How many times have you looked out your branch window at the cars moving through the ready and return lines and thought, “I have the experience and know-how to be doing this for myself?”
Is the next question, “Do I have the working capital and appetite for risk to pull it off?”
Many mid-level RAC managers dream of running their own car rental business as either a franchisee or an independent, yet typically the biggest single obstacle preventing them from fulfilling that dream is limited working capital.
From implementing a new marketing and business plan and selecting and securing a location to sourcing and disposal of vehicles, the idea of striking out on one’s own can be downright daunting.
Yet what if you had a partner with international brand recognition willing to cover vehicle and facility expenses, thereby allowing you to focus solely on managing the operation and business development?
Would you then say, “I can do this”?
Avis Budget Group’s Independent Operator Program is well-suited for those with an entrepreneurial spirit who may not have the financial resources to get a new location off the ground. And the program is not limited to people with car rental company experience.
Independent Operator Program
While the major local market competitor has expanded through corporate-owned stores, and others have enticed their licensees to open smaller (non-airport) locations, Avis Budget decided to increase its brands’ local market presence through a unique, hybrid program.
Initially started by Avis then adopted by Budget when the two companies merged, the Independent Operator Program combines corporate support with local knowledge and entrepreneurial commitment, benefiting both the parent company and the operator.
The key to the program, says Michael White, vice president of local markets for Avis Budget, is selecting operators committed to developing the Avis Budget brands and placing them in local markets. To facilitate this process, the Avis Budget Group takes full responsibility for site selection, facility expenses, rental car sourcing and disposal, training, sales support and risk management issues.
In assuming these responsibilities the company has found that the operator can then focus primarily on customer service and market development. Avis Budget further determined that because the company is providing its expertise to vehicle fleet planning, the operator does not necessarily have to come from a rental car background. In fact, many current operators are from retail, body shops and customer-centric businesses.
While a rental car background may be a positive, Avis Budget has found it much more important to select candidates “with strong community ties and a strong entrepreneurial spirit,” says White. [PAGEBREAK] Not a Franchise
The Avis Budget Independent Operator Program is not a franchise; it is an independent contractor arrangement.
The selected independent operator is the face of Avis Budget in that market area, yet has no start-up franchise fees or ongoing royalties to pay to the parent company. Avis Budget retains site control and authorizes the contractor to operate the location on the corporation’s behalf.
The operator and staff work with customers as well as other local businesses and community organizations to promote and develop the rental business. The operator is responsible for marketing, employment-related expenses and vehicle cleaning. Meanwhile, Avis Budget is responsible for providing the operator with training and vehicles, and covers the rent and utilities as well.
Avis Budget supplies the account with vehicles from its regional pool. New locations might only get 10–15 units to start, but once a satisfactory utilization rate is maintained the district manager will coordinate assignment and delivery of more vehicles. After a couple of years in operation, the typical independent operator has an average fleet size of 125 vehicles; some exceed 200 units.
The operator and district management regularly review inventory levels in a “push-pull” approach, as it is in both parties’ best interest to put vehicles as close to the customer as possible. “Proximity is king,” says White.
This differs from a regular rental operation in that the independent operator is not required to spend time with fleet planning, acquisition and disposal.
Should the location suddenly have too many idle cars, the operator would contact local management to arrange to pick up the excess units. However, other than limited parking, there is no charge to the operator for idle vehicles.
The operator’s income is based on a percentage of all rental revenues (time/mileage charges) as well as revenues associated with CDW sales, fuel charges, child seats and other renter benefits.
The majority of customers renting from independent operators are either “weekend get-away” or replacement (service/insurance) type renters. Avis Budget directs customers to the independent operator’s location through the corporate reservation service via phone and the Internet.
As with any retail operation, location is a major factor in sales revenue. The company uses its considerable resources in the evaluation, selection, negotiation and development of the site. “Avis Budget contributes a significant amount of time and capital to demographic research during our site selection process,” White says.
However, to succeed and grow it is up to the operator to take the reigns and develop repeat customers through relationships within the local market.
With that in mind, corporate support for sales development is ongoing. Local sales managers routinely work with operators to train and assist them in developing local business. The program is supported by a national marketing support group that assists the local market sector exclusively with monthly regional meetings between operators and Avis Budget district management. [PAGEBREAK] Getting Started
Avis Budget estimates start-up expenses to be no more than $8,000. This covers costs related to articles of organization (C, S or LLC), initial employee payroll, uniforms, workers’ compensation and liability insurance premiums.
Getting started is relatively simple. The local agency manager conducts a preliminary interview and has the candidate complete an agency operator application. A background check is performed, and upon successful completion the candidate is scheduled for an assessment test.
The one-to-two-hour test analyzes critical thinking and evaluates personality traits to ensure the candidate is suited to being an independent operator. The test was developed by Avis Budget based on profiles and characteristics of successful independent operators.
Once the test is scored and evaluated the candidate returns to the local district office to meet with senior district management to discuss available locations and potential future locations. During this meeting management is very open and frank about its expectations for the operator.
If all parties elect to continue, agreements are signed and the operator begins the 90-day training program.
Appreciating the time commitment, Avis Budget pays the operator a stipend during the training period. Training consists of online coursework coupled with in-person training on the Wizard (rental counter) system. Trainees receive instruction on sales techniques for counter sales as well as business development sales training.
During this period the trainee will most likely be assigned to a high-volume operation such as an airport location for hands-on counter training. Trainees may also be assigned to work for a few days at one or more of other independent operators’ stores in the district.
Additionally, as a local operation grows and adds employees, Avis Budget continues to provide training to the operators, free of charge.
White says the Independent Operator Program is an ongoing success for the Avis Budget Group. Some independent operator locations have been in business for more than three decades, while some of the newer operators are run by former employees or relatives of current operators.
There are about 1,400 independent operator locations throughout the United States and Canada, an increase from some 900 locations three years ago.
White says the plan is to continue expanding the network at a rate of 150 to 200 locations a year. To further validate this anticipated growth, White explains, “We see changing workforce patterns with aging baby boomers not yet ready to retire, and greater interest from other age demographics interested in self sufficiency and local community involvement.”
This is a terrific opportunity for someone that has recently been downsized or has retired and wants or needs to remain active, White says. With minimal initial investment the operator can leave retirement funds untouched and still acquire a local business under a nationally recognized brand.
“We have two terrific brands with Avis and Budget,” White says, “which makes this an incredibly viable business venture with very little risk.”
For more information on the Avis Budget Independent Operator Program visit avis.com/selfemployment or budget.com/selfemployment. The sites list available and proposed locations by geographical area and contact information for the location’s corresponding market development manager.