In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Meineke franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Meineke franchise, based on Item 7 of the company’s 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Meineke franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Number of franchised and company-owned Meineke outlets at the start of the year and the end of the year for 2014, 2015, and 2016, based on Item 20 of the company’s 2017 FDD
- Section V – Presentation and analysis of Meineke’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average, median, high, and low gross revenue for the 488 franchised Meineke Centers (including 35 Co-branded Meineke/Econo Lube Centers) that met the following conditions: (a) the Meineke Center is operated in the United States; (b) the Meineke Center had been open and operating for more than 2 years as of December 31, 2016; (c) the Meineke Center had at least 5 bays; and (d) the Meineke Center had a Star rating of 3 or better
- 2016 average sales, cost of goods sold, direct technician labor, other variable expenses, fixed expenses, royalty fees, marketing contributions, and EBITDA for the 85 Meineke Centers that were in operation for more than 2 years as of December 31, 2016 and submitted their complete profit and loss statements to the franchisor, by number of service bays (5 bays, 6 bays, 7 bays, 8 bays, greater than 8 bays, and all)
- 2016 average sales, cost of goods sold, direct technician labor, other variable expenses, fixed expenses, royalty fees, marketing contributions, and EBITDA for the 85 Meineke Centers that were in operation for more than 2 years as of December 31, 2016 and submitted their complete profit and loss statements to the franchisor, by EBITDA quartile
Section I – Background Information
12 Things You Need to Know About the Meineke Franchise
Gearing Up for Strategic Growth
1. Meineke started the new year by announcing that it was gearing up for strategic growth into new markets in 2018. The brand said that an infusion of tech-driven business processes and systems was drawing in franchisee interest. Meineke added that these new innovations were driving significant same-store revenue increases across its franchise system.
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2. In 2017, due to the renewed interest in Meineke, the brand opened 50 new locations and completed 65 resales of existing Meineke locations, the vast majority of which have a reinvigorated presence in their markets following substantial updating, renovations, and operational upgrades. The brand hopes to continue its new growth in 2018.
3. Ed Pearson, vice president of franchise sales and development for Meineke, said, “The time is now…we’ve designed the Meineke of today and the future to be one that both leverages our iconic status and taps into a dynamic, tech-forward business model meant for today’s discerning franchise investors. We’ve mapped out a winning strategy and it all starts with our process and systems — a more dynamic enterprise built for individuals and ownership groups that want to be part of a forward-thinking concept.”
4. Under the guidance of Danny Rivera, president of Meineke, the brand has introduced multifaceted analytical techniques that consistently measure and assess key performance indicators all centered around three key objectives: convenience, reliability, and transparency. The refreshed franchise model is now tailored for franchise owners that want to manage teams and potentially multiple units, versus day-to-day operations.
5. For 2018, Meineke plans to open at least 55 new locations. The brand said that nearly 75 percent of the growth planned for 2018 already have solid franchise agreements behind them. The 2018 expansion will come from fresh franchise agreements with new and existing franchisees. Some of the territories targeted for expansion include Nashville, Tampa, Los Angeles, San Diego, Phoenix, Seattle, Vancouver, Minneapolis, and Detroit.
Major Brand Refresh
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6. At the end of last year, Meineke announced that it had plans for a major brand refresh in 2018. The brand has already started testing a new store design in 20 locations, including Las Vegas and Indianapolis. The updated look has been testing favorably at these stores and Meineke plans to update an additional 200 locations by the end of this year. According to Meineke, the refresh includes a more modern feel, with new lighting and repainted interiors and exteriors.
7. In the same press release, Danny Rivera, president of Meineke, said that the brand also had “exciting announcements” for the tire sector in 2018. Meineke started selling tires five years ago and Rivera anticipates continued growth within this segment. The company hopes that tires will make up 20% of its sales in the future.
8. Rivera added, “We continue to grow [the tire] segment. The growth, so to speak for us, is being in that space and offering tires to our consumers. We focus more so on the in center experience. We are a total car care solution — whatever need that brought them into Meineke. We will inspect their tires. We offer services both selling the tires and the installation and everything that goes around the wheel. It’s an exciting space for us as it continues to grow year over year.”
9. Meineke, originally called Meineke Discount Mufflers, was founded in 1971 by Sam Meineke in Houston, Texas. Sam Meineke was inspired to start his own automotive company because he noticed that there was a gap in the industry where customers wanted quality products, workmanship, and consistent vehicle maintenance. Meineke started franchising the business with Harold Nedell in 1972 and nine years later the company expanded into Canada.
10. Meineke Discount Mufflers was acquired by GKN, a multinational British company, in 1983 and the business moved its headquarters to Charlotte, North Carolina a few years later. Over the next decade, Meineke continued to expand and the 900th franchise opened in 1997. Meineke went private in 2003 and changed its name to Meineke Car Care Centers, Inc.
11. In 2006, Meineke’s parent company, Meineke Holding Company, became Driven Brands, Inc. and began buying other automotive service franchises starting with Econo Lube N’ Tune. Since then, Meineke has acquired Maaco, Auto Qual, Drive N Style, Walt’s Auto Care, and America’s Service Station.
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12. Meineke has ranked on Entrepreneur’s annual Franchise 500 list every year for the past 10 years, except in 2018. The brand’s highest rank was No. 50 in 2016, while its lowest rank was No. 480 in 2017.
Section II – Estimated Costs
- Please click here for detailed estimates of Meineke franchise costs, based on Item 7 of the company’s 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Meineke’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 773
- Outlets at the End of the Year: 785
- Net Change: +12
- Outlets at the Start of the Year: 785
- Outlets at the End of the Year: 800
- Net Change: +15
- Outlets at the Start of the Year: 800
- Outlets at the End of the Year: 777
- Net Change: -23
- Outlets at the Start of the Year: 12
- Outlets at the End of the Year: 1
- Net Change: -11
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 1
- Net Change: 0
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 14
- Net Change: +13
Section V – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
Part 1 – Average and Median Gross Revenue for Fiscal Year Ended December 31, 2016
- The chart below is the average and median Gross Revenues by number of service bays for fiscal year end December 31, 2016 statement (the “2016 Gross Revenues Statement”) as reported by 488 franchised Meineke Centers (including 35 Co-branded Meineke/Econo Lube Centers) that met the following conditions:
- (a) the Meineke Center is operated in the United States;
- (b) the Meineke Center had been open and operating for more than 2 years as of December 31, 2016;
- (c) the Meineke Center had at least 5 bays; and
- (d) the Meineke Center had a Star rating of 3 or better.
- As of December 31, 2016, there were 819 franchised Meineke Centers, including 42 Co-branded Meineke/Econo Lube Centers open and operating in the United States. The franchisor excluded 331 Meineke Centers (including 7 Co-branded Meineke/Econo Lube Centers) from this financial performance representation because the Meineke Center either failed to meet the criteria described in (a) through (d) above or failed to submit weekly sales reports for the 2016 fiscal year.
- “Gross Revenues” has the same meaning as described in Item 6.
- Meineke Car Care Centers, LLC (MCC) implemented the 5 Star Rating program in the fall of 2008. Each Meineke Center is given a score of 1 to 5 Stars, based on a set of established criteria each calendar quarter. The franchisor and MCC consider a 3 Star rating to represent an average performing Meineke Center.
- The 2016 Gross Revenues Statement included below omits all Meineke Centers with less than 5 bays because the franchisor recommends that all new Meineke Centers have 5 bays or more. Currently, you are required to open a Meineke Center that has a minimum of 4 service bays.
- The franchisor does still have locations in the system that only have 3 service bays; however, these are franchised locations that were developed before MCC changed the required minimum number of service bays for a Meineke Center.