How to buy a car wash

| 4 min read

There are 3 very compelling reasons why you could want to buy a car wash: it is a comparatively uncomplicated business, it has strong and steady demand, and is relatively inexpensive business to buy.

Most households have a car and many have more than one. Further, outsourcing cleaning is fairly cheap and since most car washes are hand car washes, they do not require any expensive equipment or products.

Instead of opening up a new one, you can buy an established car wash which has a proven track record located on a busy road at a prime location.

Business transfer agents

Regardless of which sector or industry you want to venture into, hiring a solicitor or a business transfer agent can help you secure the best deal if they have experience in acquisition of similar businesses.

You will require a solicitor to also carry out the conveyancing of the freehold the business has been established on. However, a large part of the work of a conveyancer is spent in preliminary matters and drawing the agreement for sale which usually precedes the transfer document, signed at “completion”.

What type of car wash do you want to buy?

 A car wash can be as simple or sophisticated as you could want it to be.

There are drive through automated car washes, the most expensive of car washes. Provided there is a steady flow of customers, automated car washes can service more customers, consequently, generating more income in a lesser time frame.

They are not as labour intensive, so require fewer staff which translates to higher gross profit margins. However, you have to factor in the maintenance cost of the expensive equipment to find out what you will be truly making.

On the other hand, there is the self service model, which is also not labour intensive and is cheaper to maintain as it does not require expensive cleaning equipment. However, it requires more effort from the customer.

Next, there are car valeting or detailing. They offer more substantial services like polishing, waxing, paintwork restoration. Such car washes tend to attract more on higher incomes and car dealerships.

Last but not the least, there are mobile valeting businesses. They offer tremendous value as you will not require a premise for the actual car wash and it is relatively easier for the customers when they do not have to drive to a car wash. 

Business valuation

Sellers do not usually under value their business and would have gotten their business valued from an independent expert. However, it could be worth to get your own valuation from an expert so as to ensure that you are paying a fair price.

Car washes are usually valued as per the profits earned over several years, keeping in mind the expense to set it up (land and equipment).

Due diligence

The process of due diligence is one that provides a thorough investigation into a proposed investment transaction. It means you check the investment worthiness, and assess the full claims made by the owner. This check is usually performed by a solicitor and accountant who act on behalf of the buyer. A large portion of due diligence will involve checking financial statements and accounts.

You should not only assess the car wash, but also spend some time watching the flow of traffic. A busy street means more potential customers. If it car wash if co-located with a petrol station, which gets a steady flow of customers, it will be a massive advantage.

Click here to find more about due diligence.

You need a solid contract

You, as the buyer, will have to produce the sale document. This agreement will have to cover the mechanics of the deal – what is being sold, where it is, how it is to be transferred, and so on. This is where warranties come in. Click here to download a business sale agreement.

Warranties are legally binding promise as facts about the business, which provide information relating to the business. Click here to know about how warranties work and why they are important.

Other documents you need

The starting point for documents are those relating to the sale and purchase – of company shares, or of business assets.

Additionally, you may need assignment and novation agreements to transfer contracts the seller is a party to.

If company shares are being sold, then you will need directors service agreements, board minutes to document approvals to changes, and possibly, a new shareholders agreement and new articles of association.

We can help you find exactly what you need for your circumstances if you contact us and ask

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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