Line-X Franchise Cost & Profit Opportunity Review

March 22, 2019


Durability seems to be a long-lost artform nowadays. Things just aren’t made to last, anymore.

 

With the introduction of salts and chemicals to our roadways, along with other corrosive materials coming into contact with our vehicles, rust has become a bigger problem than ever for vehicle owners.

 

Line-X was created to combat that very problem. With the introduction of the revolutionary product, more and more items are being protected from corrosion every day. No longer just a solution for the beds of trucks, Line-X has a full line of products to keep items safe from the elements.

 

They need ambitious, skilled people to help them spread their product around the country and world, and they are looking for franchisees to open their own shops.

 

The Line-X Revolution

 

The road to Line-X was not a short one. It began in 1982, when parent company Burtin Urethane Corp. was formed. After years of development and testing, the first spray-on elastomic coating was invented for the industry in 1988. In 1990, the United States Coast Guard would begin using the product to protect lifeboats and other equipment, giving the coating its first real boost onto the market.

 

In 1993, Line-X would break off and become its own division of Burtin Urethane Corp. Carlos Burtin, the founder of Burtin Urethane, would become president of the Line-X division and introduce the product to the Canadian market. With the new international expansion, Line-X began picking up speed and growing at a rapid rate.

 

By 1999, Line-X would begin selling franchise licenses to help spread their product even farther. With the introduction of their spray-on bedliners for pickup trucks, the popularity was rising, and franchisees were needed to help meet the demand.

 

Since then, Line-X has grown to nearly 400 franchised locations in the United States and they are showing no signs of stopping.

 

Getting in Line

Knowledge of the auto industry is a must for potential Line-X franchisees. Even with the plethora of ways that Line-X products can be used, automotive uses are still reigning supreme, so having experience in this field is highly desired.

 

Knowing how to work with customers regarding their vehicles is paramount. With this specialized service, it’s even more critical, because this is not a required service for vehicles. With an auto repair shop, the customer needs the services. Sure, they have plenty of options for who is going to perform said repairs, but either way, it needs to happen. With Line-X, this is not so. Line-X bedliners are a completely optional treatment. Though they are recommended to protect the truck from rust and corrosion, a customer can still decide against the treatment if not sold on it properly.

 

Keeping customers engaged and happy is key to maintaining high sales. Without these attributes, customers may walk out the door without purchasing anything, which is not good for business.

 

Previous experience in sales and the auto industry are important, but so is financial strength. Opening a franchise location is expensive and without financing options, the applicant will need to be able to provide proof of funds.

 

The cost to purchase the franchise license will run $30,000. That price alone is high, but it does not include the additional $125,000 to $320,000 that will be required to get the location open. When considering the space and equipment needed to run this kind of business, it’s easy to see why the estimated startup costs are so high.

 

Being able to show proof of funds is a basic requirement, but it’s not the only thing Line-X is looking for in their franchisees. They also want to see a strong credit history, as this will help them determine if the applicant can be responsible with money. Poor financial management can kill a franchise, and Line-X has no time for that. They want strong franchised locations that will continue to generate revenue for them for years to come.

 

The combination of experience, responsibility, and financial strength make up the majority of the requirements that Line-X is seeking in their franchisees.

 

The application process will contain many steps, including face-to-face interviews and on-site shadowing. The relationship between franchisor and franchisee is a long-term commitment and both sides need to be sure of the agreement before the paperwork is signed. Any party can choose to end the process at any stage if they feel the relationship will not work out.

 

For those that pass the application process and are awarded a franchise license, the real fun will begin with the location selection and construction.

 

Lining Up a Great Business

 

Finding the perfect location to house a Line-X franchise is no simple feat. The location has to be large enough to house the shop and office area needed, as well as be located in a place that is both convenient to customers and conducive to high sales.

 

Choosing a location in a neighborhood where the residents are less likely to purchase the product could result in lower sales. People generally don’t like to travel too far, especially for non-essential services, so picking an area close to the demographics that are more likely to utilize Line-X’s services is imperative.

 

The construction of the building is also important, because the layout needs to lend itself to efficiency. Having an easy flow from office, to shop, to customer areas will make the day-to-day operation of the location much easier. The franchisee should be heavily involved in the designing of the building to ensure the vision is correctly realized.

 

Once the location has been built, staff will need to be hired and trained to ensure they are qualified to provide Line-X services.

 

Line-X assists with training by providing classroom and on-the-job training to franchisees. The franchisee will then pass down this training to the newly hired staff to ensure each location is operated at the highest standards of service. Because Line-X is a proprietary product, its application must be done to the manufacturer’s specifications to ensure continuity of the product. Application is part of the product itself, and a poor application job makes the entire brand look bad.

 

Most franchisors charge royalty fees to each of their franchisees. These fees are how the franchisor continues to make money on their product, even though they don’t actually own the shop administering it.

 

Line-X is not very forthcoming about their royalty fee structure. They say that they typically don’t charge any royalty fees, but in some scenarios, may charge anywhere between 5 and 12 percent of gross total sales.

 

While it’s nice that they may not charge any fees, it doesn’t help a potential franchisee make a decision if they sometimes do. Since it is unknown what circumstance will make them charge one franchisee fees but not another, or how much that fee may be, it’s hard to compare with other franchisors. There’s a big difference between no fee, 5 percent and 12 percent.

 

It does appear that Line-X charges advertising fees. Most franchisors do, but usually only around 2 percent. Line-X charges 5 percent. If they aren’t charging any royalty fees, this is not so bad, but if they are, that adds up very quickly to a large portion of sales. Even if they charge 5 percent royalty and 5 percent advertising, that’s 10 percent being taken out of the franchisee’s pocket.

 

As far as value for the cost of the franchise license, Line-X doesn’t tell us enough to make an informed decision.

 

Line-X’s Franchise Durability

It appears that the lack of information provided by Line-X hasn’t dissuaded too many franchisees. Their total franchise location count has been on a steady upward climb for several years now.

 

Between the years of 2010 and 2015, they grew by 56 locations in the United States. For the type of service they provide, that’s a pretty impressive growth rate.

 

When looking at the franchise viability, it’s also important to analyze the turnover rate. Line-X’s turnover rate is a little on the high side, but still technically healthy. Lingering at 9.08 percent turnover isn’t bad, just a little higher than desirable for a franchise system of this size.

 

Despite their turnover rate, the overall franchise system appears to be doing quite well. The entire brand, which consists of 576 franchised locations, both in and out of the United States, and six company-owned locations, has been growing steadily since it first began franchising in 1999.

 

With growth and success at this level, Line-X is lining themselves up for a very bright future, and they’re taking their franchisees along for the ride.

 

Deciding to Sign on the Line

 

Line-X is nearly a household name. When it comes to durable bedliners, they are the go-to company. They have a brand recognition that is unmatched in their industry.

 

That recognition, along with their superior franchise system makes them a great option for a franchising opportunity. Their earning potential and ongoing support sets up the franchisee for success from the moment the agreement is signed.

 

The downsides to a Line-X franchise license are the ambiguity regarding their royalty fees, and their high turnover rate.

 

While most information about Line-X points to no royalty fees at all, there is a small disclaimer that states that they may, in some instances, charge fees. While the chances of them charging these royalty fees is probably very small, it’s still possible. It’s that possibility that makes it hard to compare apples to apples when considering other franchise opportunities.

 

A simple phone call to Line-X will probably clear up any confusion regarding this policy, but it would still be nice to have it explained up front.

 

Their turnover rate is a little on the high side, but still not terrible. It falls into the healthy range of under 10 percent, but is higher than desirable. It’s not a deal breaker, just something to give a little extra thought to when deciding between Line-X and a different franchise license.

 

Overall, there’s not much in the way of negativity that can be said about a Line-X franchise license. There are a couple of areas of concern, but nothing drastic.

 

Their turnover rate is still healthy and clarification regarding their royalty fees will make it easier for the potential franchisee to make the decision. It’s ultimately up to the candidate if this opportunity is a good fit for them or not.

 

As stated above when speaking about the desired qualifications of a franchisee, interest in the industry is a must. For those potential franchisees that have a passion for working with people and providing automotive services, Line-X is a great opportunity. It provides consistency in terms of services provided, as well as exposure to the auto industry.

 

For franchisees who are looking for a straightforward business to run with relatively low startup costs, this is also a good option. While prior experience in the auto industry is looked upon favorably, it may not be a requirement. Of course, the franchisee should have at least a little interest in the industry, otherwise the business may suffer. However, Line-X as a whole is a good, profitable option for business owners with a diverse business background.

 

The only franchisees who will absolutely be ill-suited for a Line-X franchise, are those who have no interest whatsoever in the industry, and those who do not have the desire or ability to operate a business in an area that’s conducive to high sales for this type of product. Those two attributes are necessary for the franchise to be successful, and an investor without them should not bother applying for this opportunity.

 

With a system that can work for a diverse group of franchisees, it’s easy to see why Line-X has remained successful as long as it has. They have created a franchise that has great potential and that can grow and evolve with the future of the automotive industry. It’s also a product that really sells itself. People like to protect their investments, and with Line-X, that’s exactly what they’re getting.

 

This is a franchise and a product with mass appeal. Both are built for durability.

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