Buying an auto repair shop in Florida

An auto repair shop sells labor by the hour and parts at a markup. Most customers pay when they pick up the car, so there's little waiting for money. The exceptions are fleet accounts, billed monthly, and body work that insurance companies pay for. A general repair shop lives on maintenance, brakes, diagnostics and the bigger jobs that come out of them: a car in for an oil change often leaves with a work order for something more. Specialists (transmissions, diesel, European cars, tires and alignment) earn more per job but depend on a narrower stream of work.

Body shops are a different business. Most of their revenue comes through insurance claims. Many get steady work through referral agreements with insurers, called direct repair programs, and in return follow the insurer's rules on pricing and process.

A small shop usually has a service writer at the counter, a few technicians paid hourly or by flat-rate hours (a set number of hours per job, however long it takes), and an owner who often still works in the bays or runs the front. What you're really buying is the customer list and the reputation that keeps those customers coming back.

• Technicians who have been there for years, including at least one who can diagnose hard electrical and computer problems without the owner.
• A trusted service writer who isn't the owner.
• A spread of customers: no single fleet, dealer or insurer the shop can't live without.
• Shop software with clean repair orders, so you can see month by month how many cars came in, the average bill and the comebacks (jobs redone under warranty).
• Current scan tools, and equipment for calibrating driver assistance cameras and sensors, which many newer cars need after windshield or body work.
• For body shops: a working paint booth, a frame machine, and insurer or manufacturer certifications that keep work coming.
• A lease with years left, enough bays and parking, and zoning that allows auto repair.

Any business paid to maintain or repair other people's vehicles must register with the Florida Department of Agriculture and Consumer Services (FDACS) before it starts work, under the Motor Vehicle Repair Act (sections 559.901 to 559.9221, Florida Statutes). That includes body, paint and glass work. Each location needs its own certificate, registration renews every two years, and the number must appear on invoices. The act also requires written estimates and a signed customer notice on jobs above a set amount (section 559.905).

When a shop is sold, FDACS treats the new owner as a new shop that must register, and the seller has 15 business days to tell FDACS (rule 5J-12.003). If you're buying the company itself, ask FDACS what to file.

The state registers shops, not mechanics. Miami-Dade and Broward add their own rules: Miami-Dade registers shops and certifies mechanics, and Broward licenses shops and requires a certified technician for each category of work.

Used oil, oil filters and waste tires fall under Florida Department of Environmental Protection rules (chapters 62-710 and 62-711, Florida Administrative Code). Body shops that spray paint must also follow a federal EPA air rule that requires filtered spray booths and painter training (40 CFR part 63, subpart HHHHHH).

Ask for repair orders, not just tax returns. Shop software shows how many cars come in, the average repair order, margins on parts and labor, and which customers bring in the money. If one fleet or one insurer's referral program is a big share, ask how that relationship started and whether it depends on the owner personally.

Technicians are the hardest part to replace. Find out what each one earns and how (flat rate or hourly), whether they own their tools, and whether any have said they'd leave if the shop sells.

Go over the equipment with someone who knows it: the lifts (and their inspection records), alignment rack, scan tools, air compressor and, for body shops, the paint booth and frame equipment. Check how often jobs come back, the warranty claims, and any open complaints with FDACS.

Shops handle oil, solvents and paint, and some sit on properties with old underground tanks or in-ground lifts. If real estate is part of the deal, or your lease makes you responsible for contamination, get an environmental report before you close.

• Who are your biggest customers, fleets or insurers, and how long have they been with you?
• How long has each technician been here, and how are they paid?
• What does a typical week look like for you, and which jobs can only you do?
• Where do new customers come from now: referrals, online reviews, a dealer or an insurer program?
• What equipment will need replacing in the next few years?
• Have there been any complaints to FDACS or the county, or any warranty disputes?
• In Miami-Dade or Broward: which of your technicians hold the county certifications, and do you think they'll stay?