and whether you’re buying existing or you’re planning to work with Autobarn to construct or fit-out your own store.
The capital investment can range anywhere between $250,000 and $500,000.
A complete rundown of the franchise costs will be provided once you complete a franchise application.
What we can tell you though is that you’ll need to pay a refundable $2,000 deposit at application.
How do I become an Autobarn franchisee?
- Make an enquiry on the Autobarn website.
- You’ll receive a franchise kit and FAQ booklet, a list of new sites and existing sites for sale, and an expression of interest form.
- Complete the expression of interest form and return to Autobarn. You’ll have the opportunity to select an existing store opportunity.
- You’ll have an interview with an Autobarn business development manager so you can get to know more about the operation and the franchise model.
- If you had interest in a specific store, the BDM will provide you with a run down of that particular store including top line financial figures.
- If you’re happy to proceed, you should ask for a uniform franchise offering circular (UFOC) as soon as possible.
- This will give you time to go through the UFOC carefully. It’s recommended you seek independent legal and financial advice to ensure you’re in a position and have the capital to run a store.
- Autobarn like to first “test the waters” by asking you to complete an initial application for preliminary approval. This agreement is non-binding.
- If you’re granted preliminary approval, you will then receive a disclosure agreement, a franchise agreement, a business plan template, sales and turnover figures for existing store, and rundown of development and operating costs.
- The disclosure agreement contains contact details for existing franchisees so it’s recommended that you get in touch and find out if an Autobarn franchise is right for you.
- If you have an existing site in mind, Autobarn will provide the past 3 years financial statements for the business, a local market and demographic study and other crucial information.
- At this point, you should speak with your mortgage broker about applying for an Autobarn franchise loan. It’s important that you’re approved for finance before jumping on board.
- You’ll be asked to complete an application form and return it along with your business plan and a refundable $2,000 deposit.
- Autobarn will arrange travel for you to attend their Melbourne head office for orientation day.
- You’ll have the opportunity to ask plenty of questions about the business operations and your business plan will be evaluated.
- If you’re happy to proceed and your application is approved, Autobarn will arrange for the franchise agreement.
- Ensure that you’re pre-approved for an Autobarn franchise loan with help from your broker before signing the agreement so settlement can be organised right away.
How will Autobarn support me?
Following the initial application process, you’ll be offered the following training:
- An orientation day at the Autobarn head office.
- A 4-week management program where you will be given a run-down on operations.
- This is followed by 2-4 weeks on in-store work experience.
- During this time, you’ll be working with an Autobarn business development manager to help you with sales and merchandising, store presentation and layout, business strategy and budgeting, staff training, staff retention and staff recruitment.
- Only offered by a handful of franchise systems, Autobarn also provides franchisees with bookkeeping and administration services.
- Your inventory and point of sales systems will be maintained by a dedicated IT team.
The benefits of an Autobarn franchise?
Trying to get your own start-up off the ground can be rewarding but difficult if you have no experience.
It’s also difficult to borrow the amount you actually when it comes to business finance because you have a lot more to prove in your application.
With an Autobarn franchise, select lenders have more confidence in offering finance because of its national presence and strong marketing and advertising capabilities.
This includes national sporting sponsorships such as the V8 Supercar teams at Red Bull Racing Australia and Triple 8 Race Engineering.
From a business perspective, Autobarn franchises have:
- Strong buying power.
- A vertically-integrated warehousing and centralised distribution system.
- Low overheads.
They also benefit from the high average turnover across the entire motor vehicles parts retail sector.
Autobarn was founded in Melbourne in 1985 as a buying group or purchasing cooperative of 9 specialist automotive parts and accessories retailers.
Basically, by buying in bulk, they had greater buying power to negotiate sharper pricing for aftermarket parts and accessories.
They were also able to leverage a great market presence by combining their advertising efforts.
In 1991, Autobarn established its franchise model and expanded beyond Victoria.
By 2002, it opened its first national distribution centre.
Today, there are more than 115 Autobarn stores across Australia.
Autobarn is the largest franchised automotive parts and accessories retailer in the country and is part of BAPCOR Limited.
What do they sell?
- Spare parts.
- 4×4 and camping equipment.
- In-car electronics and entertainment systems (including installation).
- Car security and alarm systems (including installation).
- Car cleaning and maintenance.
- Paint and body repair kits.
- DIY tools and hardware.
How does the lease arrangement work?
Like most other types of franchise businesses, you won’t lease the store directly from the landlord.
Instead, you will rent the property in a head lease arrangement whereby Autobarn holds the lease with the landlord and then “subleases” the property to you.
Why do they do it this way?
Firstly, it gives Autobarn a level of protection because in the event that your business is failing and you’re unable to make rent, Autobarn can step in to take over.
They will then help you to get your business back on track or it may be that you have to shut up shop.
Autobarn will hold on to the property until they find another suitable franchisee.
Secondly, a head lease is a major benefit to you in that Autobarn takes care of all lease negotiations and disputes on your behalf.
Because they have such strong buying power, they can negotiate a much better rental price than if you were to lease a property yourself to run your own independent aftermarket spare parts and accessories store.
There has been a serious downturn in Australia’s car manufacturing industry over the past 5 years most notably with the closure of Holden manufacturing.
This came as a result of a huge consumer shift towards imported cars, particularly from Japan.
However, aftermarket retailers like Autobarn have benefited from the higher number of vehicles on the road, whether they’ve been locally manufactured or imported.
In times of economic uncertainty, many consumers are more likely to buy new parts or seek used parts instead of purchasing a new motor vehicle.
Do you need an Autobarn franchise loan?
Find out if you qualify!
Call 1300 889 743 or fill in our online enquiry form to speak with a franchise loan expert.