EagleRider founders and co-owners Jeff Brown and Chris McIntyre remember their first rental customers like it was yesterday.

Four tourists from Austria had just returned from their motorcycle tour and insisted that the two entrepreneurs join them for dinner. During dinner, the Austrians related, with misty eyes, how the trip was the fulfillment of a boyhood dream and that they would remember it forever. To further confirm their satisfaction, the customers even picked up the bill.

The event personifies the EagleRider motto, “We rent dreams.”

From that first rental in 1994 of four Harley Davidson motorcycles out of a backyard garage in Torrance, Calif., EagleRider has grown to 51 locations in the U.S. with additional locations in eight other countries.

EagleRider handles more than 50,000 customer transactions a year. With the current dollar exchange rate and fully 55 percent of the company’s rental business coming from overseas, 2008 is tracking to be their best ever.

Overcoming Barriers to Entry

McIntyre and Brown met in the 1980s while working for National Cash Register Corporation (NCR) and became friends with a mutual interest in motorcycles. After touring the U.S. and Canada the two set their sights on Europe. But shipping their beloved Harleys abroad was both incredibly expensive and a logistical nightmare; moreover, they couldn’t find anyone in Europe that offered motorcycles for rent. [PAGEBREAK] In their hometown of Newport Beach, Calif., the pair routinely came in contact with vacationing Europeans, none of whom were aware of a motorcycle rental company in Europe. In fact, many asked them about renting motorcycles in the U.S. And so the seeds of the EagleRider concept began to take root.

Initially, finding someone willing to finance a motorcycle rental operation seemed impossible. And building a fleet of motorcycles one bike at a time certainly didn’t support the number of reservation inquiries they were receiving.

The partners’ first big break came when they met Joe Opferman of 1st Source Bank/Truckers Bank Plan. Opferman’s company ended up providing their business with a finance line, allowing them to purchase 25 new motorcycles in 1998. “We owe a lot of our success to Joe and Truckers,” relates McIntyre. “They saw our vision, and without their help we wouldn’t be where we are at today.”

Insuring the motorcycle fleet was another issue. At the time no one else was renting motorcycles so insurance for this niche market was nonexistent. Their second break came when they finally found an insurance carrier willing to support their business.

Over the years, however, EagleRider has found that accident claims are significantly lower than those experienced in car rental, owing primarily to the fact that third-party liability claims are negligible with motorcycles.

The EagleRider Experience

The EagleRider rental experience is significantly different than typical car rental.

The majority of EagleRider rentals are booked through an extensive network of travel industry partners around the world and via a global online marketing effort that includes numerous multi-lingual Web sites. Therefore the company enjoys significant reservation lead times that allow efficient fleet planning as well as a maintenance regimen that far exceeds factory recommendations.

Because the customer is often on an once-in-a-lifetime trip, the EagleRider staff does everything they can to ensure the right bike is at the right location at the right time and in the best condition possible. [PAGEBREAK] The motorcycle is not just a commodity but part of the customer’s lifestyle. It is just as important as the trip itself.

EagleRider enjoys several things that the typical rental operation only dreams of: high daily rates (entry models start at $75/day, rates average $125/day), longer term rentals (four to 10 day average rentals) and very high utilization rates during the peak seasons. For group rentals each person typically gets a bike of their own instead of renting one car for several customers.

Because motorcycles are not covered on credit card insurance policies, 90 percent of EagleRider customers take the damage waiver. Being avid riders themselves, McIntyre and Brown found it was just “common sense” to offer suggestions on scenic routes, interesting sites and restaurants and hotels that accommodate the needs of the motorcycle rider.

To this end EagleRider gains a significant percentage of revenue through trip planning and all-inclusive guided tours for groups. “We want their trip to be ‘unforgettable’ and we do everything we can to ensure that,” says Brown.

International travelers return home with photos of classic diners and biker bars along Route 66, spurring them to return with friends. Some 40 percent of EagleRider’s customer base is repeat business.

EagleRider includes riding gear as part of the rental or as a purchase. In fact, the typical EagleRider location looks more like a riding accessory boutique store than it does a rental counter. Amongst vintage gas pumps and nostalgic Americana, EagleRider brand helmets, boots, goggles, riding jackets and pants perpetuate the mystique of the open road.

A Unique Sales Model

EagleRider has a fleet of 3,500 units currently composed of Harley Davidson, BMW and Honda motorcycles. The company’s power sport division rents Honda and Polaris off-road vehicles, personal watercraft and snowmobiles.

EagleRider is the largest single purchaser of Harleys, Hondas and BMW motorcycles in the world. Unlike the auto rental market, EagleRider has a variety of supply agreements that vary between OEM and from year to year. The company’s entire fleet fulfillment is processed via the OEMs’ dealership body, making EagleRider’s business model mutually beneficial to both the local dealer and EagleRider. [PAGEBREAK] The bikes are less expensive to buy than rental cars and they hold their value well. Locations de-fleet in the winter, though it’s not uncommon to hold bikes until spring to take advantage of the strong selling season.

EagleRider and its franchisees buy collectively through its purchasing entity, EagleRider Finance.

When a bike is set to be remarketed, usually at around 18,000 miles, the selling dealer has the first right of refusal. The system has little need for auctions because the majority of EagleRider’s bikes are sold back to the original selling dealer or to another dealer in the EagleRider network. The bikes that are not purchased by the dealer body are retailed through EagleRider’s sales division and marketed through the company’s extensive rental database.

Dealers drive business to EagleRider through replacement rentals and rental referrals for customers looking for an extended test drive. There is no official “certified, pre-owned” program in the world of used motorcycles, though each bike retailed through EagleRider receives a “1 million mile warranty.”

Taking Advantage

Knowing that Brown and McIntyre’s original dream was to ride Europe, it should come as no surprise that opening international locations are part of the business plan.

EagleRider operations include far-flung destinations such as Mexico, Costa Rica, France, Spain, Australia, New Zealand and the United Kingdom. Brown and McIntyre anticipate opening locations soon in South Africa, Brazil, Japan and British Columbia, Canada. The current business plan calls for having some 500 locations in virtually every vacation destination in the world.

EagleRider recently entered into a partnership agreement with Advantage Rent a Car to rent EagleRider products through Advantage locations in Maui, Las Vegas and Seattle. Having car rentals available in these markets allows EagleRider to rent to groups that include non-riding members.

Buying into the Dream

EagleRider is currently looking for franchisees in major metropolitan areas and tourist destinations.

Standalone locations work well in tourist areas, while dealerships or car rental locations with an established business model are optimal in cities with seasonal markets such as Chicago.

Franchisees benefit from EagleRider’s extensive international reservation network, central marketing, tie-ins to tour operators, wholesale purchasing and motorcycle insurance (theft, damage, and $3 million liability coverage) through an A++ rated insurance company.

The franchise agreement requires a dedicated and exclusive general manager for the EagleRider operation to ensure that the customer’s experience will live up to the “We rent dreams” standards. (That person can be reallocated off-season.)

Overhead is less than traditional car rental because motorcycles have a much smaller footprint. There is an opportunity for ancillary “lifestyle” clothing and gear sales.

 

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