Do Not Buy a RestorFX Franchise Before Reading This

Are you looking to become a franchisee of RestorFX?

You might think their promises of "starting your own legacy" are too good to be true - and you wouldn't be wrong. Before investing in this franchise, you must read this blog post. We will honestly review the RestorFX franchise and license program (from now on, RestorFX) and explain why investing in this business may put your capital and yourself at serious risk.

Lack of Transparency

When considering a new investment opportunity, ensuring a solid return on investment and profit potential is vital. If you are considering owning a franchise, there are several ways to forecast your revenue and profitability. Franchise Disclosure Document (FDD) is one of them.

While most franchises use FDD to provide insights into a prospective franchisee's potential earnings and profits, to the best of our knowledge, RestorFX is not one of those franchises. Experts suggest that if a franchise does not disclose a forecast about a new franchisee's potential earnings and profits, it is best to avoid such a franchise.

Why is RestorFX not assisting their potential franchisees in making informed decisions about investing in their franchise? Could it be because their existing franchisees cannot generate revenues and profits? We will find out!

Discrepancies in Profitability Calculation

Profitability is a crucial factor in the success of any business, and it is vital to have a clear understanding of your potential costs and revenues before investing in a franchise. Accurately estimating your profitability is challenging, as it involves predicting your costs and revenues. While revenues may be easier to forecast, costs can be more difficult to predict due to their reliance on variables such as labor costs. It is essential to be cautious when evaluating data provided by a franchisor, as the company may have a vested interest in promoting the franchise opportunity. 

When trying to gauge the potential profitability of a RestorFX franchise, it will be beneficial to seek out the insights and experiences of current and past franchisees. However, finding unbiased sources of information can take time and effort. We recommend seeking out multiple sources of information and speaking with especially past or failed franchisees who have experience with the company to understand the potential costs and revenues associated with the franchise. If you are still looking for unbiased sources of information, we are here to help and can assist you in your research.

RestorFX clear-coat restoration is quite a labor-intensive process. Contrary to some claims, the process typically takes 7 to 12 hours on an average vehicle. This is significantly longer than the claimed 2.5 to 4 hours. Awareness of this difference is essential, as it could dramatically impact your investment decision. Making decisions based on incorrect or misleading information could lead to a poor investment outcome.

If you are working with car dealerships, you will likely need to spend significant time each day identifying and securing vehicles for your business. This process may involve inspecting the vehicles on the dealership's lot, proposing the selection to the sales manager, obtaining approval, and transporting the chosen vehicle from the dealership to your shop. This process can be time-consuming, taking anywhere from 2 to 3 hours per day, depending on the size of the dealership's lot and the number of vehicles you want to process.

Once the vehicle arrives at the shop, it is essential to spend sufficient time preparing it for the coating application process. This prep work can take anywhere from 4 to 8 hours, depending on the vehicle's condition and the level of detail required. Some may claim that this prep work takes less time, but it is essential to understand that taking shortcuts or rushing this process can have short-term and long-term negative consequences. Skimping on prep work may lead to a lower-quality finish and require additional work the next day or in the future.

After prepping the vehicle, the installation process typically takes 1 to 2 hours to complete. The next day, you will need to allocate more time to prepare the vehicle for delivery. This will involve tasks like tape removal, polishing, touch-ups, and handling the logistics of delivering the vehicle to the customer. These preparations are essential to ensure that the vehicle is ready for delivery and meets the high standards that you have set for your business. It is highly unlikely that one technician will be able to finish the entire process in a mere 4 hours. The process from pickup to drop-off typically takes 7 to 12 hours, with an average completion time of around 10. 

Using inaccurate data to calculate costs can significantly overestimate the profit margin for a RestorFX franchise. If the franchisor claims that it takes only 4 hours to complete the process, but in reality, it takes 10, this could lead to significant discrepancies in your cost calculations. If you use inaccurate data, you will overestimate the profitability of the franchise, leading to poor investment decisions. 

Can You Charge a Reasonable Amount for the Service?

After investing significant time and effort into the RestorFX clear-coat restoration process, including transporting the vehicle and using pricey materials, it is reasonable to charge a fair price for the service. This may include charging at least $1000 for a compact car and $1800 for a truck. By positioning RestorFX as a high-ticket service in your area and charging a fair price, you can aim to remain profitable and grow your business. However, is it possible to sell the service at this price point?

Selling the service at this price point to car dealerships is very difficult (almost impossible). However, selling it to retail customers may depend on the shop's reputation, business model, set-up, and employee qualifications. These and other variables can influence the demand and customers' willingness to pay a premium price. It is essential to carefully consider these factors when determining the pricing strategy for your business.

Why do dealerships not pay a fair price for RestorFX services?

Dealerships, like any business, are trying to maximize their profits. They will not be willing to pay a fair price for the RestorFX clear-coat restoration service because they believe the service's value is not worth the cost. This may be due to various factors, such as the dealership's perception of the quality of the service, the demand for the service in their market, or their cost structures and profit margins. Ultimately, the price that a dealership is willing to pay for the services of your RestorFX franchise will depend on their business considerations and how they perceive the value of the service to their customers.

Before offering your services to dealerships, you must understand how their market works. Dealerships are primarily concerned with maximizing their profits and will not be interested in your services solely to improve customer satisfaction. Instead, they will be looking for ways to increase their profitability. 

Don't be fooled into thinking that dealerships need your service to improve customer satisfaction. They will only choose your service if they see that RestorFX's clear-coat restoration service helps them turn their inventory faster without reducing their profitability but increasing it.

As a RestorFX franchise, if you choose to do business with dealerships, you must be aware that this will negatively affect your profitability. If your service doesn't increase the dealership's profits, they will perceive it as nothing but a cost and will be reluctant to continue using your services unless you reduce your prices. The hard truth is that when you do business with dealerships as a RestorFX franchise, you sacrifice "your profitability" for doing business with them. 

How much are car dealerships willing to pay for RestorFX services?

Car dealerships are willing to pay only a mere $400 for RestorFX - a fraction of what it's worth, and there are several reasons why they will pay more.

While there are certainly benefits to using RestorFX, they're hard to measure and are indirect - it's a complicated formula with many variables. Contrary to what someone might tell you, RestorFX is not an essential service for dealerships - in fact, we'd venture to guess that 99.99% of them don't use the service at all and yet still manage to remain highly profitable businesses. Sure, their goal is to turn their inventory quickly without increasing costs, but when dealerships turn to RestorFX, their recondition costs dramatically increase.

For example, when a dealership starts using RestorFX, they may find that they're able to turn their inventory faster, but it's hard to pin that down to the service itself. It could be because their salespeople or managers are doing better, or they're good at purchasing, or their internet marketing team is doing a great job, or it could be because of a demand fluctuation in the market. It's a complicated formula with many variables, and even if RestorFX helps to speed up the process, it's unlikely that the executives at the dealership will acknowledge that.

There are several other reasons why dealerships will not pay more than $400 to RestorFX:

Dealerships cannot increase the sales price of a vehicle after RestorFX has processed it. All money spent on RestorFX services is an expense.
All dealerships have in-house detailing teams (aka make-ready departments), and their standard paint correction cost is a fraction of what RestorFX charges. For just $80 to $120, they can substantially improve a car's appearance and make it easy to sell.
For the average pre-owned car buyer, the blemishes and signs of wear and tear on the paint of a used car are often just shrugged off as inevitable. When they buy a pre-owned vehicle instead of a brand-new one, they are more likely to overlook the unsightly aspects of the car.
Car buying is an exhausting and time-consuming experience. Most customers arrive at the dealership after work, only to leave the dealership late in the evening. Unfortunately, the inadequate lighting in the dealership and lack of time do not allow customers to inspect the vehicle's paint thoroughly, making it difficult to spot any potential problems.
Even if car buyers notice imperfections in the vehicle's paint, they know that a dealership is not the best place to get that fixed.
Dealerships often have vendors in their back lots that provide services such as refinishing, paintless dent repair, and wheel repair at meager prices. For example, some dealerships pay just $100 to $150 to get a panel repainted. These mobile vendors create an unfair market for RestorFX services.
Because of these reasons, it is challenging to sell the RestorFX clear-coat restoration service to car dealerships for more than $400.

Is it profitable to do business with dealerships?

It is definitely not. Even when you offer the service at half price, you spend the same amount of labor and supplies. With a price of $400 per vehicle, it would still take 7 to 12 hours to complete the job, resulting in a revenue of only $30 to $60 per hour – far less than what's necessary to cover paychecks and all the other expenses.

We believe that if you're not making at least $100 of revenue per hour per person, your business won't just struggle to make a profit—it will also face difficulty retaining employees and will never be able to grow. If you become a RestorFX franchise and do business with car dealerships, the chances of achieving the $100 per hour benchmark will be slim. To grow your business and ensure its success, you need to employ talented and experienced team members and pay them above market averages. As a RestorFX franchise, however, this is not easy to achieve.

By the way, is a $100 per hour benchmark an ambitious target? Absolutely not! With the right knowledge and skill, you can easily achieve far more than that. Take window tinting, for example. A $400 tint job can take two and a half hours—that's $160 per hour. Paint protection film installation can make you up to $2100 in just 15 hours—that's $140 per hour. PDR technicians can make $300 per hour by repairing one dent in half an hour and charging $150 for the job. With these impressive earnings in mind, why would you want to be a RestorFX franchise and settle for a meager $30 to $60 per hour when dealing with car dealerships? 

What are the other downsides to doing business with car dealerships?

As a RestoFX franchise, doing business with dealerships can be an exhilarating experience, full of highs and lows.

When it comes to building relationships with sales managers, the benefits can often be short-lived. When a manager leaves and moves on to another dealership miles away from you, your RestorFX franchise will have no choice but to start back at square one, forming new ties all over again. Unfortunately, inexperience brings drawbacks - newly hired management may try too hard and take an overly conservative approach when managing their reconditioning costs, meaning fewer cars for the RestorFX franchise in the long run due to tightened budgets.

Furthermore, doing business with dealerships carries the risk of ever-changing market conditions in the automotive retail industry. For example, recent events such as the global chip shortage have negatively affected dealerships and their vendors. Avoiding doing business with car dealerships will minimize these kinds of risks.

How can you succeed in the retail market as a RestorFX franchise?

To effectively tap into the retail market as a RestorFX franchise, it will be necessary to implement a well-thought-out and proven strategy. This will require significant initial and ongoing investment, such as marketing and advertising, to raise awareness of your services and train your staff. However, recouping your investment as a RestorFX franchise can take way more than you think or can never be possible.

Investing in retail marketing can look like a lucrative venture, but there is no guarantee for success. Factors such as market saturation with similar services and a lack of receptiveness to the brand in the area can impact the success of the investment in the long term. Additionally, it is important to consider the costs associated with operating a retail business, such as initial set-up, advertising, and the extra investment you will make to diversify your service offerings.

As a business owner in the retail market, it is essential to diversify your services to remain competitive and successful. Customers nowadays want convenience and look for one-stop shops that can provide them with all or most of their reconditioning needs. Auto painting, paintless dent repair, paint protection film, powder coating, and window tinting are some of the services you should consider offering. Along with RestorFX, if you cannot provide some of these services, you will be at a disadvantage compared to competitors who provide these services.

The investment in diversifying services may seem intimidating initially, but it is essential to becoming successful in the automotive refinishing and detailing market. If your shop does not offer a broad spectrum of services, customers will be faced with an inconvenient and costly process of shopping around to fulfill their needs. Not only is this time-consuming and inefficient, but it also prevents customers from taking advantage of potential discounts through bundling multiple services from a single shop.

We must caution that if someone advises you not to diversify your services, they are likely doing so out of self-interest, not yours. Diversifying your services will benefit your business. 

How do RestorFX franchisees perform?

Our research into the performance of RestorFX franchisees has left us with shocking findings. Over the past two years (January 2020 to December 2022), RestorFX has posted 22 times on Instagram to announce the addition of new franchisees (or licensees) to their network. When we took a closer look at their social media profiles and Google Business accounts, as of December 20, 2022, we found that 14 of these new franchisees have zero reviews on Google Business, and a lot of them do not even have a Google Business accounts, suggesting that they gave up soon after they received the training. The remaining eight franchisees have less than ten reviews, which is way below industry standards.

It would be surprising if RestorFX franchisees were doing better, given the lack of brand recognition and an almost non-existent market for its products and services. They're facing an incredibly tough challenge – to convince people to invest in a niche product without any proofing or reviews to back it up, leaving customers without reliable information to make an informed decision on a product, especially if it's new and unfamiliar. Without reviews, it's no wonder that most franchisees are failing in their first few years, and it's hard to imagine any success stories under these extraordinary circumstances.

What should a franchisee expect to receive in exchange for the franchise fee?

Franchising may seem like an ideal way to launch your own business, but it comes with risks. Hundreds of thousands of dollars are typically on the line when you purchase a franchise fee, so you must do your due diligence beforehand. Several performance indicators can help you make an informed decision. Some of these are: 

(1) Market demand: There should be a solid demand for the franchise's products and services. 

(2) Brand recognition: A franchise should have a well-known and respected brand, which can help to attract customers and increase the chances of success for the franchisee.

(3) A proven business model: A franchise should have a proven business model that has been successful in other locations.

(4) Training and ongoing support: A good franchise should provide training and ongoing support to the franchisee, including marketing and operational support. 

Let's face it: when you purchase a franchise, you're not just looking for a business model, training, and support. You're expecting more – a steady stream of customers who recognize the brand and demand the services. That's why, among all the indicators, focusing on "market demand" and "brand recognition" is far more important than anything else.

Take the UPS Store, for instance.

If you are going to ship something, you don't have to Google a 'shipping and mailing company near me' because everyone knows that UPS, FedEx or USPS are the go-to companies. Therefore, becoming a UPS Store franchise offers an invaluable advantage – you don't need to worry about customer acquisition or creating brand awareness. The company's renowned reputation is already in place, justifying any associated fees with entering the venture.

For a more convincing example from the automotive industry, take XPEL.

XPEL is one of the well-known paint protection film suppliers in the US. According to SEM Rush, the annual search volume of the term "XPEL" is 12,000, which indicates its brand recognition. Beyond this, there is also a solid demand for their products and services, namely "paint protection film" and "clear bra". These two terms alone have a search volume of 30,000, which adds up to 48,000 searches for XPEL's services or products annually - that's some serious demand. The good news, if you want to join XPEL as an installer, there are no franchise fees to pay!

RestorFX is a franchise with very little brand value and market recognition. According to SEM Rush, the annual search volume of the term "restorfx" is only 480 (when this blog post is published), indicating an extreme lack of awareness about the brand. With such low demand for products like "paintless clear-coat repair" and "clear coat restoration" (barely reaching 1k annually), it's hard even to fathom why someone would spend tens of thousands investing in this company. It is no surprise that most RestorFX franchises fail within the first few years – with its weak market presence, how can they be expected to survive?

Is it a franchise program designed for failure?

The failure rate of RestorFX franchisees is very worrying, leading us to believe that their business model is fundamentally flawed. This begs the question—was RestorFX's franchise program designed to ensure the failure of its franchisees rather than their prosperity? Unfortunately, the following evidence seems to point in that direction.

Alexander Kotyakov, the founder of RestorFX, opened a corporate shop in Santa Ana, CA, only to watch it fail like the hundreds of other RestorFX franchises. Similarly, Brandon Dahlman, RestorFX's Technical Developer & International Training Director, opened a shop in Grand Haven, MI, but we couldn't find any online evidence that it operates.

RestorFX's lack of concern for their customers is an inexcusable demonstration that shows how little effort they put into maintaining a productive business model. Instead, unethical practices and lies are the tools in their arsenal - turning entrepreneurs' dreams to dust before any real progress can be made. Unsuspecting entrepreneurs join RestorFX only to fail! This scandalous behavior must be met with disapproval; anything less would mean condoning such blatant disregard.

The organization appears to be more focused on making money from reselling franchises than providing its current franchisees with the necessary tools for success. It seems like the only thing keeping them afloat is reselling territories - essentially duping new entrepreneurs over and over again at risk of failure so long as it serves 'the bottom line'.

Health concerns: Is there a restriction on the way?

RestorFX is an ambient-curing polyurethane clear coat with an alarmingly high ratio (65% to 75%) of isocyanates as a hardener, according to the US patent application 20090017199 A1. This raises serious concerns about the safety of RestorFX's products, yet the company fails to be transparent and does not publicly disclose its products' Safety Data Sheets (SDS).

Based on the data we found on the patent application, which was not granted a patent, we will assume that the product contains a high ratio of isocyanates. If RestorFX isocyanate-free, we urge them to contact us and email their product's Safety Data Sheet (SDS) for our review. We will gladly revise this section if we confirm their products are isocyanate-free.

What are isocyanates, and why are they so important?

Isocyanates are chemicals that can cause serious health effects if inhaled or come into contact with the skin. According to the Occupational Safety and Health Administration (OSHA), some possible health effects of isocyanate exposure include irritation of the skin and mucous membranes, difficulty breathing, and chest tightness. Some isocyanates are potential human carcinogens, which may cause cancer and have also been shown to cause cancer in animals. The main health effects of hazardous isocyanate exposures are asthma and other lung problems, as well as irritation of the eyes, nose, throat, and skin. It would be best not to underestimate the potential health risks of isocyanates. The Centers for Disease Control and Prevention (CDC) have documented cases of death caused by exposure to isocyanates.

For these reasons, CDC recommends that the facilities use engineering controls such as "closed systems" and ventilation to minimize isocyanate exposure in the workplace. Technically speaking, they recommend using isocyanate only in a closed system, such as a paint booth, which is designed to ensure that the fumes are contained and do not spread throughout the facility.

RestorFX appears to be turning a blind eye to its products' potential dangers and health hazards, as evidenced by the lack of warnings on its Franchise Disclosure Document or website. This alarming lack of safety concerns raises severe doubts about the company's dedication to public health.

Despite the obvious risk posed to the people who use their products, it is shocking that they appear to prioritize their bottom line over people's health. What could be their motivation? We do not know, but their strategy is most likely to sell franchises to entrepreneurs who cannot afford a paint booth. If this is the case, by hiding the potential health risks of their products, RestorFX puts the health of franchisees and their employees at serious risk.

In addition to the CDC and OSHA, several state agencies have raised issues with isocyanates. California's Department of Toxic Substances Control (DTSC) is one of them.

According to the agency, people who become oversensitive to isocyanates may be at risk of experiencing life-threatening asthma attacks, even when exposed to very low levels of isocyanates. Because of this reason, on July 1, 2018, California's DTSC added polyurethane systems that contain isocyanates to their priority list.

The priority list is a list of chemicals that the DTSC has identified as being of high concern based on their potential to cause harm to human health or the environment. In general, adding a chemical to the DTSC's priority list may result in tighter regulations on the use and disposal of the chemical. These regulations may include requirements for product labeling, use restrictions, reporting, and record-keeping requirements.

It's no surprise that California might be the first state to restrict or even ban products containing isocyanates. Still, the European Union (EU) has been ahead of the curve in taking action. As part of the REACH regulations, the EU has already implemented a wide range of restrictions on isocyanates.

One of these restrictions is a requirement that will be effective in August 2023 and will require employers to provide comprehensive training to reduce the risk of exposure to isocyanates.

These requirements will ensure workers are aware of the potential health risks associated with exposure to isocyanates. If they do not use personal protective equipment or the workspace is not explicitly designed for isocyanate use, such as not having controlled environments and air exchange units, they will know their health is at serious risk.

It won't be surprising if RestorFX installers in Europe are required to utilize the product in a paint booth to comply with the new REACH regulations once they take effect in August 2023.

Conclusion

This is incredibly concerning and suggests that RestorFX may be one of the least successful franchises in history. It appears that the company has failed to deliver on its promises, leaving many franchisees feeling cheated and dissatisfied. Also, its track record of lack of transparency and blatant disregard for the success of its franchisees make it an investment to be avoided at all costs.