SBA 504 and 7(a) Franchise Car Wash Feasibility Study Case Study: Express Tunnel Franchise in Erie, Pennsylvania

A franchised 130-foot express tunnel on the Peach Street corridor in Millcreek Township, in a lake-effect snow belt where the leading wash is a touchless multi-service operator and the friction express format is not yet established. A $5,702,450 project financed with an SBA 504 loan for the real estate and equipment and a small SBA 7(a) loan for the franchise fee and pre-opening costs, under the SOP 50 10 8.1 rule that 7(a) exposure no longer reduces 504 access. Coverage of 1.37x in Year 2 and 1.76x in Year 3. Written determination: feasible.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 1, 2026

MMCG concludes that the proposed franchised express tunnel car wash on the Peach Street corridor in Millcreek Township, Erie County, Pennsylvania is feasible as proposed under a combined SBA 504 and 7(a) structure with a borrower contribution of $1,118,990 and a financial reserve of $279,000 funded at closing. The determination rests on three findings. The market's established wash is a touchless, multi-service operator whose unlimited plan is priced at $29.99, and no friction express franchise with license plate recognition membership operates on the corridor. The trade area is a snow belt in which winter salt exposure sustains wash frequency, and membership revenue, which is 74 percent of wash revenue at stabilization, does not fall in a mild winter. And the franchise system's reported unit volumes place the Project's stabilized revenue of $1,743,244 inside the system's disclosed range. The Project covers its debt 1.37 times in Year 2 and 1.76 times in Year 3, above the 1.15x minimum that SOP 50 10 8.1 sets for 504 projects of $5 million or more. The determination is conditioned on confirmation of the franchise system's listing in SBA's current Franchise Directory file, receipt and review of the franchisor's current Franchise Disclosure Document, and executed land control at or below the land basis used here.

This is an MMCG model study: a complete feasibility analysis performed on a model site in a real market using public data, prepared to show lenders and franchisees how MMCG underwrites a franchised express tunnel under the combined SBA programs. The market, zoning, competition, tax treatment, program rules and franchise directory status come from the public record. The specific parcel, its price, the development budget and the operating assumptions are modeled and labeled as such. Franchise disclosure figures are as reported by franchise data publishers for the 2025 and 2026 disclosure documents and are identified where those publishers disagree; the franchisor's own current disclosure document is a condition of the determination. MMCG has no relationship with the franchisor, any franchisee, or any landowner in Erie County. Items that could not be verified at the study date are disclosed in the Conditions and Limitations section.

SBA reinstated its Franchise Directory for loans approved on or after June 1, 2025. The Directory contains the franchises and other brands that SBA has reviewed and found eligible for SBA financial assistance, and lenders may rely on it rather than reviewing franchise documentation for affiliation and eligibility. Brands that meet the Federal Trade Commission definition of a franchise must be listed to obtain SBA financing, and SBA states that placement is not an endorsement and does not ensure the success of the business. SBA has moved from franchise agreement addenda to a one-time Franchisor Certification model, and from January 1, 2026 an executed Franchisor Certification is required for listed brands.

A reproduction of the Directory effective August 11, 2026 lists Tommy's Express Car Wash with Franchise Identifier Code S2297 as an FTC franchise with a certification on file. It is the only express tunnel franchisor with a large unit base confirmed in that file. SBA's current Directory file is dated September 21, 2026, and the lender's confirmation of the code in that file is a condition of this determination.

The franchise prototype uses an approximately 130-foot dual belt conveyor, glass tunnel walls with a transparent roof, license plate recognition for members through the franchisor's app, and four membership packages. The Project's total cost of $5,702,450 sits inside the 2025 Item 7 range and the lower part of the 2026 range. Its Year 3 revenue of $1,743,244 sits between the 2025 average of $1.65 million and the 2026 average of $2.22 million, which places the forecast inside the system's disclosed performance rather than at its top.

The Project will operate as a franchised 130-foot express exterior tunnel car wash under an unlimited monthly membership model on a 1.4-acre pad in the C1 Corridor Commercial district on the Peach Street corridor in Millcreek Township, Erie County, Pennsylvania, the township's principal retail corridor near the Millcreek Mall complex and the Interstate 90 interchange. The physical program comprises a 4,600 SF franchise prototype building with glass tunnel walls and a transparent roof, in-floor heat and a boiler, housing a 130-foot dual belt conveyor with friction wash arches, an undercarriage flush and rust inhibitor application, a protectant arch and a drying package; three automated pay lanes with license plate recognition, one dedicated to members; stacking for approximately 26 vehicles; 20 free vacuum stalls under canopy with mat cleaners; a reclaim system; and a snow storage area within the site plan. The wash will operate seven days a week from 7:00 a.m. to 8:00 p.m., staffed by a general manager and 4.5 full-time-equivalent attendants for a total of 5.5 FTE under the franchise system's low-labor operating model. The borrower will hold the real estate in a passive company leasing to the franchisee operating company. The Project is positioned as the corridor's friction express alternative to the established touchless operator, with membership packages from $19.99 to $39.99 per month under the franchise system's pricing and a blended revenue per member of $27.50 in Year 1.

Marketing and Sales Strategy

The launch follows the franchise system's grand opening playbook of free washes over the opening period, timed for late autumn so that the first winter's salt season drives early membership. Members join through the franchisor's app, and license plate recognition converts first visits into memberships at the pay station. Local marketing of $60,000 in Year 1 supplements the brand fund, with geofenced advertising around the Millcreek Mall complex and the Peach Street retail corridor, family plans, and a member referral credit. Business outreach targets fleet memberships for dealerships, rental car operators at Erie International Airport, contractors and service companies. Retention runs through card-failure recovery, plan upgrades at the pay station and a winter-weighted communication calendar built around salt removal.

Amenities

Source: U.S. Census Bureau, QuickFacts and 2020 and 2010 Census.

Millcreek Township is the suburban retail and residential core of the Erie metropolitan area, with a stable population of about 54,000 and a median household income of $76,910 that exceeds the Erie County level. Its Peach Street corridor and the Millcreek Mall complex draw shoppers from the city of Erie and the wider county. The trade area is mature rather than growing, and the Project's case rests on format and service gaps, not rooftop growth.

Erie sits on the Lake Erie shore in the lake-effect snow belt, where winter road salt is applied repeatedly from late autumn through early spring. AAA estimates that U.S. drivers paid $15.4 billion in rust repairs caused by de-icing methods over five years, about $3 billion a year, at almost $500 per repair, and recommends frequent washing with attention to the undercarriage. The Project's undercarriage flush and rust inhibitor application are built for that demand, and members are modeled at 2.7 washes per month, above the 2.5 used in temperate markets, because winter salt exposure raises wash frequency.

The membership model also changes how weather risk reaches the lender. A mild winter reduces retail washes and member visits, but members pay the same monthly price whether they wash twice or four times. In the sensitivity cases, a winter with member frequency of 2.4 washes and retail volume 10 percent lower leaves Year 3 coverage unchanged at 1.76x, because lower volume also lowers variable cost.

Millcreek Township's zoning ordinance, adopted April 28, 2022 and updated June 2024, defines a car wash as any building or premises or portion thereof used for washing automobiles and light trucks, and lists car wash among the uses permitted in the C1 Corridor Commercial district and the C3 Interstate Commercial district. A permitted use proceeds through site plan and building permit review without a conditional use hearing. No car wash moratorium in Erie County was found in public records, in contrast to the 2026 moratoriums in Warren and Roseville, Michigan and the Parma, Ohio moratorium extended in 2026, where density of new washes prompted municipal limits. The site plan must accommodate snow storage, stacking for approximately 26 vehicles and the vacuum layout within the ordinance's site standards, which are confirmed at site plan review.

Competitor Number 1 Delta Sonic Car Wash, Peach Street This touchless car wash with fuel, oil change and detailing services is located at 6900 Peach Street, Erie, PA, on the same corridor as the subject. Delta Sonic, founded in 1967 in Niagara Falls, New York, operates a touchless wash system. Its unlimited Super Kiss plan is listed at $29.99 per month and its Super Kiss single wash at $18.

Competitor Number 2 Delta Sonic Car Wash, Village Common Drive This touchless multi-service car wash is located at 2540 Village Common Drive, Erie, PA, under the same plan structure as Competitor Number 1.

Competitor Number 3 Niagara Car Wash This car wash is located at 5504 Zuck Road, Erie, PA. Its format and pricing were not verified.

Directory sources also list Suds Wash and Frog's Car Wash in the Erie area; their addresses and formats were not verified. No friction express tunnel franchise with license plate recognition membership was identified on the Peach Street corridor, and no car wash under construction or permitted on the corridor was found in public records.

The franchise system's four membership packages are modeled at a blended revenue per member of $27.50 in Year 1, escalating 2.5 percent per year, against the $29.99 unlimited plan at the established touchless competitor. Retail single washes are modeled at an average ticket of $14.00, escalating 3 percent per year, against the competitor's $18 premium single wash.

Pennsylvania lists washing, cleaning, waxing, polishing or lubricating of motor vehicles among the services subject to its 6 percent sales tax, and Erie County carries no local rate. Prices are modeled exclusive of the tax, which the operator collects and remits; the treatment of unlimited membership subscriptions is confirmed with the Pennsylvania Department of Revenue before opening.

The franchise system's grand opening model supports a faster Year 1 ramp than an independent launch, and the Year 3 base of 3,700 members approaches the 4,000-member level at which industry data shows retail-to-member conversion accelerating. Holding 3,700 members at 7.5 percent monthly churn requires 278 new members per month, equal to 10.7 percent of Year 3 retail visits, within the 9.8 to 15.4 percent conversion range industry data reports for sites approaching and above 4,000 members. The 130-foot dual belt conveyor processes peak-day volume at Year 5 without queuing onto the corridor.

Location: Peach Street corridor, Millcreek Township, Erie County, PA Size in SF (Gross): 4,600

Source: Marshall & Swift CoreLogic, MMCG

The land basis is an MMCG assumption for a corridor pad. The hard cost lines carry the franchise prototype's glazing and the winterization a lake-effect market requires, including in-floor heat and a snow storage area. The equipment contingency carries a tariff allowance because Section 232 duties on imported steel and aluminum have stood at 50 percent since June 4, 2025, which bears on conveyor, arch and canopy steel.

Loan Assumptions

SOP 50 10 8.1, effective October 1, 2026, provides that SBA guaranty exposure under 7(a) no longer reduces the amount of 504 financing a borrower can access. The structure uses each program for what it does best. The 504 loan finances the land, building and equipment at a fixed debenture rate over 25 years with the special purpose contribution: under 13 CFR 120.910, a limited or single purpose building operated by a business of two years or less requires a borrower contribution of at least 20 percent. The 7(a) loan finances the costs 504 does not carry well, the initial franchise fee, training and opening support, pre-opening marketing and working capital, with the 10 percent equity injection SBA requires for a start-up.

Because the 504 project exceeds $5 million, SOP 50 10 8.1's minimum debt service coverage of 1.15x and its additional third-party lender underwriting requirements for 504 projects of that size apply. The Project's projected coverage of 1.37x in Year 2 and 1.76x in Year 3 clears the minimum. The franchise system's 5.5 FTE support $522,500 of debenture at SBA's job standard of one job per $95,000, against a debenture of $1,646,235; the Project qualifies through a community development goal under 13 CFR 120.862, with the CDC's portfolio meeting the job average. SBA's environmental policy permits a Transaction Screen as the starting point for car wash only facilities, and no fuel sales are proposed.

Variable cost per car comprises chemicals at $0.85, water and sewer at $0.45, electricity and gas at $0.55 and maintenance at $0.50, escalating 3 percent per year. Labor is a general manager at $62,000 and 4.5 FTE attendants at $16.00 per hour with a 15 percent burden, escalating 3.5 percent per year. Royalty and brand fund are carried at 6 percent of gross sales, using the higher of the two brand fund rates reported for the franchise system. Property tax is an MMCG estimate.

The Year 1 shortfall of $178,067 is funded from the financial reserve. Stabilized margins of 42 to 43 percent after a 6 percent royalty and brand fund reflect the franchise system's low-labor model and sit inside the 35 to 50 percent four-wall range reported for mature express tunnels.

At Year 3 pricing, revenue per car is $11.55 and contribution after variable cost, card processing, royalty and brand fund is $8.03 per car against fixed operating costs of $476,179.

Year 3 volume exceeds the 1.25x threshold by 72 cars per day, a margin of 21 percent.

The Project holds coverage above 1.25x in every single-factor case and above 1.0x in the combined downside. The mild winter case, the risk most often raised for snow-belt washes, leaves coverage unchanged because membership revenue does not depend on visit frequency and fewer visits lower variable cost. A new express competitor on the corridor is the binding risk, at 1.32x.

The determination of feasible is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the franchise system's current disclosure document figures, which are reported here as compiled by franchise data publishers; the Directory listing in SBA's September 21, 2026 file; the specific parcel and its price; the addresses, formats and pricing of Niagara Car Wash, Suds Wash and Frog's Car Wash; the Delta Sonic plan prices, which are taken from a consumer source citing the operator's site; PennDOT winter maintenance data and NOAA 1991 to 2020 climate normals for Erie; Millcreek Township's car wash stacking, noise and hours standards; Erie County and Millcreek Township property tax millage and assessed values of existing washes; May 2025 Erie-area wages for cleaners of vehicles and equipment; Penelec and natural gas tariffs; Erie water and sewer rates and tap fees; the FY2027 SBA 7(a) fee values; and the primary SBA text of SOP 50 10 8.1, whose 504 and 7(a) provisions are taken here from published CDC and counsel summaries.

This model study applies the methodology described on MMCG's SBA car wash feasibility study and car wash feasibility study pages. MMCG prepares franchise and independent car wash feasibility studies for SBA 504, SBA 7(a), USDA B&I and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.