FDD Talk 2018: Jiffy Lube Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Jiffy Lube franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Jiffy Lube franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Jiffy Lube franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Jiffy Lube outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Jiffy Lube’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average, median, high, and low net adjusted sales and vehicle count for the 1,891 franchised Jiffy Lube service centers that were open for 12 full months in 2017 (system-wide and by quartile)

• 2017 average, median, high, and low net adjusted sales and vehicle count for the 10 new franchised Jiffy Lube service centers that were open for 12 full months in 2017 (system-wide and by quartile)

• average sales revenue, cost of goods sold, labor, operating expenses, and net income for the 73 pilot franchised Jiffy Lube service centers that offered a variety of light automotive repair services, including repairs such as brakes, suspension, spark plugs, and tires, that are a complement to Jiffy Lube’s core business, measured during the pilot from December 2015 to December 2016

• 2017 average, median, high, and low net adjusted sales for the new Jiffy Lube Multicare service centers (open 7+ months and open 18+ months)

Section I – Background Information

11 Things You Need to Know About the Jiffy Lube Franchise

Appoints New President

1.  Around the beginning of February 2018, Jiffy Lube International announced that it had appointed Patrick Southwick as the company’s new president. Southwick comes to Jiffy Lube after working for its parent company, the Shell Oil Company, for over 15 years.

2.  He has served in numerous strategic and operational roles in North America and abroad including global marketing manager for indirect markets; regional sales manager; and as a consultant within Shell’s U.S. strategy & portfolio and global strategy & portfolio organizations.

3.  As part of his new role as Jiffy Lube president, Southwick will be responsible for the strategic direction of the automotive service provider, including management and growth of the 2,000 independently owned and operated Jiffy Lube service centers across the U.S. and Canada.

Launches New Brand Extension

4.  To kick off 2018, Jiffy Lube launched a new brand extension called Jiffy Lube Multicare. With the Multicare brand extension, Jiffy Lube is focused on rolling out brake, diagnostic – and eventually tire – services to its customers.

5.  Steve Ledbetter, former president of Jiffy Lube International, said, “Jiffy Lube Multicare is not a rebrand; it is more of an extension. That’s been a core idea. What Jiffy Lube is known for is speed, convenience and a quality service every time. We are taking that same brand equity through more of a complete automotive maintenance process for the consumers. As vehicles continue to last longer, more items tend to have intervals that are lining up with what we refer to as ‘wear-maintenance.’ We realized we needed to leverage not only our brand strengths, but also our capability and credibility to do more for consumers. We believe that Jiffy Lube Multicare is the flagship for us to do that.”

6.  Jiffy Lube had been developing the idea for Multicare for several years and “recognized as things were moving and the car was changing, consumers’ needs were also changing.” One of the first things Jiffy Lube looked at were services that its technicians could perform competently and ones that fit with its model while not eroding its core brand strength. The brand decided that wear-maintenance items (brakes and tires) would be the focus of the Multicare extension.

7.  As Jiffy Lube continues to evolve into offering more services, it will continue to have one thing in mind – its core competencies. Ledbetter added, “As we move into the future, there are things we won’t do. If we feel that certain services don’t meet any of our core competencies and they will begin to clutter what we do best, we won’t touch them. We are never going to drop an engine, and we are never going to rebuild a transmission. Those are big services that technically don’t make sense with our footprint, don’t make sense with our brand and don’t make sense for us to go build the competencies to go execute them efficiently.”

8.  At the time of the announcement, Jiffy Lube said that it had approximately 1,000 stores ready to qualify for Jiffy Lube Multicare. Ledbetter expects Multicare to eventually be implemented in about 75 percent of the Jiffy Lube network. To help existing franchisees roll out these new programs, Jiffy Lube has come up with a strict set of requirements and processes. The Multicare requirements fall into four general categories: technical, training, equipment, and signage. Ledbetter said that customers can expect to see the Jiffy Lube Multicare brand extension in both new constructions and existing Jiffy Lube centers.

Company History

9.  Jiffy Lube was founded in 1971 by Edwin H. Washburn in Ogden, Utah. Over the next few years, Washburn opened six additional locations in the state and in 1979, James Hindman bought out all seven locations. Hindman established Jiffy Lube International, began franchising that same year, and relocated the company’s headquarters to Baltimore, Maryland. Jiffy Lube considers 1979 to be its official founding year with Hindman as its founder.

10.  By the end of the 1980s, Jiffy Lube had over 1,000 franchised and company stores across the United States. In 1991, Jiffy Lube became a subsidiary of Pennzoil and after the merger of Pennzoil and Quaker State in 1998, all 581 Q Lube stores were converted into Jiffy Lube locations. In 2002, Pennzoil-Quaker State was purchased by Shell Oil, which still owns the company and all its subsidiaries, including Jiffy Lube. Today, Jiffy Lube has franchised stores throughout the United States and Canada.

Entrepreneur’s Franchise 500

11.  Jiffy Lube ranked No. 181 on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Jiffy Lube franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Jiffy Lube’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  1,928
• Outlets at the End of the Year:  1,915
• Net Change:  -13

2016

• Outlets at the Start of the Year:  1,915
• Outlets at the End of the Year:  1,911
• Net Change:  -4

2017

• Outlets at the Start of the Year:  1,911
• Outlets at the End of the Year:  1,922
• Net Change:  11

Company-Owned

2015

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2016

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• This Item 19 sets forth certain historical data. The following tables show sales and vehicle counts of franchised stores for the full 2017 calendar year. All franchised service centers which were open for 12 full months in 2017 are included in the tables below.

• Certain of the franchised service centers participated in optional programs, such as the Jiffy Lube Brakes & Services program and the extended automotive repair and maintenance services program.

• The sales reported is Gross Sales, which means all receipts for goods and services sold in the ordinary course of business, excluding sales tax, coupons, discounts, proceeds of sales of recovered materials, and amounts refunded to customers. This number is the basis for payment of royalty fees.

• Vehicle count reported is the total number of separate customer transactions experienced by a store. Although a store may have serviced the same vehicle on multiple occasions during the calendar year, each occasion would be reported as one vehicle.

• All data for all stores is reported daily through a point-of-sale computer system. These figures have not been audited, although Jiffy Lube believes them to be reliable.

• The Sales Tables and Vehicles Count Tables are broken into four quartiles. Each quartile displays ranges of High, Average, Low, and Median annual Gross Sales, vehicle counts, and the number and percentage of franchised service centers that exceeded the average in each quartile.

• The total system is also displayed with the ranges of High, Average, Low, and Median for each, and the percentage of service centers that exceeded the average.

• For purposes of this Item 19. “Net Adjusted Sales” are calculated as sales minus promotions, warranty, non-royalty income, and any national billed fleet discounts.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

Part 1 – Comparative Annual Net Adjusted Sales (2017)

First Quartile (473 stores)