P&G muscles into car wash biz - Atlanta Business Chronicle:

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The consumer products behemoth is rollingt out anational franchise-basecd car wash chain, dubbed Mr. Clean Car with Atlanta as the headquarters. Cincinnati-basee P&G (NYSE: PG) entered the car wash business afte acquiring the franchise rightsof Atlanta-based Carnett’s Car Washes, a chaijn run by Bruce Arnett Sr. and Bruce Arnett Jr. The car wash businessa is a $35 billion market in the U.S. and has beingv growing at a 10 percentannualo clip, said Mike Foster, a directod in FutureWorks, the new business development arm of P&G. The marker also lacks a national player. “From a cleaning standpoint,” Foster said, “[the] Mr.
Cleanm brand name and equity extends very well into the car wash Foster declined to disclose revenue projections forthe Mr. Clean Car Wash but let on that P&G has a soft-spot for “billion-dollat brands.” “We have 24 billion-dollar Foster said. “We wouldn’t be focusing on areas that don’t have the opportunity to grow to be interesting tothe company.” The Carnett’sz deal is likely a “bolt-on kind of which extends the Mr. Clean brand, rather than a broade r shift by P&G into the services said ErinAshley Smith, equitie analyst with P&G does a “lort of consumer research behind a lot of their Smith said.
“I would imagine that in this case they agood return.” While P&G’s well-lubricatecd marketing machine makes Tide and Pampers fly off the supermarket shelves, the services business might be anotherr matter. P&G’s previous attempts at entering the serviceindustry fizzled. In P&G operated a laundry service callefd , which it sold in according toThe . Other effort s at company-owned stores, including one called Culinary Sol, also fell Selling franchises in the middle ofa recession, where liquidity is a scarce commodity, also makews P&G’s timing suspect. Mr.
Clean Car Wash franchisees would need toinvesty $3 million to $4 million per car for land acquisition, construction and operating capital. They’d also pay an initiakl franchise feeof $35,0000 and 6 percent of net revenue in monthly royalty fees. “Marke t conditions [today] are interesting to be selling franchises,” Foster said. While Carnett gives P&G entry into the car wash the consumer goods company gives the locak chaina deep-pocketed partner and a nationally recognizef brand to take to market. “The wholee time we were buildingour we’d kind of had visions of taking it to the next leve and growing it beyond Atlanta,” said Arnett Jr.
, now chieg operating officer of the Mr. Cleanh Car Wash franchise. Partnering with a highly visible Arnett said, also drove interest from investor s and potential franchisees. Shortly after the acquisition became public in he said, “we were just inundated with inquiriez from investors across the country.” P&GG hopes to initially focus on six markets Georgia, Ohio, Illinois, Kentucky, North Carolina and Texas — but has aspirationsw for a broader “We want to be a national brand across everty state,” Foster said. “We want to have a presence in evert majormetropolitan area.” The Mr. Clean Car Wash however, will be measured.
Initial plansa call for the construction of three new car washes in metro Each car wash will employ up to50