Car Wash Diligence Checklist
Use this checklist to validate membership quality throughput weather risk capex timing and debt cushion before LOI.
Built from the Acquidex car wash analysis framework for first-time buyers who want operating truth and downside clarity.
Disclaimer: This checklist is intended to assist diligence and does not replace full diligence.
Deal Setup
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Confirm asking price and deal structure assumptions | Avoid anchoring to stale broker math | Latest CIM LOI draft and broker revisions | ||
| Rebuild seller SDE bridge with normalized assumptions | Most errors start with aggressive add-backs | SDE bridge with line-item support | ||
| Set explicit go/no-go thresholds before LOI | Pre-commit rules reduce emotional overpay | Investment memo with hard thresholds | ||
| Assess future buyer and scalability profile | One-off sites trade weaker than replicable platforms | Exit memo with buyer profile and scale constraints |
Revenue Quality
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Membership revenue share split vs retail washes | Recurring revenue quality determines durability | 24-month revenue by stream | ||
| Monthly churn and reactivation rates trended | Low-quality recurring revenue can hide churn | Membership cohort and churn reports | ||
| Average revenue per member trend reviewed | Price pressure shows up here first | Member billing trend by month | ||
| Failed payments and billing leakage reviewed | Recurring revenue quality depends on successful collections | Decline report and failed charge trend | ||
| Promo dependence measured by cohort | Promo-driven growth is fragile | Discount code and campaign report | ||
| New-member vs legacy-member behavior split reviewed | Fresh growth may be weaker than the legacy base | Cohort retention usage and ARPM split | ||
| Pre-sale promo or revenue spike checked across last 3-6 months | Artificial ramps can overstate durable run-rate | Monthly promo cadence revenue trend and campaign history | ||
| Package mix by ticket tier reviewed | Pricing power requires healthy mix | Wash package mix and average ticket report | ||
| Fleet/commercial concentration tested | One account can distort deal quality | Top account list with monthly revenue |
Throughput and Site Operations
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Site throughput by peak hour validated | Throughput limits cap growth and queue quality | POS lane throughput logs | ||
| Actual utilization tested against theoretical maximum capacity | Broker throughput claims often overstate real headroom | Capacity model with observed cars per hour | ||
| Peak-hour abandonment and cycle-time consistency reviewed | Line abandonment and inconsistent cycle times hide lost revenue | Queue study and cycle-time logs | ||
| Queue and stacking constraints checked | Physical flow can bottleneck revenue | Site observation notes and photos | ||
| Ingress and egress friction documented | Access drives conversion and repeat traffic | Drive path map and peak-hour observation | ||
| Labor schedule matched to traffic pattern | Labor mismatch hurts margin | Payroll and hourly traffic logs | ||
| Refund and rewash rates trended | Service quality issues create hidden leakage | Customer support and refund logs |
Membership Unit Economics
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Member wash frequency by plan tier reviewed | High usage can destroy membership margin | Usage by member cohort | ||
| Unlimited-plan abuse and account-sharing risk tested | A small group of heavy users or shared accounts can wreck margin | Usage outlier report and household/account analysis | ||
| Contribution margin by plan tier calculated | Revenue alone can hide weak economics | Tiered revenue and direct cost worksheet | ||
| Promo-to-full-price conversion measured | Weak conversion means rented revenue | Cohort conversion report | ||
| Member geographic draw radius reviewed | Weak draw radius can make demand more fragile than it looks | Member ZIP analysis and drive-time map |
Weather and Seasonality
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| 24-month monthly sales seasonality mapped | Annual averages hide weak months | Monthly revenue trend report | ||
| Rain or snow sensitivity measured | Weather shocks drive downside risk | Revenue vs weather day analysis | ||
| Weak-month staffing and cost flex tested | Cost rigidity can collapse DSCR | Off-peak labor and utility run-rate model |
Equipment and Capex
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Tunnel or in-bay equipment roster with age | Age profile predicts replacement needs | Equipment schedule with install dates | ||
| Deferred maintenance backlog estimated | Owners often pause spending before sale and dump the backlog on the buyer | Backlog estimate from logs inspections and vendor quotes | ||
| Downtime and parts failure history reviewed | Frequent failures reduce effective capacity | Maintenance tickets by month | ||
| Downtime impact on revenue and peak-day loss quantified | Frequency alone understates how badly downtime hurts cash flow | Revenue impact analysis tied to outage logs | ||
| OEM versus third-party parts and service quality reviewed | Parts quality and service quality affect long-term reliability | Parts purchase history and vendor summary | ||
| Service contract terms and response SLAs reviewed | Slow response times can turn small failures into revenue leaks | Current service contracts and SLA terms | ||
| Water reclaim system condition validated | Reclaim failures raise utility burden | Inspection report and service logs | ||
| 12-36 month capex forecast built | Capex timing affects valuation and debt safety | Vendor quotes and capex calendar |
Cost Structure
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Water and sewer trend by month reviewed | Utility inflation can compress margins quickly | 24-month utility bills | ||
| Electric demand charges and load profile reviewed | Power cost spikes may come from demand structure not simple usage | 12-month electric bills with demand-charge detail | ||
| Water pressure consistency and municipal constraints checked | Pressure and municipal limits can impair throughput and customer experience | Pressure logs municipal notices and operator notes | ||
| Chemical cost per wash trend tested | Chemical creep often hides in blended COGS | Chemical usage and purchase logs | ||
| Chemical vendor dependency and pricing lock-in reviewed | Supplier concentration can squeeze margin or service continuity | Vendor contract pricing terms and renewal history | ||
| Utilities as percentage of revenue benchmarked | Benchmark against quality thresholds | Utility-to-sales worksheet | ||
| Repairs normalized to realistic run-rate | Understated repairs inflate earnings | Historical repairs plus forward reserve model |
Site and Real Estate
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Lease term and options confirmed | Lease control is core value protection | Fully executed lease and amendments | ||
| Assignment and transfer restrictions reviewed | Transfer friction can break closing | Lease legal summary | ||
| Rent escalator and CAM trend reviewed | Rent shock erodes post-close returns | Rent and CAM history | ||
| Competitive radius and incoming supply checked | Nearby new washes can crush volume | Market map and supply pipeline list | ||
| Barrier to entry and competitor offer strength assessed | Easy supply growth or aggressive pricing can collapse local economics | Zoning and permit review plus competitor pricing and membership scan | ||
| Visibility traffic pattern and roadwork risk reviewed | Great washes underperform when line of sight or traffic flow breaks | Traffic count data line-of-sight review and municipal roadwork plans | ||
| Landlord redevelopment and shared-center dependency reviewed | Site repurposing or weak anchors can reduce traffic or terminate value | Landlord discussions center plan and anchor tenancy review | ||
| Environmental and discharge compliance reviewed | Wash sites carry environmental and permit risk | Permits inspection history and compliance notices | ||
| Drainage flooding and stormwater risk reviewed | One bad storm can create shutdowns repairs and claims | Drainage inspection flood history and site plan |
Financial Quality
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Tax returns reconcile to P&L and deposits | Reconciliation quality predicts reporting trust | 3 years returns P&L and bank statements | ||
| Cash handling and refund controls tested | Weak controls create leakage risk | Cash SOP and override logs | ||
| Owner role and replacement plan documented | Owner dependence reduces transferability | Owner task map and replacement budget |
Debt and Downside
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Base case and downside DSCR modeled | Debt cushion is the survival metric | 3-scenario debt model | ||
| Stress test churn up and weather down | Combined shocks reveal fragile deals | Downside scenario output | ||
| Stress test year-one capex event | Deferred capex can erase free cash | Capex shock scenario | ||
| Cash left after debt in bad-luck year is acceptable | Thin residual cash means high failure risk | Cash-after-debt bridge base vs downside |
Insurance and Catastrophic Risk
| Checklist Item | Why It Matters | Evidence Requested | Status / Notes | |
|---|---|---|---|---|
| Claims history and insurability trend reviewed | Past losses and premium drift can signal structural site problems | Loss runs renewal quotes and broker summary | ||
| Business interruption coverage adequacy checked | Weather and equipment failures hurt more when interruption coverage is weak | Current policy with interruption limits and waiting periods |