February 7, 2011-Expanding business models for rental stores
February 8, 2011
Filed under Features
HAWTHORNE, Calif. — A national and international motorcycle-renting agency has broadened the way dealers can become involved in the rental business.
EagleRider, the Los Angeles-based bike rental company, is now offering a business model that allows dealerships to host a rental operation without making a large, initial financial commitment. The concept, different from EagleRider’s usual franchise agreement, calls for a dealer principal to provide space in their store for a rental operation and then work with an independent operator who would oversee the rental business.
In this third-party model, the dealership gains a certain percentage of any rental business that is done in the store plus makes additional revenue from any parts and accessory sales. Financial benefits also would extend to any service department work that is done for the rental operation.
Chris McIntyre, president and one of the founders of EagleRider, says the new business model provides opportunities for both the dealer and his company.
“What does a dealer want?” he said. “A dealer wants more door swings. We bring in door swings, from within a market and from outside of the market. Door swings they would never get because (renters) are coming there not to buy a bike necessarily, but to experience something.”
In return for generating dealership traffic, the rental center operator profits by using the dealership’s different profit centers.
“What do we need when we open up a location?” McIntyre said of a stand-alone rental operation. “We need parts, we need service, we need accessories, we need mechanics. Those are extremely expensive things.
“Rentals are an amazing profit center. What eats it away” are funding those typical dealership departments.
“It’s a classic win-win,” McIntyre said of the third-party rental operation.
The business model could take several forms, but here’s one such example. A dealer principal could have a friend or an associate who they trust and believe highly in their product knowledge. The dealer could then allow this individual to open a “drop-in” rental center within the dealership. The renter center operator would then work out agreements with the dealer principal over service department work and what percentage of the revenue the dealership would make from the rental business.
McIntyre notes this business model does not have to be just with dealers’ friends. EagleRider can work with a dealership to find an appropriate entrepreneur to run the drop-in store.
The third-party concept is one of number of different business models EagleRider is using to expand its business. McIntrye said the company now offers two tiers of franchise agreements with dealers, including one that offers a much-reduced franchise fee.
Regardless of what model fits a dealership best, McIntyre said EagleRider has one requirement for each operation — one employee must become specialized in the EagleRider business. That’s accomplished through a multi-day training course that EagleRider offers to its new dealers.
“It’s a paradigm shift,” McIntyre said of the rental business. “Sales, service, parts and motorclothes are completely different than rentals, tourism and travel. We’re in the travel business.”