With more people traveling and exploring, a rental car franchise could be profitable, provided you find the right location. This type of business does well in areas with high traffic, such as airports, tourist destinations, and city centers. However, there are other factors to consider first. For example, most car rental franchises require a large upfront investment because you need a fleet. Following marketing trends and comparing the top franchises will also help your decision-making.

Table of Contents

1. Overview of the Market

2. Independent Business Versus Rental Car Franchise

3. Other Factors to Consider

4. Car Rental Opportunities and Franchise Cost

5. Conclusion

Overview of the Market

The US car rental market has grown steadily in recent years, driven by the rising travel and tourism industry. Indeed, market reports say it is worth around $35.26 billion in 2024 and is expected to grow to $51.12 billion by 2031, with an annual growth rate of 5.5%. Here are some more market drivers:

• Drive vacations are becoming more popular. People like the flexibility of using rental cars on road trips when it comes to visiting all the attractions.
• Millennials and Gen Z consumers turn to car rentals instead of vehicle ownership because they prioritize life experiences over assets.
• Increased business travel.
• Eco-friendly options – electric and hybrid rentals are becoming more popular.
• Increasing interest in renting luxury vehicles – and enjoying the experience of driving various cars.

The car rental space is highly competitive, but partnering with a well-known brand can give you an advantage. Alternatively, you can research other automotive franchises or explore different franchise opportunities with high-profit potential.

Independent Business Versus Rental Car Franchise

Whether you open your own business or join a franchise, here are some key points to bear in mind:

Fleet

Building your fleet is an expensive part of starting your business. Customers want to choose from different sizes and styles of vehicles. For example, compact cars, luxury cars, SUVs, trucks, vans, and 4×4 vehicles. Auto auctions can offer good deals, whether you’re opening a rental company or car dealership franchise. Also, partner with a local auto repair franchise to save on maintenance costs, as hiring a full-time mechanic can eat into your profits.

Location

When starting an independent car rental business, the right location is everything. The same goes if you own an oil change franchise or similar. Look for a high-traffic area with potential customers. However, watch out for big competitors like an Enterprise franchise or Hertz, who offer lower prices. If you’re part of a franchise, it’s easier – headquarters will help you choose a profitable territory. If location is a problem for you, consider a work from home franchise.

Insurance

You’ll need fleet insurance to cover any damage to your cars or business. If you’re part of a franchise, the corporate team can guide you through the legal requirements, such as licenses and insurance, ensuring you have the necessary coverage.

Running the Business

For day-to-day management, hire a reliable team to help grow the business and keep things running smoothly. Don’t overlook the importance of technology, especially if you’re interested in absentee owner franchises. Invest in software for online bookings, customer service tools, and marketing campaigns. Ongoing franchise support can help you maximize operational efficiency. In contrast, it can be a lot to take on by yourself.

Marketing

Marketing is key to being a successful business owner, whether you’re in the car rental business or you own a transmission repair franchise. Knowing how to advertise and stand out from competitors will attract more customers. Identify what makes your car rental business unique. If you join a franchise, you’ll benefit from their proven marketing strategies and support, as they guide you through the entire process and help with advertising.

Other Factors to Consider

With both international and local car rental franchise opportunities in the US, how do you know which one to join? Here are several things to think about.

1. Financial Track Record

When evaluating a rental car franchise, focus on three key financial aspects:

1. Return on Total Invested Capital: Ensure the franchise uses capital efficiently. If the business plans to expand, it should only borrow money it can comfortably repay. A good measure to check is the debt-to-net profit ratio. If the debt exceeds 20% of profits, it could be a warning sign.
2. Return on Investment (ROI): ROI tells you how much profit the franchise makes compared to its costs. A positive ROI means the business is profitable, while a negative ROI indicates trouble.
3. Asset Management: Car rental businesses often buy vehicles in bulk for discounts, use them for 12-18 months, and then sell them. It’s important to know the prices at which they buy and sell cars and available financing options. If the franchisor doesn’t provide this information, it might suggest financial issues.
   

2. Reputation

How do customers, employees and other stakeholders feel about the franchise you are considering? Do most of them view the company in a positive light? Do its customers give positive reviews? Are car rental franchises profitable? Did former franchisees earn from it? If the answer to all questions is yes, then the franchise could be worth investing in. Some may even have franchise opportunities for veterans. Overall, a company with a good reputation has built a loyal customer base that you can benefit from.

3. Car Rental Franchise Brand Values

Strong brand values help build trust with customers. For instance, a business that prioritizes consistent service quality, fair pricing, and vehicle safety attracts loyal customers. Equally important, a franchise system whose values align with yours ensures better partnership.

Brand values also set a car rental franchise apart from competitors. For example, if a brand prioritizes eco-friendliness, it can appeal to environmentally conscious consumers. This gives you an edge in a market where customers may want specific features such as hybrid or electric vehicles. This unique positioning could help grow your customer base more quickly.

4. Existing Contracts

Also, check the contracts your franchisor has. Do they have deals with airports or travel agencies? Travelers are the main source of car rental profits, and having contracts with airports and agencies guarantees steady business year-round.

5. Competitors

When checking out the competition, think beyond other brands. You should also look at how many franchisees the franchisor has in your area. Will you have exclusive rights to your territory? If there is too much competition, you can always research which industries are most likely to franchise in different markets. For instance, car wash franchise opportunities are worth exploring if you’re passionate about car care.

Car Rental Opportunities and Franchise Cost

Car rental franchises are available through several well-known brands. The big question is: how much does a car rental franchise cost? The answer depends on the brand, the location, and the size of the fleet. Here are some options:

Enterprise Franchise

Enterprise Rent-A-Car is one of the world’s largest car rental providers, with over 1.7 million vehicles at thousands of locations across the globe. It offers international franchising opportunities. However, it doesn’t franchise in some countries including Canada and the US. To find out more details, including franchise cost, email the global franchising team at [email protected]. You may find an opportunity in one of the international markets.

Even if you don’t find an Enterprise franchise opportunity near you, researching the brand’s business model can be helpful. For instance, Enterprise has developed its own internal systems and processes for fleet management, customer service, and logistics. The company continually strives for better efficiency, control over pricing strategies, and adaptation to local market demands. See if other franchises can match up to these operational standards.

Budget

Budget Car Rental is owned by the Avis Budget Group, which also offers Avis car rental franchise opportunities. This larger corporate backing allows Budget to provide franchisees with access to a well-established global supply chain, fleet management, technology systems, and marketing resources.

Budget Rent-A-Car franchise is another big-name rental brand. The company has around 3,350 locations in over 120 countries. As the ‘Budget’ name suggests, its branding is about offering customers great value for money. So, as a franchisee, you can highlight this branding message in your marketing campaigns. Budget also has an affiliate program where you can earn a commission rate of 8% on a typical rental.

Hertz Franchise

Hertz has been providing car rental services for over 90 years. It has corporate-owned locations and franchise opportunities. It has two programs for entrepreneurs: the Agent Program adds a Hertz agency to an existing business like a car dealership franchise, hotel or truck rental location. Or there is a franchise program. Visit the company website to select the country in which you want to franchise for more information and franchise cost.

Hertz Global Holding also owns Dollar Rent a Car and Thrifty Car Rental. Both brands are marketed as budget-friendly options for leisure and business travelers.

• Dollar requires a net worth of $500,000 or higher and liquid assets of $150,000 or higher, depending on the location.
• Thrifty Car Rental franchise also requires a net worth of $500,000 or higher and liquid assets of $150,000 or higher, depending on the location. The approval process and finalizing the legal documentation take around 60 to 120 days.

Avis Car Rental Franchise

Avis offers various opportunities if you want to break into the car rental business. While it has many corporate-owned locations, it also has franchise openings in some international regions, such as Europe, Asia, and the Middle East. The initial investment is $600,000 to $1.5 million. If this puts you over budget, check out low cost franchise opportunities.

U-Save

U-Save car and truck rental franchise is looking for ambitious partners who want a standalone business or are looking to add it to an existing auto-related business. It is one of the smaller brand names, with about 200 locations around the world. However, the company has more than 30 years of experience in the car rental sector. The initial investment is around $685,500. Don’t forget to check out other investment opportunities. For instance, an auto glass repair franchise or an auto parts franchise.

Sixt

Sixt was founded in 1912 with only three cars. The company now has over 3,500 locations across 85 countries. Due to high demand and investments in premium customer service, it has seen strong revenue growth in 2024. In the second quarter, it earned a record EUR 1.01 billion, up 8.9% from last year. In the US, Sixt opened 15 new branches this year, bringing its airport locations to 49, close to its year-end goal of 50. The initial investment is $500,000 to $1.5 million.

Conclusion

To sum up, a car rental franchise is part of a growing industry. More people are traveling by road and like the convenience of a car rental service. However, if you partner with one of the top-name brands, prepare to invest around $500,000 to $1.5 million. And if you’re investing this much, you need to ask are car rental franchises profitable? Partnering with a well-known brand should get you off to a great start.

Additionally, as with any business, operational efficiency and cost management play a big part in how much money you make. Location is also a big deal. Locations in high-demand areas such as airports or tourist hotspots tend to generate more revenue due to consistent demand.

If you can’t afford to invest in a car rental business, turn your attention to other affordable automotive franchises. For instance, DetailXPerts is one of the lower-cost franchises in mobile auto detailing and commercial cleaning. Moreover, we’re a green business that appeals to the eco-conscious customer willing to pay more for sustainable services. Discover how our steam cleaning technology cleans vehicles, buildings and public spaces without wasting water.

Download our guide on How Much Does It Cost to Start a Mobile Car Wash to discover other ways to open a lucrative automotive business with franchise support.