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Description
Investment Icon

What Are the Initial Investment Requirements for a Michelin Commercial Service Network Franchise?

To open a Michelin Commercial Service Network franchise, you will need to consider a range of initial investment costs. The franchise fee is set at $2,500, while the total initial investment can vary significantly, ranging from $189,000 to $4,252,500. It's essential to ensure you have the necessary cash available, as the required cash on hand falls within the same range. Additionally, prospective franchisees must meet a net worth requirement of $500,000 to $1,000,000 to qualify for ownership.

Fees Icon

What Are the Ongoing Fees Associated with the Franchise?

Owning a Michelin Commercial Service Network franchise comes with ongoing financial obligations. Franchisees are required to pay a royalty fee of 10% on gross sales, which contributes to the overall support and brand strength. Additionally, a marketing fee of 2% is assessed to help promote the brand and drive customer traffic. Understanding these ongoing fees is crucial for effective financial planning and maintaining profitability in your franchise operation.

Revenue Icon

What Is the Average Revenue Potential for Franchisees?

Franchisees in the Michelin Commercial Service Network can expect varying revenue outcomes based on several factors. The average annual revenue per unit is reported at $717,913, with a median revenue of $1,200,000. However, it's important to note the range of performance, as some units generate as low as $250,000 while others can achieve revenues up to $1,127,000. This revenue potential highlights the importance of location, management, and market conditions in determining financial success.

Breakeven Icon

How Quickly Can Franchisees Expect to Break Even?

New franchisees in the Michelin Commercial Service Network can anticipate a breakeven timeframe of approximately 12 months. This relatively quick return on investment is appealing, especially when coupled with an investment payback period of around 36 months. Understanding these timelines is vital for franchisees as they plan their financial strategies and prepare for the early stages of business operations.

Michelin Commercial Service Network Franchise Financial Requirements

Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.

Net Worth Required icon The minimum total assets (minus liabilities) you must possess.

i Net Worth Required:

$500,000 - $1,000,000
Investment Payback icon The estimated period to recoup your total investment.

i Investment Payback:

36 Months
Franchise Fee icon The initial fee paid to join the franchise system.

i Franchise Fee:

$2,500
Royalty Fee icon Ongoing percentage of revenue paid to the franchisor.

i Royalty Fee:

10%
Marketing Fee icon Regular contribution toward the franchise’s advertising fund.

i Marketing Fee:

2%
Breakeven Time icon The estimated timeframe to recover your initial costs.

i Breakeven Time:

12 Months
Initial Investment icon The total amount required to launch the franchise.

i Initial Investment:

$189,000 - $4,252,500
Cash Required icon The minimum liquid capital you must have on hand.

i Cash Required:

$189,000 - $4,252,500
Average Revenue icon The typical yearly revenue generated per franchise location.

i Average Revenue:

$717,913
Median Revenue icon The middle value of yearly revenue among franchise locations.

i Median Revenue:

$1,200,000
Highest Revenue icon The largest reported annual revenue among franchisees.

i Highest Revenue:

$1,127,000
Lowest Revenue icon The smallest reported annual revenue among franchisees.

i Lowest Revenue:

$250,000
Industry icon A broad sector defining similar types of franchise businesses.

i Industry:

Automotive Franchises
Category icon A more specific division within the broader industry.

i Category:

Auto Repair
Leadership icon The key individuals guiding the franchise’s strategy and growth.

i Leadership:

Florent Menegaux
Corporate Address icon The official business address of the franchisor’s headquarters.

i Corporate Address:

101 Harrison Bridge Road Simpsonville, South Carolina 29681
Funding Year icon Available financing options to help start the franchise.

i Funding Year:

1997
Parent Company icon The main organization that owns the franchise brand.

i Parent Company:

Michelin Retread Technologies, Inc.

Michelin Commercial Service Network Franchise Unit Growth Summary

A breakdown of corporate, franchised, and total units, with yearly net changes.

The overall number of operating franchise locations.

Total Units i

333
The number of locations owned by independent franchisees.

Franchised Units i

333
The number of locations owned and run by the franchisor.

Corporate Units i

0
Units 2020 2021 2022
Total Units 317 340 333
Net Change YoY 23 -7
Franchised Units 317 340 333
Net Change YoY 23 -7
Corporate Units 0 0 0
Net Change YoY 0 0
Investment About

Investment Overview

The Michelin Commercial Service Network offers a range of investment options, with initial investment costs ranging from $189,000 to $4,252,500. The franchise fee is set at $2,500, and ongoing royalty fees are 10% of gross sales, complemented by a 2% marketing fee. Prospective franchisees should be prepared to demonstrate a net worth between $500,000 and $1,000,000, ensuring they have the financial backing to support their business venture.

Potential About

Financial Performance

The average annual revenue per unit is approximately $717,913, with a median revenue of $1,200,000. Units have reported annual revenues ranging from $250,000 to $1,127,000. With a breakeven time of just 12 months and an investment payback period of 36 months, franchisees can expect a reasonable return on their investment, making it an attractive opportunity for aspiring entrepreneurs.

Metrics About

Franchise Growth

The Michelin Commercial Service Network has shown consistent growth in franchised units over the past few years. In 2020, there were 317 franchised units, which increased to 340 in 2021 before slightly declining to 333 in 2022. This growth trajectory reflects the brand's resilience and appeal in the market, providing franchisees with a supportive network for their business endeavors.

Fees About

Corporate Structure

The Michelin Commercial Service Network operates solely through franchised units, with no corporate-owned locations reported from 2020 to 2022. This structure emphasizes the franchise model's focus on empowering individual franchisees to manage their operations while benefiting from the brand's established reputation and support systems.

Breakeven About

Operational Insights

Franchisees should be aware of the average operating expenses, which total approximately $192,547 annually. Key expenses include wages and salaries, general contracting, and royalties. Understanding these costs is crucial for managing profitability and ensuring efficient operations within each unit.

Units About

Brand Commitment

The Michelin Commercial Service Network is committed to delivering high-quality services and maintaining strong relationships with franchisees. The brand's mission focuses on innovation, customer satisfaction, and community engagement, ensuring that franchisees are equipped to succeed while upholding the values and standards associated with the Michelin name.

Frequently Asked Questions

The initial investment for a Michelin Commercial Service Network franchise ranges from $189,000 to $4,252,500, which includes the franchise fee and other startup costs.