In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Precision Tune Auto Care franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Precision Tune Auto Care 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 Precision Tune Auto Care franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Number of franchised and company-owned Precision Tune Auto Care 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 Precision Tune Auto Care’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2017 average and median gross sales, and average number of bays, for the 207 domestic franchised Precision Tune Auto Care Centers that reported 52 weeks of sales figures from July 3, 2016 to June 25, 2017 (total and by quartile)
- 2016 average and median gross sales, and average number of bays, for the 251 domestic franchised Precision Tune Auto Care Centers that reported 52 weeks of sales figures from July 5, 2015 to June 26, 2016 (total and by quartile)
Section I – Background Information
8 Things You Need to Know About the Precision Tune Auto Care Franchise
Acquired by Icahn Automotive Group, LLC
1. In early June 2017, Precision Auto Care, Inc. announced that it had entered into a definitive agreement to be acquired by Icahn Automotive Group, LLC, a wholly-owned subsidiary of Icahn Enterprises L.P. Icahn Enterprises — which already owns Pep Boys and Auto Plus — said that it plans to continue using the Precision Tune name for the acquired stores and is looking forward to working with the enterprise’s franchise owners to grow the brand. When the announcement was made, Icahn said that it was offering to buy Precision Auto Care for $37 million.
2. The deal closed in late July. Daniel A. Ninivaggi, CEO of Icahn Automotive Group, LLC, said, “We are extremely pleased to welcome to the Icahn Automotive family more than 320 corporate-owned and franchised Precision Tune service locations in the U.S. and internationally, along with Precision Auto Care CEO Robert Falconi and his leadership team. This acquisition is a significant step in our strategy to expand our national automotive service network, and enhances our existing store footprint in support of our goal to provide customers with premium parts and services at a great value.”
Opening Locations on Military Installations
3. At the end of June 2017, Precision Tune Auto Care opened a new auto service center at Fort Lee in Virginia. According to Precision Tune’s CEO Robert Falconi, it is the second Precision Tune Auto Care center to open on a military installation. Falconi said, “We’re very excited to be here. We are having a great experience at the Fort Myer location, and hope our services will be just as popular at Fort Lee. We think it’s a great opportunity.” He added that as a military-friendly company, opening a new shop in Fort Lee was a natural fit for the brand.
4. Precision Tune said that it plans to continue opening locations on military installations, with another center set to open on Langley Air Force Base in October. Shelly Pritchett, services business manager for the Army and Air Force Exchange Service, said this new development should be beneficial for the community. She said, “They are very enthusiastic to be here, and they are excited to be on another military installation. They are quickly developing a reputation of great service to Exchange patrons.”
5. Precision Tune Auto Care was founded by Bill Childs in 1976 in Beaumont, Texas. He decided to act on his idea for a convenient tune-up and Precision Tune was born. Childs didn’t wait long to start franchising the business — he started awarding franchises in 1977. The very first franchisees were Wally and Dolly Metrojean in Alexandria, Louisiana and the first area developers were Don and Janie Scott in Orlando, Florida. Over the next two years, Childs continued to grow Precision Tune and by the end of the 1970s, there were 100 shops across the country.
6. In the 1980s, Precision Tune introduced a few new innovations such as its “We Care” Card Program, introduced as a customer service measurement tool, which is still being used today. The company also implemented a precedent-setting 12 month/12,000 mile nationwide warranty. Around this same time, Precision Tune began acquiring other auto service franchises, including National 60-Minute Tune.
7. The first international Precision Tune franchise opened in 1991 in Taipei, Taiwan. The company continued to grow domestically and internationally over the next 30 years and today, there are over 320 Precision Tune locations around the world.
Entrepreneur’s Franchise 500
8. Precision Tune Auto Care has earned a spot on Entrepreneur’s annual Franchise 500 list every year for the past 10 years. The brand’s highest rank was No. 162 in 2013, while its lowest rank was No. 331 in 2017.
Section II – Estimated Costs
- Please click here for detailed estimates of Precision Tune Auto Care 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 Precision Tune Auto Care’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: 221
- Outlets at the End of the Year: 218
- Net Change: -3
- Outlets at the Start of the Year: 218
- Outlets at the End of the Year: 215
- Net Change: -3
- Outlets at the Start of the Year: 215
- Outlets at the End of the Year: 213
- Net Change: -2
- Outlets at the Start of the Year: 34
- Outlets at the End of the Year: 35
- Net Change: +1
- Outlets at the Start of the Year: 35
- Outlets at the End of the Year: 40
- Net Change: +5
- Outlets at the Start of the Year: 40
- Outlets at the End of the Year: 44
- Net Change: +4
Section V – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
- The gross sales are a compilation of the results of individual Precision Tune Auto Care Centers operated by franchisees, and should not be considered as the actual or probable gross weekly sales that you will achieve at your Center.
- Actual results vary from Center to Center, and Precision Tune cannot estimate the results of your Center or any particular franchisee. Your experience is likely to differ.
- Actual sales and earnings of the Center are affected by many factors, including your own efforts, ability, and control of the Center, as well as other factors over which you do not have any control. Precision Tune does not represent that any Center you establish will be profitable.
- Some Centers have sold the amounts stated in the following summaries. There is no assurance you will do as well as these Centers. If you rely on these figures, you must accept the risk of not doing as well.
- The tables below reflect gross sales as reported by 207 Precision Tune Auto Care Centers located in the United States which reported their weekly sales figures to Precision Tune for all 52 weeks ended June 25, 2017. These 207 Centers in the survey represent 97.18% of the 213 Precision Tune Auto Care Centers open and in operation in the United States on June 25, 2017. Centers in the survey were comprised of franchised Centers.
- The data is not audited. Although Precision Tune believes the data to be reliable, it has not independently verified its accuracy.
- Data from some of the Centers used to compile the above tables are owned and operated by Precision Tune’s area developers under franchise agreements with Precision Tune.
- Due to rounding, the numbers may not add up.
- Precision Tune does not provide expense information because the data may vary significantly from one location to another. Examples of expenses that vary materially from location to location include salaries and owner’s draw, rent, marketing, refunds and allowances, and interest expenses.
- The tables shown below do not reflect expenses or debt service costs. If you finance the initial franchise fee; development and construction costs; costs to purchase furniture, fixtures, and equipment; or costs to acquire the Center, you will incur costs to pay back the money you borrow.
- The Center may face competition from other auto repair centers, including dealerships, independents, and other franchised chains.
- You may not have comparable automotive experience to that of the existing franchisees and their employees reflected in the tables shown below. While Precision Tune will provide certain assistance to you, you and your staff will be primarily responsible for the daily operations of your Center in accordance with the terms of your franchise agreement.
- The quality and effectiveness of your managerial skills will affect, positively or negatively, the sales results of the Center. Decisions made with respect to location, implementation of marketing programs, personnel, cost controls, and other factors, may impact the results of your Center.
- Factors including those bearing upon business cycles and performance of the national and world economy, may affect the results of the Center.
Part 1 – Average Sales – 52 Weeks Ended June 30, 2017
- Only domestic Centers excluding company stores that reported 52 weeks from July 3, 2016 to June 25, 2017 were included.