Master Franchise FAQ
Honest-1® offers two very different franchise programs: the Single Center Franchise program and a Master Franchise program. This page of FAQ's is targeted toward the Master Franchise program. To learn more about the Single Center Franchise program, please click the link below.
View the Single Franchise FAQ pageQ: What is a Master Franchise/Area Representative?
A: Honest-1 Auto Care® has developed a Master Franchise regional program which we refer to as an Area Representative ("AR"). This program allows an AR to acquire an exclusive territory for the purpose of selling franchises and servicing the franchises that are sold in that particular area. The AR pays a fee for the right to own the territory, develop and service a specific number of Honest-1® Centers, and in return, receives 50% of the initial franchise fees and 50% of the royalties paid by the franchise owners operating in their area. Each AR has a development timetable within which to sell franchises in the exclusive territory. Generally it is a requirement to sell one franchise per year until the penetration with the territory reaches one Center per 200,000 population. Honest-1® believes that a fully penetrated market area should attain one Center per every 100,000 of population. The term of the AR Agreement is 20 years with one 10 year option to renew.Q: Tell me about the history and background of Honest-1 Auto Care® and H-1 Auto Care, LLC?
A: H-1 Auto Care, LLC is a Nevada Limited Liability Company formed on June 29, 2007. H-1 Auto Care, LLC owns the marks and does business as Honest-1® and Honest-1 Auto Care.® Our principal business address is 7430 East Butherus Drive, Suite B, Scottsdale, Arizona 85260. H-1 Auto Care, LLC also maintains websites at www.honest-1.com and www.h-1franchise.com.Our predecessor is Honest-1 Auto Care, Inc., a Nevada corporation incorporated on March 17, 2003 which offered franchises for Honest-1® Centers from June 2003 to June 2007. On July 10, 2007, H-1 Auto Care, LLC purchased all the assets of Honest-1 Auto Care, Inc.
Q: Does Honest-1® have programs for multiple Centers or area development?
A: Yes, we offer two programs designed to fit different investment levels. One is single franchise of an Honest-1® Center. The second is a Master Franchise or Area Representative program.Q: How is the territory and fee determined in the Master Franchise/Area Representative program?
A: Territories are determined by Designated Market Areas or DMA's. Territories average 2.5 million or greater in population. Generally speaking, you can open one Center per 100,000 population. The fee is based on the population of the territory and an average sized territory is $175,000.Q: Do I need to own an Honest-1® Center to be a Master Franchise/Area Representative?
A: No, our top developers do not own any Honest-1® franchise Centers of their own. By concentrating your attentions on developing new locations you maximize the income and annuity aspects of the AR program. However, many of our AR's do own a Center as well as run the development of their areas.Q: What is the franchise fee and royalty for an Honest-1® Center?
A: Franchise fees are $25,000 for your first Honest-1® franchise. Royalties are 6% of gross sales paid weekly by electronic funds transfer.Q: How do I make money as a Master Franchise/Area Representative?
A: An Area Representative (AR) will receive 50% of the initial franchise fees and 50% of the royalties paid by the franchise owners in the AR's designated territory. Each AR has a development timetable within which to sell franchises in their exclusive areas. Generally it is a requirement to sell one franchise per year until the penetration within the territory reaches one Center per 200,000 population. We believe that a fully penetrated market area should attain one Center per 100,000 of population.Q: What are the minimum financial requirements to become an Area Representative?
A: A minimum net worth of $750,000 with at least $150,000 in liquid assets in addition to a good credit rating are required to be considered for an Area Representative.Q: Is financing available?
A: Yes. At this time H-1 Auto Care, LLC offers financing for Master Franchise/Area Representatives only. Our financing program will finance up to 40% of the AR fee at the interest rate of prime rate plus 3% fixed over 60 months. There is a minimum down-payment of $107,500 required to be approved in the financing program.We also have numerous lending sources available to assist single Center franchisees with equipment or real estate acquisitions and leases. Real Estate typically requires a 20-30% down payment for purchases and/or development. With equipment, leasing companies usually require far less. With good credit, a franchisee can often lease/purchase the necessary equipment, signage and even inventory with as little as 2-5% down.
Q: Do I need automotive experience?
A: No, our franchisees come from diverse backgrounds such as business, marketing, sales, management, and technology. H-1 Auto Care, LLC offers a comprehensive training program for owners, managers, and staff.Q: How much money can I expect to make?
A: We do not make any earnings claim regarding our Master Franchise/Area Representative (AR) program. But we can explain how it works. The AR will receive 50% of the initial franchise fees ($25,000 is the fee, thus the AR receives $12,500) and 50% of the royalties paid by the franchise owners operating in the AR's exclusive area. Royalties for an underlying franchise are 6%, of which the AR receives half or 3%. As per our Franchise Disclosure Document Earnings Claim (see below) show an average Honest-1® Center generating $608,050 per year in revenue. How many franchises are sold and Centers opened each year will be the primary driving factors on earnings.Below is the Item 19 Earnings Claim for an Honest-1® Center which shows how we derive our average sales figure:
Item 19: Earnings Claim
Criteria: Centers open and operating under the same management for a time period of at least 18 months. Sales figures represented are for the year of 2007.
| Pleasant Hill, IA | $619,937 |
| Henderson, NV | $668,774 |
| N. Las Vegas, NV | $578,727 |
| Portland, OR | $594,605 |
| St. George, UT | $578,206 |
| _________________________ | ________ |
| Average Annual Sales 2007 | $608,050 |
| Average Monthly Sales 2007 | $ 50,671 |
Q: How will I learn to operate an Honest-1® Center or to run the development function?
A: Our comprehensive training program provides you with everything you need to know from Center operations to business management. Our Area Representative program also consists of training in franchise sales and real estate development.Q: What do you mean when you say that Honest-1® is different from competition?
A: First, Honest-1® proactively takes extraordinary steps to protect our environment by helping our customers maintain the most efficient and safe vehicles possible. By maintaining a vehicle in good working condition they will experience increases in fuel economy as well as reduced emissions. This has a positive impact on our eco-system.More importantly we go beyond basic standards and expectations of auto care facilities and take additional measures to protect our environment now and into the future. While offering exceptional service programs for our customers to choose from, we also offer specialized, ECO-Friendly Auto Care™ services for those that want to play a greater part in helping the environment. An example of this is our ECO-TuneUp.™ Also, we have developed an exclusive line of new products that are designed to increase fuel efficiency and decrease engine emissions. Integral to our product line is an Organic Friction Modifier, ECO 360™ which is present in over 60% of the fluid products we sell.
Through the Honest-1® ESA™ (Environmentally Sustainable Actions™) Program we employ environmentally responsible standards and practices in four primary categories:
- Pollution Prevention
- Recycling
- Resource Conservation
- Offering and Promoting ECO-Friendly Auto Care™ services
We are the first 100% eco-friendly automotive franchising company in what is commonly recognized as a dirty industry. All of our operating units have been ESA™ Certified as of August 2008!
Second, traditional industry statistics state that 66% of automotive service customers are female. Honest-1® Centers are designed to be family friendly to capture this customer base. To that end our Centers have upscale physical features such as tiled lobbies with leather easy chairs and couches, Internet workstations, complimentary beverages, large screen HDTV's, a childrens play area secured by a low wall, tiled and upscale restrooms, and exceptionally clean work areas.
Third, The name Honest-1® speaks to an important point of difference. Honesty and integrity are the pillars which hold our system together and apart from competition. We thoroughly train and reinforce integrity in every service offering to the customer. We are the Home of Honest Mechanics.™
Honesty, Value and Support, and an unwavering commitment to our customers and our environment are the priorities of our corporate philosophy.
Q: How do Honest-1® Centers receive their supplies and products?
A: Honest-1® has national contracts and a network of vendors for wholesale supplies and products. You will join this buying group as a franchisee of Honest-1.® Honest-1® also produces a branded proprietary line of fluid products which contain ECO 360™ an organic friction modifier designed to increase fuel efficiency and reduce harmful engine emissions. ECO 360™ is available only in the Honest-1® Fuel System Treatment and the Honest-1® Oil Treatment products available only through Honest-1 Auto Care® Centers.We also maintain an Approved Product List or APL that ensures all Honest-1® Centers share core products and maintain excellent quality standards. We have identified wherever possible vendor partners that share our ECO-Friendly Auto Care™ mission.
Q: What makes the Honest-1® system unique?
A: Automotive repair and maintenance is recession resistant. It has a low cost of entry. Operating hours are reasonable and you need no prior experience. That makes the franchise attractive to a varied pool of candidates. We are eco-friendly and as a result will attract the 31% of Americans who believe strongly in envrionmental concerns. This represents a $10 Billion per year segment of automotive repair and maintenance that we are focused on and well positioned to attract. Our family friendly and upscale Centers are designed to make females and families comfortable which is far different than most of our competitors.Notice Regarding Franchise Offers and Sales
This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. There are approximately 14 countries and 15 US states that regulate the offer and sale of franchises. The countries are Australia, Brazil, Canada (provinces of Alberta and Ontario), China, France, Indonesia, Italy, Japan, Malaysia, Mexico, Russia, South Africa, South Korea, Spain, and the United States of America. The US states are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states or countries, are receiving this message in one of these states or countries, or intend to operate a franchise in any of these states or countries, we will not offer you a franchise unless and until we have complied with any applicable pre-sale registration and/or disclosure requirements in the applicable jurisdiction.
This offering is not an offering of a franchise. In New York (USA), an offering of a franchise can only be made by a prospectus that has been previously filed and registered with the Department of Law of the State of New York. The application for registration of an offering prospectus or the acceptance and filing thereof by the Department of Law as required by the New York law does not constitute approval of the offering or the sale of such franchise by the Department of Law or the attorney general of New York.
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