FRANCHISE INFORMATION PACKAGE
Why our customers prefer getting their vehicle inspections done at InspectaCAR? It s simple, we re certified, experienced and not a repair shop.
TABLE OF CONTENTS 04 ABOUT US 04 OUR MISSION 05 OUR HISTORY InspectaCAR S JOURNEY 06 IS InspectaCAR THE RIGHT BUSINESS FOR YOU? 07 FRANCHISEE TRAINING PROVIDED 08 CAPITAL REQUIREMENTS 09 INSPECTOR TRAINING PROVIDED 12 FRANCHISE PROCESS 13 FAQs 15 NEXT STEPS
ABOUT US We aren t new to the Canadian automotive service industry; in fact, InspectaCAR has been operating in Alberta since 2010, and our unique and proven No Repair Policy vehicle inspection business has saved thousands of customers from costly repairs that weren t necessary, as well as helped countless others avoid the pitfalls of purchasing a pre-owned vehicle that is a lemon. OUR MISSION Our mission is to establish InspectaCAR as Canada s first independent vehicle inspection franchise and to become the leading authority in unbiased vehicle inspections across the country. 4
OUR HISTORY InspectaCAR first launched in Lethbridge, AB in May of 2010. The following January we opened our second inspection facility in Calgary, AB. We knew we were onto something special after both locations broke even within the first three months of opening! Since that time our business has continued to grow and interest in our franchise opportunities exploded after InspectaCAR was featured on Dragon s Den in late 2013 when we received an offer from Jim Treliving (Mr.Lube) and Bruce Croxon (Lavalife). Today, thanks to the Dragon s Den, demand for our business model now stretches across Canada. Since airing on the show InspectaCAR has witnessed phenomenal growth in support and interest from fans and prospective franchisees from coast-to-coast. With our strong management team, and support from the Dragon s, InspectaCAR s future now looks brighter than ever. 5
Is InspectaCAR the Right Business for You? Our goal is to establish InspectaCAR inspection facilities in every province across the country. Now we just need enthusiastic entrepreneurs to join our franchise team to help us in our quest to establish InspectaCAR as Canada s leading authority on independent vehicle inspections. That said, we aren t willing to sacrifice quality for quantity; therefore, only those franchisees that meet our strict selection criteria will be selected to join our team. We need to ensure that each of our franchisees possess the necessary skills and entrepreneurial drive that are required for both parties to succeed. To help you decide if InspectaCAR is the right business for you please see our list of requirements below: Franchisee Profile Requirements Exceptional ability to build and lead a team Adhere to the InspectaCAR business system A passion for delivering and maintaining superior customer service Demonstrate unwavering commitment to providing outstanding service Strong business acumen Always be ready to roll up your sleeves and help out where necessary Hands on commitment and superior work ethic Be willing to share your success and failures with the InspectaCAR team An entrepreneur with the drive to do whatever it takes to succeed Give back to your local community 6
FRANCHISEE TRAINING PROVIDED Our training program for a new owner is competency based and typically takes one month to complete. This first phase of training is a one-week on-boarding program. During this module, each new franchisee will be introduced to members of our different functional departments and will learn how each of these business units will support each new franchise facility during start-up and subsequent day-to-day operations. Our second module is a very comprehensive program that is comprised of web-based learning and hands-on experience facilitated by instructors in our Lethbridge, Alberta headquarters. During this phase of our training program, new franchisees will learn the different programs associated with InspectaCAR. These programs will help you successfully track and manage technician s time, bookings, classifieds and report generating with our own specialty software and website. You will also learn outside vendor s software for proper inspection specifications, labor quotes along with receiving social networking advice. In our third and final phase, we provide in-store practical training experience while one of our commercial account representatives works to promote your facility. By the end of this stage, franchisees will have acquired all the necessary competencies required to successfully own and operate their own InspectaCAR facility. Training includes: Client intake and service management Product knowledge and handling InspectaCAR team training and customer service focus Marketing and promotions Purchasing and inventory control Effective management practices Staff development 7
CAPITAL REQUIREMENTS Our franchisees have the opportunity to lease InspectaCAR facilities, as well as convert their existing repair facility into an InspectaCAR inspection station. However, as we expand our operations across Canada it is paramount that each franchisee is matched with a suitable location. The specific cost of an InspectaCAR facility will depend on the building size, required furnishings, equipment to be installed and location. Typically, the turnkey cost of purchasing an InspectaCAR facility will be in the range of $225,000 to $350,000, however, the actual cost may exceed $350,000 in certain locations due to higher development costs. Included in the cost of the franchise is the following: Assistance with site selection and lease negotiation All equipment, furniture, display equipment and signage Use of recognized and respected InspectaCAR system and brand equity 1-week training program in our hands-on facility located in Lethbridge, AB Store-Opening Manager to assist in the opening of your InspectaCAR and training of your employees for 1 week The use of all InspectaCAR Proprietary Manuals, Systems and Vendors Right to use the Trademarks or Trade names Comprehensive marketing and merchandising programs Ongoing support from the Support Office and field personnel Not included in the cost of the franchise: The building The property that the inspection facility is built on The term of the license agreement is 10 years with an option to renew for a further 10 years. 8
Average outlay to establish a new InspectaCAR is outlined below: ESTIMATED INITIAL INVESTMENT BY FRANCHISEE (NEW LOCATION) Category Investment Franchise Fee $25,000 Training Fee $7,500 Training and Attendance fees $2,000 - $10,000 Insurance premiums during training $200 - $500 Vehicle Inspection Certification Program (cost per technician) $500 Inspection Facility Development Costs Construction of leasehold improvements, fit out, signage $25,000 - $50,000 Equipment $50,000 - $100,000 Project management fee $7,500 Legal and professional fees, including design and architect fees $20,000 - $25,000 Utilities deposits and hook-ups $0 - $20,000 Permits and licenses $3,000 - $5,000 Monthly rent $4,000 - $10,000 Security deposit $2,500 - $10,000 Point of Sale (POS) System initial cost $500 - $1,000 Inventory, office equipment and supplies $20,000 - $25,000 Opening advertising and promotion $5,000 - $7,500 Insurance premium for first year $3,000 - $4,000 Working capital $50,000 TOTAL $225,700 - $358,500 Ongoing Fees Rates Royalty Payments 5% National Marketing Fund 1.5% Local Marketing Fund 2% (Actual costs can be above or below the above estimates depending on location site specifics, contractors, etc.) 9
INSPECTOR TRAINING PROVIDED Vehicle Inspection Certification Program This course is required for all journey person mechanics that will perform Motor Vehicle Inspections on behalf of InspectaCAR. This 3-day course will include two days of theory and one day of practical. Prerequisites include Certificate of Qualification (TQ#), or Red Seal status in Automotive Repair Trades. Apprentices who have reached level four in any of the above trades can also participate in the course but will not receive their Inspectors Certificate until they become certified mechanics. Participants are eligible to receive Authorized Inspectors Certification upon successful completion of the course. Course Content This course will cover the following content: Classes of motor vehicles Motor Vehicle Act and Regulations Designated Inspection Facility Program Preventative Maintenance Program Inspector Qualifications and Responsibilities Responsibilities of Facility Operators and Inspectors Vehicle Inspection Manual Procedures for forms completion and decal application Vehicle Inspection e-forms general procedures and how to sign up Preparation and administration of Authorized Inspectors examination 10
EXTENDED SUPPORT InspectaCAR offers continued support through our proprietary business system to assist each Franchisee in managing their day-to-day operations. Ensuring each Franchisee s business is an ongoing success is our top priority, which is why we are continually improving our business systems to serve our partners better. We want to provide each one of our Franchisees with the most up-to-date and relevant tools, policies and procedures and deliver them in a timely manner. At InspectaCAR we know that the business landscape is constantly changing, which means our business has to adapt with it in order to achieve our corporate goals. Our list of ongoing support includes: MARKETING We provide ongoing support with advertising, media, pricing, public relations, merchandising, local marketing, national marketing and market research. TRAINING Additional training and information updates for managers, support staff and technicians are provided on an ongoing basis when changes to our business systems or vehicle inspection protocols are made. FINANCE Our financial assistance program includes the use of our payroll systems, proprietary inspection performance tracking software, loyalty programs and custom web portal. In addition, we are able to provide lower cost liability insurance and health premiums through group coverage. IT Franchisees will also be provided access to our IT specialists who are there to assist with issues relating to hardware, software, system administration and other IT requests. OPERATIONS InspectaCAR manages their districts by offering the time, knowledge and energy of a District Operations Manager. Our District Managers are responsible for a designated territory to ensure the utmost focus and commitment to our Franchise Partners. In addition to providing experienced and knowledgeable feedback and guidance, they also ensure that our standards of inspection quality, value, cleanliness and customer service are consistently met in all locations within their district. PURCHASING Franchisees will also be able to benefit from InspectaCAR s group purchasing power which affords superior discounts on product pricing and services only available to companies with the minimum required economies of scale. INSPECTACAR NETWORK We consider our network to be one of our greatest assets. That is because we believe networking to be the most powerful marketing tactic available to any individual or organization. Our franchisees will be able to accelerate their success by having access to our vast network of business professionals who are willing to share information and their advice. 11
FRANCHISE PROCESS Month 1 Prospective franchisee fills out the Franchise Inquiry Form found under the franchise tab on our website (www.inspectacar.ca) We will respond to the inquiry with information on Franchise opportunities available in the area of interest and to answer any additional questions posed in the inquiry. If both parties wish to proceed, an application form will be emailed. If the application is approved, a member of our Franchise Team will contact the prospective Franchisee to arrange a meeting Months 2-3 Upon completing the 1st interview, if the prospective Franchisee is deemed to have met all the InspectaCAR criteria the due diligence process commences The prospective Franchisee will be asked to sign a non-disclosure agreement and be given a copy of the franchise agreement for their review During this stage the prospective Franchisee will be required to get an approval for any financing they may require Once financing is secure the Franchisee signs the franchise agreement and pays the franchise fee to InspectaCAR Month 4-6 Members of our Franchise Team work with real estate professionals and the Franchisee to locate potential sites Once approved, the site is secured, the lease is signed, and the possession date is finalized Month 6+ InspectaCAR training dates are set and build out begins (6 12 weeks) Training is completed Inspection facility opens 12
FAQs HOW MUCH CASH AM I GOING TO NEED UPFRONT? An initial cash investment of approximately $150,000 to $250,000 is required depending on the size of facility and location, plus $50,000 in working capital. At least 50% of the franchise cost must be unencumbered (cash or liquid assets). The remaining amount may be financed through the chartered banks, or by way of the Canadian Small Business Loan program. HOW MUCH CAPITAL NET WORTH IS REQUIRED FOR A FRANCHISE PART- NER? We require a minimum net worth of $500,000 and unencumbered capital of a minimum of $150,000. HOW MUCH CAN I EXPECT TO MAKE? By law we are not able to provide earnings claims; therefore, we cannot guarantee any financial results or timing of said results. However, we are able to provide you with a financial modeling tool that you can use to assist in calculating your own financial projections. We will make this tool available to you after we receive your signed non-disclosure agreement. AM I REQUIRED TO BE A FULL-TIME OPERATOR? At InspectaCAR we believe the best results are achieved when the owner of a franchise is fully involved in the day-to-day operations of the business. However, we do permit absentee investors provided they have an operating partner who also invests his or her own capital and has an equity interest in the business. WHAT ARE THE ONGOING FEES? Ongoing Fees - Monthly Rates ROYALTY FEE (GROSS SALES) 5% NATIONAL MARKETING FUND (GROSS SALES) 1.5% LOCAL MARKETING FUND (GROSS SALES) 2% DOES INSPECTACAR OFFER FINANC- ING? No, InspectaCAR does not lend funds to finance the cost of the franchise. However, InspectaCAR is respected and recognized by all major Canadian banks that offer the Canadian Small Business Loan. Once you have been awarded a franchise with InspectaCAR, we will be happy to introduce you to our banking contacts. DO I HAVE TO BE A MECHANIC TO OWN AN INSPECTACAR? Despite our No Repair Policy, a certified journeyman technician who is licensed by their province s vehicle inspection program must perform each inspection; therefore, at least one equity partner (or operating manager) must hold a valid journeyman technician license and be certified to perform vehicle inspections. HOW LONG DOES THE CONSTRUC- TION PROCESS TAKE? There are many stages to prepare for construction including, but not limited to, planning, design, blue prints, engineered drawings, landlord review, city approval, and the tendering process. While the actual construction time of each franchise may vary considerably, we estimate the construction time of each facility to range between three and six months. 13
FAQs Contd... CAN I RENT A SUITABLE LOCATION OR DO I HAVE TO BUILD? Yes, you can rent, however, building your own facility is also an option. The location would have to be deemed suitable by the InspectaCAR team and may be an acceptable alternative. WHO DESIGNS THE FACILITY? All designs are done in-house and with a design specialist. As a Franchise Partner, you will have limited involvement in the design or layout of your facility. WHO MANAGES THE CONSTRUCTION PROCESS? InspectaCAR s Franchise Team assists you with the construction process and works closely with the general contractor that you, the Franchise Partner, can select from an approved contractor list provided by InspectaCAR. WHAT ONGOING SUPPORT WILL I RE- CEIVE? InspectaCAR manages their districts by offering the time, knowledge and energy of a District Operations Manager. Our District Managers are responsible for a designated territory to ensure the utmost focus and commitment to our Franchise Partners. In addition to providing experienced and knowledgeable feedback and guidance, they also ensure that our standards of inspection quality, value, cleanliness and customer service are consistently met in all locations within their district. 14
NEXT STEPS Still have questions? We would be happy to answer them. Just visit www.inspectacar.ca and click on the Franchise tab. Additional questions can be posed by filling out the Franchise Inquiry Form. Thank you for your interest. We look forward to receiving your application and working with you during the next steps of our due diligence process. For Additional Information Please Contact: Braden Chase Director of Strategic Corporate Advancement 1-888-994-9550 braden@inspectacar.ca 15