Once you’ve decided to work for yourself, there are three ways in. You can start from scratch, building a business from an empty building and zero customers. You can buy an existing business that’s already running. Or you can buy a franchise, opening a new location under an established brand with its system and rules.
There’s no single right answer. Each one trades money, risk, control, and time differently, and the best choice depends on how much cash you have, how much risk you can stomach, and how much you want to be your own boss. This guide compares all three, with auto repair shops as the main example, and the same thinking applies to almost any business.
Short version: Starting from scratch usually costs the least upfront and gives you full control, but it takes the longest to make money and carries the most risk of failing. Buying an existing business costs more, often around two to three times its yearly owner earnings for a small business, but you get customers, staff, equipment, and cash flow on day one. Your risk shifts to whether you’re paying a fair price and whether the customers stay after the old owner leaves. A franchise gives you a proven system, a known brand, and support, but you pay a franchise fee, ongoing royalties, and marketing fees, and you follow their rules. Franchise investments are often the highest of the three. For auto repair, a recent Meineke franchise disclosure listed a total initial investment of about $227,000 to $581,000.
The Three Options Side by Side
| Start from scratch | Buy an existing business | Franchise | |
|---|---|---|---|
| Upfront cost | Usually lowest | Usually higher; you pay for the business’s earnings | Often highest |
| Time to steady income | Longest | Day one, if the customers stay | Medium; the brand helps, but you start with zero customers |
| Risk | Highest chance of failing | Overpaying, or customers leaving with the old owner | Fees eat into profit; you’re tied to the brand’s reputation |
| Control | Total | High, after the transition | Limited by the franchise agreement |
| Ongoing fees | None | None (maybe seller loan payments) | Royalties and marketing fund, for as long as you operate |
| Financing | Harder; no track record | Easier; lenders can look at past results | Often easier with established brands |
Starting From Scratch
Why people choose it: it’s usually the cheapest way in, and everything is yours. Your name, your prices, your way of doing things, and no fees to anyone.
What it costs: for an auto repair shop, a lean start in a leased former shop often lands between $50,000 and $150,000, and a full-service shop can pass $350,000. How much it costs to open an auto repair shop breaks it down line by line.
The hard part: you start with zero customers. Every customer has to find you, try you, and come back, and that takes months to years. Until then, you’re living on working capital. Lenders are also cautious with startups, because there’s no track record to judge.
It fits you if: you have the skills, a realistic budget with several months of costs in the bank, a local reputation or customers who’ll follow you, and the patience for a slow first year. Starting small, such as running mobile repair before opening a shop, lowers the risk a lot.
Buying an Existing Business
Why people choose it: you buy a business that already works. Customers, phone number, staff, equipment, supplier accounts, and reputation all come with it, and the money starts coming in on the first day.
How small businesses are priced. Most small businesses sell for a multiple of seller’s discretionary earnings (SDE), the yearly profit plus the owner’s own pay and personal perks run through the business. In other words, it’s what one full-time owner-operator actually earns from the business. For auto repair shops sold between 2021 and 2025, BizBuySell’s data shows a median sale price of about $410,000, median SDE of about $182,000, and a median multiple of about 2.3 times SDE. Shops took a median of about 207 days to sell.
So a shop that reliably earns its owner $150,000 a year might sell for around $350,000, depending on the equipment, the lease, the staff, and how dependent the business is on the current owner.
What to check before you buy (due diligence):
- Three years of tax returns and financial statements, and whether they match the bank deposits. Be very careful with “the real numbers are higher, I run a lot of cash.”
- Customer base. How many active customers, how many fleet accounts, and whether one or two big accounts make up most of the revenue.
- Owner dependence. If customers come for the owner personally, some will leave when he does. Ask for a transition period where the seller stays on and introduces you.
- Staff. Will the key techs stay? Talk to them before closing if the seller allows it.
- Equipment condition and what will need replacing soon.
- The lease. How many years are left, the rent, and whether the landlord will transfer it to you. A great business with six months left on its lease is a risky purchase. Commercial leases for small business owners covers what to look for.
- Licenses, permits, and environmental issues, especially for a shop. You may inherit problems you didn’t cause.
- A non-compete agreement so the seller doesn’t open across the street next year.
Pay an accountant to review the numbers and a lawyer to handle the purchase agreement. A business broker usually represents the seller, not you.
Financing a purchase. Lenders, including SBA lenders, generally prefer financing an existing business with a track record over a startup. Under SBA rules in effect since June 2025, a buyer usually needs to put in at least 10% of the total project cost. A seller note, where the seller lets you pay part of the price over time, can count for up to half of that 10%, but only if the seller agrees not to receive any payments on it for the entire life of the SBA loan. Seller financing outside an SBA loan is also common in small deals, and a seller willing to finance part of the price is a good sign they believe in the business.
It fits you if: you can raise more money upfront, you’d rather manage an existing operation than build from zero, and you’re willing to do serious due diligence.
Buying a Franchise
Why people choose it: a franchise gives you a known brand, a tested way of running the business, training, buying power with suppliers, and national marketing. For someone who’s great at the trade but new to business, that structure is real value.
What it costs: a franchise has an initial franchise fee, the cost to build out and equip the location to the brand’s standards, and then ongoing fees for as long as you operate: a royalty, usually a percentage of your revenue, and a contribution to the brand’s advertising fund.
For an example from auto repair, Meineke’s 2024 franchise disclosure document listed:
- Total initial investment: about $226,774 to $580,818
- Franchise fee: up to $45,000
- Royalty: mostly between 3% and 7% of revenue depending on the service, with a minimum of $20,800 a year
- Advertising fund: 8% of revenue on most services
At those rates, royalties and marketing fees take about 13% of revenue on most work, and that comes off the top before you pay rent, payroll, or yourself. A franchise has to deliver enough extra business to make that worth it.
The franchise disclosure document (FDD). Federal law requires franchisors to give you their FDD at least 14 calendar days before you sign anything or pay any money. It’s long, and it’s the most useful document you’ll get. Read at least these parts:
- Item 7, estimated initial investment: the full startup cost range.
- Item 19, financial performance: what existing locations actually earn, if the franchisor discloses it. Many don’t, and that’s information too.
- Item 20, outlets and franchisee information: how many locations opened, closed, and changed hands, plus contact information for current and former franchisees. Call them. Former franchisees will tell you things the sales team won’t.
- Item 21, financial statements of the franchisor itself.
Have a franchise lawyer review the FDD and the franchise agreement before you sign. The agreement usually runs ten years or more and can restrict what you sell, where you buy parts, and what you can do after you leave.
It fits you if: you value a proven system and brand over full control, you have the capital, and the numbers still work after royalties and marketing fees.
How to Decide
Ask yourself these questions honestly:
- How much cash can I put in, and how long can I go without a paycheck? Little cash and lots of patience points to starting small. More cash and a need for income now points toward buying.
- How much do I want to be my own boss? If following someone else’s system would drive you crazy, a franchise isn’t for you.
- Do I know the business side, or only the trade? A franchise or an existing business with good records gives you more structure to learn from.
- Is there a good business for sale near me at a fair price? Sometimes the answer decides for you.
- Do the numbers work? Whatever you choose, write down the total cost, the monthly costs, and what the business has to bring in. For a shop, the startup cost calculator and the shop labor rate calculator do this math.
Pick the Risk You Can Live With
Every path has risk; they just put it in different places. Starting from scratch risks running out of money before the customers show up. Buying risks paying too much for customers who leave. A franchise risks fees that eat the profit. Choose the risk you understand best and can manage, then do the homework that path requires.
For auto repair specifically, the full plan for starting from scratch is in the auto repair shop blueprint.
Related Guides
- How to open an auto repair shop, the full step by step blueprint
- How much it costs to open an auto repair shop
- Commercial leases for small business owners
- Going independent, on what changes when you stop being an employee
- Do you need a business plan, because a lender or seller will ask for one
- From technician to business owner
This article is for general informational purposes only and isn’t financial, legal, insurance, or tax advice. For guidance specific to your situation, talk to a licensed professional.
Frequently Asked Questions
Starting usually costs less upfront and gives you full control but takes longest to earn steady income. Buying costs more but comes with customers, staff, and cash flow on day one. The right choice depends on your cash, your patience, and whether a good business is for sale at a fair price.
Most small businesses sell for a multiple of seller’s discretionary earnings, the profit plus the owner’s pay and perks. For auto repair shops sold from 2021 to 2025, BizBuySell data shows a median multiple of about 2.3 times SDE.
Under SBA rules in effect since June 2025, buyers generally need to put in at least 10% of the total project cost. A seller note can cover up to half of that if the seller takes no payments on it for the life of the SBA loan.
The FDD is a document franchisors must give you at least 14 calendar days before you sign or pay. It lists the full investment, fees, financial performance if disclosed, how many locations opened and closed, contacts for franchisees, and the franchisor’s financial statements.
It varies by brand. As one example, Meineke’s 2024 disclosure listed a total initial investment of about $226,774 to $580,818, plus ongoing royalties and an advertising fund contribution based on revenue.
Sources
- BizBuySell: Auto repair valuation benchmarks. Median sale price $410,000, median owner earnings $182,133, median multiple 2.31, 207 days to sell, based on 1,286 sales from 2021 to 2025.
- Starfield & Smith: Equity injection under SOP 50 10 8. The 10% minimum since June 1, 2025, and the seller note rule (on hold for the whole loan, up to half of the 10%).
- Franchise Chatter: Meineke 2024 FDD review. Total investment $226,774 to $580,818, franchise fee up to $45,000, the royalty schedule with its $20,800 minimum, and the 8% ad fund.
- The FTC Franchise Rule (16 CFR 436) for the 14-day disclosure rule and the FDD Items.