Background | Benefits | Agreement | Costs | Profitability

 PEGASUS RENTAL CARS BACKGROUND

Pegasus Rental Cars was set up in Christchurch, New Zealand during the last half of 1989. The directors had seen overseas the use of used
vehicles as a cheaper alternative the new vehicles used by The Big 3 (Avis, Hertz, Budget). The high cost of used vehicles and strict requirements by the Ministry of Transport on licensing and vehicle condition had made the costs of establishing a used car rental business prohibitive. Once importing of secondhand Japanese cars allowed a quality used car to be purchased at a reasonable price, the opportunity was seen to establish a rental operation that catered for people on a budget. The budget traveller or backpacker was specifically targeted as potential business opportunity.
The existing companies saw our business as a threat, stealing their market share but we believed we actually offered another option to people who would otherwise have taken a bus or train. The customers would have more flexibility and at a cost no more than the cost of public transport. Initially vehicles were imported from Japan and still a limited number do get imported. Changing used car markets have meant it is some times more timely and cost effective to buy here.
As a result of targeting the backpacker market we established a healthy relationship with a chain of hostels which resulted in agencies in Picton and Queenstown to service these hostels. The hostels have now been absorbed by a New Zealand wide hostel group.
This group is now part of a worldwide organisation in contact with free independent travellers worldwide. Pegasus Rentals has been accepted as the supplier of cars to this organisation and we believe there will be benefits in more business both from the hostels in New Zealand and from its association with the International group. Pegasus depots are now located nationwide. The need for more cars and hence more capital requirement has led to the alternative of franchising Pegasus Rental Cars to enable the established growth to continue so we can keep up with the ever increasing demand from one of the few growth industries in New Zealand - tourism. Recently, with the aid of a nationwide computor system, there has been a push into the business market which has been successful in creating a lot of repeat business.
We are looking for partner's in our business more than wanting to sell what we have developed and hence are looking for buyers with business
sense and integrity to share in our future growth.
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BENEFITS OF A PEGASUS RENTAL CAR FRANCHISE

1. Ownership of your own business with assistance of experince in the field. Involvement with a well known brand name in the free independent traveller and budget rental car market, as well as repeat customers in the business client market currently being developed.
2. Sharing of advertising marketing costs nationally as well as internationally.
3. Purchasing price advantages through the established network and supply channels of a larger organisation.
4. Conferences for the sharing of knowledge and experiences with others in the industry.
   Assistance in local selection of sites, marketing and promotion.
5. Training.
6. Access to advise on management and financing of your business.
7. The ability to move cars from town to town without the restriction of only having one available depot.
8. Assistance in selection and purchase of cars locally and from overseas.
9. Benefits of a central booking system and referrals from other operators and overseas tourist centres.
10. Additional revenue from commissions on other associated rental vehicle products.
11. Involvement in a national computer programme and its reports including accounting ability.
12. Assistance in the event of holidays and sickness from others in your own organisation.
    Budget and projection assistance in the setting up of a new and ongoing venture.
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FRANCHISE AGREEMENT

Pegasus Rental Cars has a franchise agreement which will be the basis of the contract between the parties. The agreement is for 5 years with two renewals. The agreement gives one "Pegasus Centre" right of operation within a defined area.
There is an ongoing management fee payable on gross revenue earned at the Pegasus Centre. This fee is 5%.
National advertising is paid monthly as a nominal percentage share of the gross turnover.
In the case of a new Pegasus Centre there is a one off licence purchase fee.
In some cases it may be advisable or preferable to purchase an existing business. A goodwill payment will need to be made in this instance. This figure can be calculated by known factors for the business operation and is an ideal way to be instantly profitable.
For more information contact the Directors of Pegasus Automotive Services Ltd.

For more information contact the Directors of Pegasus Automotive Services Ltd.

Kevin Lamb
PO Box 7166
Nelson
New Zealand
Phone/Fax 643 546 8050
Email: franchise@rentalcars.com.au
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COSTS

To own a new franchise centre in a new area the costs will be determined by various factors: For example: a small operation
The licence fee 10,000 to 20,000
5-10 vehicles 35,000
Fax machine 500
Cell phone 500
Signage 1500
Painting 2,000
Counter 1,000
Stationery 300
Legal fees 1,000
Accountants fees 1,000
Computor Hardware 3,000

 

There will be working capital required in the form of:
Rent in advance 700
Insurance 300
Advertising 1,000
Power Bond 200

 

Franchise Centre licence fee: is a once only fee which allows the applicant the right to the use of the Pegasus Systems, Pegasus Name, Trademarks and identity at the designated Pegasus Centre and area described in the Franchise Agreement. The franchise purchase includes training at a Pegasus Center plus on site training and set up of the operation.
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PROFIT PROJECTIONS AND PROFITABILITY

Guidance with financial forecasts can obtained from Pegasus Rental Cars resident accountant. Each operation and each operator is different. Although we know the basic requirements and returns to be expected in the successful running of a Pegasus Centre the final results and budgeting are expected to be left to the purchaser.
Turnover will be affected by the size of the town the centre is located in.
Expenditure on fixed costs will be static but will be in the hands of the owner an determined by efficiency and attitudes.
Costs of vehicle repairs will be determined by the quality of the fleet purchased and standard of maintainance applied.
The financial status of the purchaser will have an effect on the results of the business.
While Pegasus can assist in forecasts and projections the final result is in the hands of the operator and will be the results of his plans, ambitions and work habits.
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WHAT DO I NEED TO OPERATE A PEGASUS FRANCHISE?

In New Zealand the Rental Car industry is regulated and you will require a Rental Car Operators licence before commencing business.
You will also need to sit a Certificate of Knowledge.
All cars must be registered under a class for hire or reward and have a current certificate of fitness. A desire to succeed in your own business is essential.
A liking for dealing with people is essential.
A fundamental business knowledge is essential.
There are and have been many excellent articles in recent magazines and business papers on franchising.
We strongly suggest you search these out of bookshops and libraries and devour them. The Franchise Association in Auckland has some very good information packs available for the budding franchisee which gives a good guide to your expectations.
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