Acquisitions Anonymous - #1 for business buying, selling and operating How This Car Warranty Broker Makes Money (And Should You Buy It?)
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Jan 31, 2025 Curious about how third-party extended car warranties work? Discover the intricate roles these businesses play—are they insurers, brokers, or something else? The discussion covers their revenue model, why margins are often low, and the complexities of financing such acquisitions. Explore potential growth avenues for owners and the competitive landscape, including consumer skepticism and challenges faced by smaller players. Plus, some unexpected insights into the intersection of business, government, and organized crime add an intriguing twist!
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State-Specific Regulations
- Auto warranty regulations vary by state, sometimes falling under the insurance commission's purview.
- This might explain the company's scattered presence across ten states rather than a regional focus.
Business Model Hypothesis
- The car warranty company likely sources leads from lower-end used car dealerships.
- They resell existing warranties, earning a commission or origination fee, rather than carrying the risk themselves.
Bureaucracy in Business Acquisitions
- Chelsea recounts a deal involving a driving school where the state lacked a process for transferring ownership.
- The buyer needed legal and political help to create a new process, highlighting bureaucratic hurdles in acquisitions.