If you're thinking about owning a car rental franchise, make sure to compare your options and consider lower-cost alternatives. Creative Colors International outlines what to expect and how it stacks up to other car franchises.

Rental Car Industry Demand Picks Up

Propelled by an increase in both business and leisure travel, the U.S. car rental industry is forecast to hit $59 billion over the next 10 years, according to Future Market Insights. As the number of low-cost air carriers makes airplane travel more accessible, car rental locations will reap the rewards at popular tourist destinations across the country. The resumption of widespread business travel, which ground to a halt following the pandemic outbreak, is also helping move the industry forward.

New technology is streamlining operations at rental franchises and improving customer service. On-board diagnostics and GPS tracking enable franchise owners to monitor their vehicles on the road to keep their fleets in top condition. Online booking and self-service technology are helping customers avoid long lines and lengthy paperwork.

Drawbacks of Car Rental Business

With the right technology and processes in place, car rental businesses can be highly efficient and streamlined, reducing costs and increasing profitability. It can be an exciting and rewarding business venture, but it may not be as profitable as you think. Take a look at the downside to the car rental business.

• High startup costs. Starting and operating a car rental franchise can require significant capital to purchase or lease vehicles, rent or buy a location, hire staff, and cover other expenses.
• Liability: You may be liable for accidents, damages, and injuries that occur while customers are driving your rental vehicles, exposing you to potential legal and financial risks. Choosing a franchise can provide some assurance, but liability remains a concern.
• Some car rental companies rely on licensing to grow their brand rather than a traditional franchise agreement. Licensing allows you to use the brand name, but you don’t receive the same training and ongoing support as a franchisee.
• Heavy competition. Car rental is a highly competitive industry, with many major players competing for customers, and prime locations are limited. Having a recognized brand will give you an edge but building a loyal customer base requires marketing expertise.
• Industry consolidation. Because of the high barrier to entry and heavy competition, consolidation in the car rental industry is high. Most of the popular brands are owned by a limited number of franchisors. Hertz is the number one car rental brand in the U.S. and has outposts at 81 airports in Europe. In addition to its namesake brand, Hertz franchises Dollar and Thrifty. Avis, another popular car rental behemoth, also owns Budget Rent a Car, Budget Truck Rental, Payless Car Rental, and Zipcar.
• Car rental demand may be highly seasonal, with peak demand during certain times of the year, such as holidays and summer vacation periods. During other times of the year, demand may be lower, which can affect revenue and profitability.

CCI: A Better Franchise Opportunity

If you’re an auto buff, there are numerous alternatives that have the potential of meeting your financial and lifestyle goals.

Creative Colors International is a leading mobile auto repair franchise offering entrepreneurs a low-overhead business opportunity in the automotive industry. We specialize in fixing rips, tears, scuffs, burns, and fading in leather and vinyl. We provide both B2B and B2C services, and our franchise owners partner with automobile dealerships, marinas, car rental locations, and more to provide interior car repair.

Over the past 43 years, we’ve built a strong reputation by focusing on quality, professionalism, and exceptional customer service. For an initial investment of $86,980 to $102,100, we provide comprehensive training and support to franchisees, including a two-week training program, ongoing support, and access to a network of experienced franchisees.

Learn More About CCI

If you think partnering with a leader in leather repair and restoration is an attainable alternative to the car rental industry, schedule a time to talk to someone from our franchise team or download CCI’s franchise kit for more information.