Chips Away

[Hoovie]

Wondering what the general opinion is about both 'Chips Away' and companies like them?

I have never used them, but seem to have a good name in that industry and very well known as well.

Reason for question is that I may be looking for a new business to invest in soon and one of the options I am considering is one of their franchises,

[Davrav]

Personal experience is that they do a good job for a reasonable price.

I had an Ex colleague who bought a franchise - bumped into him in a BMW dealership where he had been working on some of their used cars.

Asked him about his experience [had been doing it about 18 months] and he was most impressed with the training and back up. Said he had never worked so hard or so many hours but that the feedback from happy customers was a big plus. I seem to remember that he had just about recouped his investment in that time period ......................

Used a local franchisee a couple of years ago and had a chat with him. His only gripe was the increasing overlap from new franchisees on his patch which was making it more difficult to find work. He did the usual 'on the driveway/at the workplace' service but also had a small unit where he could take cars if the weather was particularly bad or conditions were not suitable outside.

[Hoovie]

Personal experience is that they do a good job for a reasonable price.

I had an Ex colleague who bought a franchise - bumped into him in a BMW dealership where he had been working on some of their used cars.

Asked him about his experience [had been doing it about 18 months] and he was most impressed with the training and back up. Said he had never worked so hard or so many hours but that the feedback from happy customers was a big plus. I seem to remember that he had just about recouped his investment in that time period ......................

To re-coup the initial investment in 18 months, I can imagine he would have worked incredibly hard (assuming he was taking a decent salary to live on as well).

They reckon that 2 jobs a day, 5 days a week for 46 weeks a year will give a net return after running costs would be around £45k (this would not include initial franchise cost or taxes on income), which sounds about right to me. And if you did 1 job every weekday of the year (so about 250 jobs a year) it's estimated you would return £25k after costs.

Used a local franchisee a couple of years ago and had a chat with him. His only gripe was the increasing overlap from new franchisees on his patch which was making it more difficult to find work. He did the usual 'on the driveway/at the workplace' service but also had a small unit where he could take cars if the weather was particularly bad or conditions were not suitable outside.

Talked to them about franchise area and demographics - they reckon that they work it out based on the demographics, not just geographical or population based, as obviously a highly populated area would have much more potential for business (and lower costs likely as distance to and between clients lower).

I would expect (but would not just assume!) that the boundaries are agreed as part of the deal and they are enforced pretty well, rather then trying to squeezenew people in-between two existing holders.

The Weather thing is obviously a key thing and would mean a mobile-only operator is at the mercy of the elements, which is a major factor up here in Sunny (!?) Scotland, and the cost of a unit would need to be factored in as well in that case.

Chips Away do a 4 week training course as part of the initial fee, and what is interesting is that I was told that you can send an employee down to get trained at any time at no extra charge, so it you did have a workshop and a mobile unit, you could run them together at no extra cost (other then 2nd persons wages of course) so turn it into a family-type business quite easily.

Thanks for the input Dave, much appreciated

[Manxrav]

Very interesting topic, I admire anybody these days who starts-up from scratch ( pardon the expression) all be it with a franchise. On island we have 3 setups, Chipsaway, Dent Doctor and an indie.

I have on 2 occasions used the Indie and he was excellent ( 1 T180 and 1 Urbancruiser) and he did both of them in the garage due to inclement weather.

The Dent Doctor is very hard to track down as he does it as a side line to his main job, Chipsaway not really had any feed back on him.

Hoovie obviousley it,s a big step but am sure you are up to the mark!!!!

When I first left Uni I worked at MacD,s as a management trainee, ( before I had a total change of career) and the thing I always wanted to do was have a " franchised resteraunt" £250000 start-up but a licence to print money if run right!!!

Regards Clare

[Hoovie]

Cheers Clare :)

Talking of Food Franchises, I was in Amsterdam in March and came across a great fast food place called "Wok 2 Walk". Think of a Subway outlet but with Noodles instead of bread :D

When I got back home, I looked into it further and found that a Franchise for W2W would be around £500,000 which is way to much for an little-known outlet, especially compared to £250,000 for a MaccyD!

I checked out the Wok2Walk in Glasgow later on to see how that one was running and it was very quiet as well :(. (The one in Amsterdam was heaving with customers in comparison every time we passed it)

Could still be a good fast food idea, but only by bypassing the Franchise megabuck buy-in charge.

[BeechCustom]

I used to work in franchising so I'm well aware of the potential pitfalls regarding this business model. That said, Chipsaway is in the 'better' category as far as I'm concerned but you still need to do your homework thoroughly. Your number one concern should be how the figures stack up. If they are quoting one customer per day that's all well and good but that means that you are going to have to find around 250 new customers every single year (granted some may turn into repeat business but either way you will need 250 jobs per year to meet their example). Is this even possible??? Then you need to test the revenue per job that they quote. £25k profit from 250 jobs is £100 average PROFIT per job.

Speak to as many local franchisees as possible and find out how many jobs they are doing per day and how much revenue those jobs are generating. If its out of kilter with the projections then alarm bells should start ringing. Also, be warey of franchisees quoting figures from years ago - it's today's experience that matters so make sure all info you get is relevant and current.

Also, you want to try and get a list of every single franchisee within the UK and speak to as many of them as possible. If the Franchisor starts guiding you to talk to a certain franchisee or denies access to such information again alarm bells should start ringing.

As with all businesses there are stronger and weaker operators but you need to be clear that you have the skill sets required to make the business work. The biggest concern I would have with franchising is how to get the work, how much of it is potentially around and what are the restrictions. If Chipsaway are telling you that their franchisees are responsible for getting most of their business on a daily basis then you will need to be a natural salesman and business networker in order to make it work. If you aren't either of these then again alarm bells time.

Hope this helps.

[Hoovie]

Hi Beech,

Some very useful info and advice there

As I understand it (early days, still waiting for brochure even!), the Retail side of the work comes a lot from referrals from their central office i.e. Guy needs a repair, calls Chips Away Freephone number and they refer them to the operator in their catchment area to chase up, plus they sort out initial arrangements with key footfall sites such as Supermarkets, leaflet drops and web site, to help with the local customer base.

Then there is the B2B side which I don't think they deal with at all, so it is down to the local Operator to develop relationships with Car Dealers in their area (if they want to) to do the SMART type of repairs. I would think that a mix of the two is the way to go, as spending say a day every fortnight at a dealer would work out pretty well as would allow multiple repairs in one hit and cut down on the non-revenue earning travel time and could give the potential for a regular income line.

Obviously doing a good job for the clients is paramount as word-of-mouth referrals and recommendations are most important - and negative reports can be a total killer for ongoing expansion.

In terms of speaking to other Franchisees, should not be hard as they all have their own web presence and contact info, so would be hard to block :) . From my discussions so far they do actually encourage contact with your 'neighbours' as the boundaries are pretty defined and developing a relationship between local franchisees can give cover for holidays/sickness periods/etc, which is good for all parties.

Personally I have no experience of having a Franchise, so will be checking into loads of things before I make any commitments for this or any other opportunity; My brother bought a Printing Franchise and it was a total disaster due to misleading info and possibly bare-faced lies so am wary naturally from that encounter (and will find out more !)

Got some more info coming through for other businesses to evaluate,but the Chips Away is quite high so far on the 'Looks Good' list (thought with todays weather, I'd be earning nowt on it )

Cheers :)

[BeechCustom]

Chips Away's lead generation facility is potentially good news. The franchisor undertakes marketing on behalf of its franchise network and any enquiries that fall into your APR (area of prime responsibility) you get to deal with but you need to check if there is a cost for this. Some franchisors may well even make money from this! They may charge their franchisees for a lead regardless of whether it turns into a sale. This is a no brainer for them. Take out a direct marketing campaign or press ads etc and pass the cost plus a bit more maybe on to the franchisee. You need to dig into this. Find out if there is a charge and also what the take up rate is then you can start to make some sense of it.

You need to be clear about the history of the territory that you'd be buying. Did someone own it before and if so why did they cease trading? Bare in mind that there is a renewal fee chargeable by the franchisor so you only get a set time to operate the franchise (usually 5 to 10 years) afterwhich you may well have to buy the franchise again. If no one has owned the territory before, why is this? Is the franchisor being greedy and coping with changing financial situation by carving up territories into smaller pieces thus making it more difficult for the franchisee?

Lastly, is what they are offering so good that you couldn't possibly do something similar yourself? I've never understood why someone would buy a cleaning franchise when you can do the whole thing for yourself with no restrictions, monthly management charges or franchise fee. The market for Chips Away type service is surely saturated or on the way to being. Check out the competition in your local area. Maybe even approach an independent about working with them?? Just a thought.

Since your brother has some experience of owning a franchise he's gonna be a goldmine for you and should be able to help you fine tune a list of questions that will get the most information out of the franchisor. Good luck.

[Hoovie]

I don't think you pay for each lead (there is a turnover charge payable which would provide revenue for the Franchiser, but would be only on converted leads) but it is a great point to make to check against :)

Some other great points raised for me to check on as well

Re "why buy a franchise" instead of setting up yourself" is possibly one of the most important things to consider.

What is the Franchises USP in effect, or at least what overwhelming feature do they offer compared to either 1) other companies or 2) your own startup.

I have seen various Franchises where it is a matter of "who?" and if you have never heard of them, how much market presence have they got and is it worth giving them money for what exactly? and what do they do and provide anyway that is special to them? In many cases, the answer really is nothing!

In the case of the SMART Repairers such as Chips Away, they do have as I understand a propitiatory process that is well regarded and a comprehensive training program on how to use, plus the marketing backup and Brand name , which I think is very strong in this case, unlike some others which I've never heard of.

Well, Postie just arrive with some bumpf to read - expecting load more material from other options early next week as well :)

[Manxrav]

Some excellent points from Beechcustom, i do know Dent Devil has at least 3 Main Dealers on island that he does work for.

Regards Clare

[Big Kev]

Some excellent points from Beechcustom, i do know Dent Devil has at least 3 Main Dealers on island that he does work for.

Regards Clare

Dent Devil, Clare....? I married one of them....she really is good at it, and I am forever asking her where the devil that dent came from......

[Manxrav]

Good for Mrs Kev, theres a bit of the Devil in all us Females, better the Devil you know!!!!!!!

Regards Clare

[Hoovie]

The female of the species could keep me in business ;)

:D

[DjRav]

Re repairs when the weathers bad- can't you use a pop up gazebo? That's what the man working from my local Asda uses! Btw he does quite well I think (repairs your chip while you do your shopping and sorts the bill direct with the insurance!?)

People like to not have to do anything!

Dave

[Hoovie]

Sometimes you can do that Dave (and a Gazebo/Marque is provided in fact), but the rain up here tends to be a little more dramatic and is often horizontal, so the gazebo solution would still work some of the time, but still be quite a bit of time where no outdoor work of this type would be sensible :)

The Tesco quite near me is raised up and underneath it is a large parking area so would be right away from the precipitation of whatever angle, which would be ideal in that respect for the 'shopper service'. I don't know, but would suspect your Asda guy might be doing a more basic type of repair if he can do a 'while you shop' service and finish in time, as the full invisible repairs are reckoned to take in region of 4 hours.

Not sure about the insurance bit though? the typical excess in place would be greater then a SMART repair would be. using a SMART repairer would usually be done bypassing the insurance company I would have expected?

I do think there is a good market for this and probably even more so when times are tight as people will be holding onto their cars and delaying changing, but still want it looking nice, plus when it is time to sell, get more for a clean one then marked up.

PS - for anyone looking for chip & scratch repairs, I noticed yesterday that AA members get a 10% discount from Chips Away - and that I would expect would apply to Toyota Club members as that is group AA membership.

[Hoovie]

Hello Everybody Peeps :)

I am resurrecting this thread now, as since my last post on it, I have spent probably hundreds of hours doing research on this matter, and last week spent a lot of time at the offices of some SMART companies both Franchisor and Independent suppliers to carry out further Due Diligence

I thought it may be interesting to share some findings and observations for anyone vaguely interested ands maybe for anyone who has looked at going into this kind of trade.

The input from BeechCustom was invaluable as a reminder of quite a few things to check on - both directly and to see what info was volunteered rather then needed to be asked - so Beech, owe you a beer :) (maybe do you a discounted SMART repair :D )

So ....

1) Driving the Mercedes VITO is like sitting on a Church Pew!

You need a van to be a SMART repairer and I reckon it should be a good looking one, so I borrowed a brand-new Mercedes Vito Dualiner for my roadtrip last week. As well as 150 miles in my RAV4, I did 550 miles in 3 days in the Vito.

I found the pedals on the VITO very high-set, so bit of an ache in legs, but the seats (which on 'my' Vito were the upgraded Comfort seats) were soooo hard! it was such a relief to get back into the RAV.

2) People who do SMART repairs (e.g. stuff with paint) are very different to people who do the PDR stuff - and even if a company advertise PDR as part of their service, it is very unlikely to be the same guy will do paint and PDR. The PDR stuff takes years to master and is quite physically demanding as well.

I know I am no longer interested in any PDR work!

3) There are essentially 3 nationwide SMART Repair Franchises currently operating from what I can see from my research. The first two are ChipsAway and Revive!, the 3rd one (who will not be named here) I had discussions with the owner and from what I had found out myself and the communication I had with him on the phone, they are dismissed as a contender on any level, especially an ethical one and all details are now in the shredder!

4) ChipsAway and Revive!

Now both these companies on the face of it do the same thing - get the car scratches and scuffs removed without a trace, and I think if the operators follow their systems, they do the job.

At ChipsAway, I watched a repair on a Mercedes ML where the pristine win was scraped with a house brick fairly well - bit like glancing a wall when parking say.

The area was taken back to bare metal and the various processes applied with the tools, primer, top coat, etc in the localised area and at the end the repair was truly invisible on the silver paint work, and I looked at all angles to try and see it.

At Revive! I didn't see the actual paint operation but saw kind of like a 'before and after' effect with a pair of oldish cars used for the training and the after car looked in showroom condition.

So the end result from both companies look good and the main difference was the approach of the franchise operation ....

Basically in summary, ChipsAway tend to focus on the B2C (Business to Customer) area, dealing with the drivers basically, and the territory allocations are structured by postcode demographics to provide a certain concentration of vehicles.

Revive! operate a different model, with a territory again based on Postcodes but much larger and focused on the B2B area, targeting the dealership operation.

The result of this difference to the Franchisee Owner is fairly obvious really - the B2C operation tends to be more profitable per job, as you can charge a private customer more, but you need to market to a much larger customer base as you are not that likely to get repeat business unless the driver is pretty careless - though word of mouth referrals will play a part of course! The number of jobs per day is likely to be lower on B2C also, as you need to travel to customer, setup, then do the work to a single vehicle, then breakdown the kit and travel to next job.

With B2B, you would arrange with a dealer to do a number of jobs in one hit, so only one travel and setup, then do maybe 3,4 or even 5 jobs and then packup either for next dealer or to end the day. So THAT part is good, but the rate the dealer will pay is quite a bit lower then the private driver.

The Revive! model also looks for people who want to have a number of repair vans and for the Franchisee to employ repairs themselves, whereas the ChipsAway model does not necessarily look for that, though many Franchise holders do do this.

The Single Van Franchise owner in SMART Repairs is often regarded as someone who is 'buying a job' as opposed to want to run and grow more then a one-man-band business. And while there is really nothing wrong with that at all, it is worth bearing in mind to decide what your 'end game' is, and not just look at the first 2 or so years.

Not going to be specific about things here as details are best discussed between the Franchise company and any interested parties, but I will mention a few points that may be useful to know ....

Marketing Fees: both cover the cost of leads, but in different ways, but both are linked to turnover, so a lead that goes nowhere gets them no payback on that lead.

Renewal Fees: Term is for 5 years on SMART Franchises generally, and for the 2 companies I visited there are NO renewal fees. Basically as long as you are meeting your contractual terms, then you have the right of automatic renewal.

Further to this, you also have the right to sell the franchise to someone else, so if you have developed your territory well and have a record of good turnover over a decent trading period it is very likely you could sell at a premium compared to your initial outlay. The Franchisor reserve the right to vet the buyer - which is fair enough as they will be an unknown operating under your name.

Territories: This is a hot item for all Franchise companies, SMART or anything else, and is something that needs to be carefully evaluated and discussed, but once the territory is agreed, that is a contractual agreement and cannot be altered without mutual agreement.

The Market: Beech raises a most important question ... " The market for Chips Away type service is surely saturated or on the way to being"

I didn't have the answer to this and it was a definite concern, as no one wants to start up a business in a dying industry! Who would jump into a business of opening up a newspaper right now while circulation is plummeting, for example?

So the market for SMART? The market is defined as the number of cars on the road, and the amount of those that have a need for some minor paint repairs that would fall within the scope of a SMART Repair - Especially as Dealerships and Insurance companies are starting to move toward using or recommending SMART.

ChipsAway say they have 3% of that market and the other franchises and independants have another 3%. I think there independents have a bit more, but even if you give them twice the ChipsAway penetration, that still leaves a potential 90% of the market untapped, so there is still definite room there I think.

Now ... The $64,000 question of why buy a Franchise and why not just go it alone? That is a very good question indeed. Anyone have the answer? I don't yet!

There are definite pros and cons of Franchise vs Independent.

There are companies (I went to see one and got a demo of a most excellent system they make) that provide the whole range of SMART solutions and systems to independent operators, together with comprehensive training packages, but the Franchise company provides other benefits, including the lead provision, which would be a useful backup to developing your own leads, and with National Advertising and Awareness, often the Franchisee operating under a national name can have a major advantage - which is why McDonalds and Subway do so well (evey McD and Subway is a franchisee operation) and so many people go to instead of the local Burger Bar or Sandwich shop.

Is that benefit greater then the Franchise Upfront Cost and Monthly Service Fee? That is up to the individual to decide and evaluate I would say. It is worth making the point again that the Trading name can be worth a significant amount to the valuation of the business at sale time - so a successful "ChipsAway" operation may well be worth more then an equally successful independent operation, just like a branch of 'Subway' will be worth more on resale then 'Sammys Sandwichs'

My conclusions are that SMART Repair is a interesting business to get into and one that has good potential for someone willing to work at it, but the question for me personally of going it alone or with a franchise operation is still one I have not yet worked out. But ....following my meetings last week, I have a lot more financial info provided which will help me with that conundrum.

I will end by saying I was impressed with both ChipsAway and Revive! and for anyone thinking of going into the SMART trade, both companies are 100% worth talking to and I think if you go in with the right mindset and work ethic, I believe you should get a decent living by working with either of them.

Watch this space! (if you are still awake)

[Manxrav]

Got to correct one thing David, not all McD,s are franchised. The vast majority are Company owned, trust ne I was an Assistant Manager for them before I relocated to teaching. Now Subway thats a completely different ballgame.

The only drawback to " Franchising" is the setup costs and the amount of direction the "Parent" Company give you.

Sorry to go back to McDees but I worked for both Company stores and Franchisees, and I know which one I preferred to work for. Incidently their training programme was and still is the BEST on planet earth, provided you have Total commitment!!!!!!

Regards Clare

[Hoovie]

Got to correct one thing David, not all McD,s are franchised. The vast majority are Company owned, trust ne I was an Assistant Manager for them before I relocated to teaching. Now Subway thats a completely different ballgame.

The only drawback to " Franchising" is the setup costs and the amount of direction the "Parent" Company give you.

Sorry to go back to McDees but I worked for both Company stores and Franchisees, and I know which one I preferred to work for. Incidently their training programme was and still is the BEST on planet earth, provided you have Total commitment!!!!!!

Regards Clare

Hi Clare,

I thought the big majority were Franchisees, but happy to be corrected :)

As far as McD's go, there is a business writer called Geoff Burch and he always holds McD up as the perfect Business Model. They may not make the best burgers, but in terms of processes, training, standards etc, if you can emulate McD's then you are onto a winner, which I get the feeling is your belief as well :D

Good point about direction from HQ - for some people that will help them tremendously, to some it will be be useful, and to others it will be seen as interference (and for the latter, they should not really have bought into the Franchise concept in the first place I would say).

In terms of the Franchise costs, something like McD, KFC or similar ask for a massive amount of money to start up and actually quite a low maximum age - so need maybe £200k and be in early 40's tops. That is quite unusual for Franchises generally I think with Upfront Fees much lower typically and the actual upfront IP cost (to buy into the system and secure the territory) are generally, for SMART franchises at least, actually not bad at all in fact (it is not a large part of the initial fee), but the ongoing Management Fees are the ones that could bug longer term if someone feels it is a bit of a one-way street

[MarsKy]

I've used 4 different ones in the past ten years. All did a great job - totally invisible repairs.

1st one worked for ChipsAway - he ran 2 vans with his son. But they were murder to book - always busy, and then it was weeks before they could find the time to come out.

2nd one worked for a franchise. The guy bought all the gear and a brand new van, via the franchise. The franchise went bust, and the poor s*d had no work, but was still indebted for thousands to the franchise for all the equipment costs.

3rd one simply went on a training course for SMART repairs, bought his own equipment and a 2nd hand van, and was never out of work.

4th one worked solely for dealers just sprucing up cars on the lot. I scratched my new car on the day I got it, and the dealer went out of his way to get the SMART repair done for me privately.

Strangely, when phoning around for one repair, many said they couldn't do the work I wanted done, saying it would need a respray. But the 3rd guy mentioned above did a fantastic SMART repair within 2 hours. There does seem to be different levels of capability (or willingness to take on jobs).

[Manxrav]

Good points there Marsky.I needed a Smart repair for the Urban cruiser just after getting it (not my fault) Dent Devils was trying to get blood out of a stone, no response at all.finished up with an indy on island, who did a first class job.

David, it is in region of £250000 to get a McDee,s Franchise and not over 40,ish. The vast majority of "Franchisee" are ex Managers or Regonal Managers, who move over to running their own. Biggest Franchisee in the Uk is an Indian Gentleman who runs most of Yorkshire Region!!!!!

Regards Clare