AAMCO Franchise Cost, Profit & Failure Rate 2024

AAMCO Transmission is a franchise business with a long history, established in 1957.

It operates in the automotive maintenance and repair sector, offering various services related to vehicle care.

Despite its founder, Martino, leaving to start the MAACO franchise, AAMCO has continued to thrive and grow through its franchise program.

Before considering joining the AAMCO franchise, it is important to have a clear understanding of the costs, requirements, and responsibilities involved.

This article aims to provide comprehensive information about the AAMCO franchise opportunity.

AAMCO Franchise
AAMCO Franchise

About the AAMCO Franchise

AAMCO Transmission is an American company that provides services related to vehicle maintenance and repair.

It is considered one of the world’s leading auto repair franchises, and it became an iconic brand through more than 50 years of history and experience. 

Part of the success of AAMCO is due to its winning marketing campaign. 

Their TV and radio commercials, in particular, have become highly recognizable: they all end with a voice saying, “AAMCO, double A (car horn beeps twice) M-C-O.” They also made heavy use of celebrities in their advertising.

The company exposure brought AAMCO to become one of the most known brands in the car care sector, and that’s why opening a franchise with them can be a very good deal for any franchisee.


History of the AAMCO Franchise

History of the AAMCO

In 1957, Anthony A. Martino founded AAMCO in Philadelphia. Before that, he was repairing cars in a small space in an ESSO shop.

The name of the company is due to the founder’s initials, but it was also chosen so that it could appear higher in the Yellow Pages, which was the main tool that people had to find the services they needed back then. The marketing strategy was key for this business since its very early days.

Martino and his partners soon started opening additional stores in Philadelphia.

In 1962, A collaboration with Robert Morgan transformed AAMCO into a national chain of transmission repair stores through a franchise program that is still active today. 

In 2006, AAMCO was sold to American Capital and just kept growing.

Today, AAMCO is the world’s largest franchisor in the sector of car care specialists, with 527 active locations in North America.


AAMCO Franchise: Business Model

AAMCO is a company that provides car care services. It is also a franchise (the biggest in the sector), meaning that you can become the owner of one or more AAMCO stores. 

Company nameAAMCO
Business ModelFranchise car care centers
Initial Investment$226,300 – $330,500
FranchiseYES
Franchise Fee$39,500
Royalty fee7,5%
Number of units527

How Much Does It Cost To Open An AAMCO Repair Center?

The initial investment required to open a new AAMCO business falls into a range between $226,300 and $330,500. 

As happens for all franchises, the initial investment comprises the franchise fee and the costs for the location, equipment, construction, and inventory. The initial franchise fee amounts to $39,500.

Other than the initial franchise fee, you’ll need to pay an ongoing franchise fee: it’s the 7.5% royalty fee, which is calculated on your gross revenue.


AAMCO Franchise Profit & Revenue

The profit and revenue of AAMCO franchise owners may vary depending on the size of the outlet, demand, location, etc.

However, AAMCO franchise owners make $713,092 in revenue per year. This data is based on the average sale of 536 AAMCO franchise outlets.

And by assuming a profit margin of 19%, we estimate that an AAMCO franchise owner makes $135,487 in profits per year.

This is how we calculated the annual profit for the AAMCO franchise:

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%713092.00
Cost of Goods Sold (COGS)25.31%180501.41
Salaries20.25%144401.13
Labor (Variable)13.16%93860.73
Rent10.13%72200.57
Franchise Royalty Fees5.06%36100.28
Insurance5.06%36100.28
Utilities2.02%14440.11
Total Expenses81.00%577604.52
Net Profit19.00%135487.48

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.


AAMCO Franchise: Requirements

As you’ve just discovered in the previous paragraph, the AAMCO franchise is quite expensive; to apply for this franchise, you must have and demonstrate a net worth of $250,000 and available liquid cash of $65,000.


Payback Period Of AAMCO Franchise

With an investment of $330,500 and an estimated 19% profit margin, the yearly profit would be $135,487.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Investment / Yearly Profit = $330,500/ $135,487= 2.43 years

Based on these figures, it will take approximately 3 years to pay back the initial investment for AAMCO. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


Failure Rate: AAMCO

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2020559553-6
2021553549-4
2022549541-8

For the Franchised outlets:

  • In 2020, the failure rate was (6)/559×100≈1.07%
  • In 2021, the failure rate was (4)/553×100≈0.72%
  • In 2022, the failure rate was (8)/549×100≈1.45%

According to the above-mentioned data, we can see that the franchised outlets for AAMCO declined from 2020 to 2022, showing a failure rate between 1.07% and 1.45%.


AAMCO Franchise: Training and Support

AAMCO Franchise Training and Support

When you get your deal with the AAMCO franchise, before you set up your new unit, you can get access to training and orientation directly provided by the company.

They offer a 3-week training (called AAMCO Operator’s School) that provides you with insights about all the operations of an AAMCO franchise unit.

A 5-week Grand Opening Operations Development Training is also available: it is held in the first quarter after the franchise unit has been open.

Franchisees can also benefit from AAMCO marketing support. We’ve already mentioned how AAMCO focuses on marketing and advertising; with this program, you’ll get to learn AAMCO’s proven marketing strategies so that you can use them for your franchise business.


AAMCO Franchise: Terms of Agreement and Renewal

The franchise contract with AAMCO is 15 years long. After this time, you can renew your contract and pay a renewal fee. 


AAMCO Franchise: Obligations and Restrictions

AAMCO recommends that franchisees participate as the first person in the business operations. It is not, however, mandatory.

If the franchisee can’t participate in the business operation, they must hire a manager. 

There are also recommendations about the employee hiring process: candidates must demonstrate themselves to be honest and dependable.

However, these are all recommendations; no obligations are indicated in the franchise contract.


AAMCO Franchise: Financial Assistance

As you can see, the AAMCO franchise can be quite expensive. 

For this reason, the company provides resources to help franchisees cover the start-up costs of their new business, both in-house and through third parties.

Opportunities abound for entrepreneurs in automotive service franchising, including brands like  Jiffy LubeGrease MonkeyExpress Oil Change FranchiseZiebart, and Alta Mere.


AAMCO VS Meineke

Company nameAAMCO Meineke 
Founded19631972
Number of Outlets598966
Franchise Fee$39,500$35,000
Royalty fee7.5%$20,800
FranchiseyesYes
Total Initial investment$250,000$350,000

Conclusion

The AAMCO franchise is one of the most expensive, but it is also the most successful.

There are many factors that contribute to the company’s success. What matters, however, is that this is the world’s biggest franchise in the sector of the car care industry. 


AAMCO Franchise: FAQs

Is AAMCO a franchise or chain?

AAMCO is a franchise. It is actually the world’s biggest franchise in the sector of the car care industry.

Who is the owner of the AAMCO franchise?

The AAMCO franchise is currently owned by Icahn Automotive Group, and Jim Gregory is the current CEO.

How many AAMCO centers are currently there?

At the moment, there are 527 AAMCO car care centers throughout North America.

Is the AAMCO franchise a good investment?

The AAMCO franchise is the best investment you can make in the car care sector.

The franchise is the biggest in this industry, and the AAMCO car care centers are very well-known and trusted. 

Is the AAMCO Franchise worth it?

The AAMCO Franchise isn’t a low-cost franchise. It is, on the contrary, quite expensive both because you need to set up an entire car care center and because the initial franchise fee is quite high (almost $40,000).

Nevertheless, the investment is worth it because it can generate great profit in a quick turnaround.

The brand is so well known that it almost needs no advertising, and car care is a sector where the market demand is always high.

Where is AAMCO headquartered?

The headquarters of AAMCO is located in Horsham, Pennsylvania, United States.

Reference: AAMCO Transmissions – WikipediaAAMCO Franchise – How To Open, Cost & Profit (startupback.com)

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