Why the hell is Procter and Gamble getting involved in the car wash industry? Also, why is perhaps the greatest consumer products company of all time getting into the franchise business? You see, P&G is a great branding company, and some believe it’s the best in the world.
What intrigues corporate America about the car wash business? Well here are some of my thoughts: There is a contingency of Harvard Business School MBA students who have as part of their class assignments accessing the concept of a Nationwide “Car Wash Company” and once these kids they get out of school, they remember this and then they think it’s a good idea.
So some end up in big fortune 500 companies like P&G (which is a BIG COMPANY so don’t get me wrong), some end up as investment bankers, and some turn up in the car wash business from time to time.
I can remember P&G Mr. Clean showing up to debut at the International Car Wash Convention many years ago and actually felt a bit of anger from the car wash owners. It seemed that P&G assumed that car washes would sell their ‘personal’ car wash systems for home washing and thought they were a kindred spirit to those in the car wash industry.
P&G advertised in all the car wash magazines and spent a lot of money (relative to the car wash industry, not giant P&G, whose annual gross income is 15 times the total of the car wash industry combined) . I laughed because I thought it was good to rub it in the arrogant and politically petty car wash industry’s face, they deserve it, mostly airheads, only a few really get it (5-10%). [personal opinion from years of observing the industry].
The Mr. Clean product appeared in major retail stores in small packages and sold well, as expected and well researched I’m sure. Once again, I felt the tension, it seemed to be pissing off the industry, kind of like Maguire did when he fired up the auto detailing industry and sold directly to the public, he pissed everyone off. Good move for his bottom line, but bad move for his dealer networks, especially with other strong product lines like sub-brands of Pennzoil or Auto-Magic, an industry mainstay, poised to pick up new dealers.
Car wash owners and the car wash industry; well it’s ruthless, throw yourself into the dog industry, it’s a profitable business and it attracts disreputable people, would-be mobsters, it’s pretty disgusting. Many have criticized players like Mace Securities who entered the business, for example, with an interesting history there.
P&G could try, but I think they should buy Mister Car Wash, change the name to Mr. Clean, and make “Mister Car Wash” a mini sub-brand, merging without disrupting either brand; I think I could make that happen well enough. This would give P&G notoriety in the market, but it would also cost them.
Mr. Clean could then sell those units as master franchises, where they were pooled, and use them for new training facilities, for new owners. P&G has big guns and could use this to help raise financing as construction of a new car wash business has stalled due to financing issues. Still, because washing applies across the board, pretty much everywhere. Yes, it will be picked up and the new model will have to be $5.00 car wash in 5 minutes. Only a couple of companies have mastered it so far.
P&G plans to sell their franchises for $500,000 and that may not be enough to make a car wash company, and I haven’t looked at the FDDs (Franchise Disclosure Documents), to see what the franchise buyer gets. In fact, I’d like to see the “prefab” buildings first (if that’s the strategy), then maybe I could fit in a 500K deal.
P&G could also make it work, like a hand wash, mostly outdoors, like they do outside of Tempe, AZ, near the university, where college students wash cars on a concrete slab with a clarifier underneath. , but that won’t work. be so good for a place with inclement weather. And I doubt P&G is looking there because that’s not their style, but it would work fine. Although I haven’t seen the plans, I doubt they’re looking around.
Instead they are looking at a full install, it’s just not in the cards IMO and I question its strengths and weaknesses, I’d like to see its SWOT analysis and poke some holes in it. Also, for a company like P&G, they want to sell their products, therefore they don’t want to own the car washes, so they want to franchise them. Wrong! That’s not right for your corporate focus or core business. And franchising is a litigious industry, and Amos, its new CEO, knows that truth better than anyone in the industry.
Most of the franchisors in the car wash sector; Bob’s Car Wash, Rapido Rabbit, etc. have failed due to lack of capitalization and selling to franchisees that failed. While P&G doesn’t have to worry about that, it doesn’t mean they should go and dump money in a car wash sludge pit!
The car wash industry is oversaturated now and with the economy down, more so, it will clearly be 18-24 months until it returns, while new outlets will fall short of legitimate ROI targets in that climate. Sure, things will come back, but it will be a while. Any company entering this market will have to be low cost and extremely high volume to win.
Most cities will likely expedite building permits now, which means a maximum of 6-9 months between submission of plans and first shovel delivery, and 6 months to build. That’s 12 months and that means 6-12 months of lousy performance. Yes, the best time to do this is when land is cheap, available, and distressed. But there is a time lapse gap here and biting the bullet now, because a huge full franchise system is the wrong strategy once again in my opinion. I could get it to work, but I guarantee you can’t, since it’s been introduced.
The Mr. Clean brand is in hot water because the NPDES and storm water rules are tightening, their product for home use puts consumers in danger of breaking the law with water pollution rules. So their only option is to do something different, but I don’t think they’ve thought it through properly. It will be interesting to watch, that’s for sure. Think about this.
