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 2018 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 2018 FDD
- Section IV – Number of franchised and company-owned Meineke 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 Meineke’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average, median, highest, and lowest gross revenues for the 475 franchised Meineke Centers (including 25 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, 2017; (c) the Meineke Center had at least 5 bays; and (d) the Meineke Center had a Star rating of 3 or better, grouped by number of service bays (5 bays, 6 bays, 7 bays, 8 bays, 8+ bays, and all)
- 2017 average gross revenues, direct labor, cost of goods sold, fixed expenses, royalties, and marketing fees for the 133 Meineke Centers that were in operation for more than 2 years as of December 31, 2017 and submitted their complete profit and loss statements to the franchisor, grouped by number of service bays (3 bays, 4 bays, 5 bays, 6 bays, 7 bays, 8 bays, 8+ bays, and all) and by quartile
Section I – Background Information
15 Things You Need to Know About the Meineke Franchise
Completed Overhaul of Ten Locations with an Updated Look and New Services
1. At the beginning of 2018, Meineke launched a brand refresh and by the end of June, 10 locations were ready to re-open following updates to the look of the centers and their services.
2. Jeff Todd, director of resale for Meineke Car Care Centers, Inc., said, “Our loyal customers have always been committed to these ten locations and we hope to reaffirm the connection that we have with them by offering updated looks and a new collection of services. Each of these Meineke locations will now be able to better meet the car care needs of the communities they serve.”
3. Each of the updated shops is owned and operated locally. These refreshed Meineke Car Care Centers offer a comprehensive line of car care services, from routine oil changes to extensive car repair. The 10 refreshed Meineke Car Care Centers are located in:
- East Brunswick, New Jersey (300 Route 18), owned by Divya Andhavarapuivy;
- Cedar Rapids, Iowa (5261 Council St. NE), owned by Keith Loeffelholz;
- Beaumont, California (1493 E. 6 St.), owned by Monir Ahmed;
- Virginia Beach, Virginia (1321 Diamond Springs Rd.), owned by Paul Hammond;
- Arvada, Colorado (6350 C N. Sheridan Rd.), owned by Ryan Tracy;
- Katy, Texas (1270 Rock Canyon Dr.), owned by Tae Kim;
- Ann Arbor, Michigan (2470 W. Stadium Blvd.), owned by Byron Pink;
- Sacramento, California (2725 W. Capitol Ave.), owned by Dario Giordano and Linda Faulkner;
- London, Ontario (663 Wellington Road South), owned by Kamran Masood; and
- Woodbury, New Jersey (548 Mantua Ave.), owned by Michael Phillips.
4. Todd added, “Each new team taking over a Meineke location is sure to steer local drivers in the right direction when it comes to car care. They represent our ideal franchisees – savvy entrepreneurs that are ready to use business expertise and the benefits of our franchise support system to push each location to be the best in town.”
5. In addition to each of these locations, Meineke has many existing units with ongoing cash flow that are prepared for resale. Key resale markets range from Houston to New York and San Francisco to Chicago.
Plans to Expand in Alabama
6. In late September 2018, Meineke announced its plans to open as many as 15 new locations in Alabama over the next few years. Dennis Elliott, vice president of franchising for the company, said Meineke hopes to expand not only in Birmingham and Huntsville, but also in the Auburn and Montgomery areas. Elliott added, “We’ve been making heavy investments in priority markets, and we think we have the ability to nearly double in size. Expanding in Huntsville and Birmingham makes a ton of sense.”
7. At the time of the press release, Meineke had car care centers across the state in Bessemer, Florence, Mobile, Montgomery, and Vestavia Hills. Elliott said the company would like to open up to five locations in the Huntsville and Birmingham areas, and up to five in the Auburn-Montgomery corridor along Interstate 85.
8. Elliott also said that Alabama’s low-cost, business-friendly reputation is one reason that Meineke has targeted the state for expansion. Additionally, according to Elliott, “There’s a lot of positive factors. There’s a lot of economic growth in the Southeast, and we’re looking to find the people who are interested in growing with us.”
Named a Top Franchise for Veterans
9. In early 2019, Meineke announced that it had been named one of Entrepreneur magazine’s 2018 Top Franchises for Veterans. Meineke was No. 36 on the magazine’s annual ranking of the top 150 franchises offering incentives, support, and other programs to help veterans become franchisees.
10. John Moreau, vice president of franchise development for Meineke, said, “It’s a true honor to provide veterans with a business opportunity that builds on their unique strengths and recognizes their sacrifice and devotion to our country. Veterans tend to possess a unique skill set, experience and perspective that equips them for success as a Meineke franchisee, and we’re happy to continue providing resources and incentives that help, support and encourage veterans to join our system.”
11. To be eligible for the Top Franchises for Veterans list, companies are required to participate in a survey designed to help Entrepreneur learn more about their veterans programs. Factors considered in the annual ranking include each company’s veteran incentive, how veteran franchisees are attracted to and supported by the company, and how each company scored in the 2018 Franchise 500. From there, the top 150 franchise concepts offering the best opportunities for veterans interested in becoming franchisees are named to Entrepreneur’s Top Franchises for Veterans list.
12. Meineke was founded in 1971 by Sam Meineke in Houston, Texas as Meineke Discount Mufflers. Sam Meineke noticed there was a gap in the industry where customers wanted quality products, workmanship, and consistent vehicle maintenance. The following year, Meineke began franchising the concept with the help of Harold Nedell. From the start, Meineke had franchising in mind and built a business model that reflected this.
13. Over the next two decades, Meineke expanded rapidly across the United States and Canada. By 1997, Meineke opened its 900th franchised location. In 2003, the company officially changed its name to Meineke Car Care Centers when it expanded to offer full-service auto repairs.
14. A few years later, parent company Meineke Holding Company, became Driven Brands, Inc. Around this time, Driven Brands acquired other automotive service companies including Econo Lube N’ Tune Inc., Maaco, Auto Qual, and Drive N Style. Following a few more acquisitions, Driven Brands, together with all of the franchises it owned, including Meineke, was purchased by private equity firm Roark Capital Group in 2015.
Entrepreneur’s Franchise 500
15. Meineke ranked No. 488 on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Meineke 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 Meineke’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
- 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: 777
- Outlets at the End of the Year: 758
- Net Change: -19
- 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
- Outlets at the Start of the Year: 14
- Outlets at the End of the Year: 10
- Net Change: -4
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
Part 1 – Average and Median Gross Revenues for 2017 Year
- The chart below is the average and median Gross Revenues by number of service bays for the year end December 31, 2017 statement (the “2017 Gross Revenues Statement”) as reported by 475 franchised Meineke Centers (including 25 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, 2017;
- (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, 2017, there were 792 franchised Meineke Centers, including 34 Co-branded Meineke/Econo Lube Centers open and operating in the United States. The franchisor excluded 317 Meineke Centers (including 9 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 2017.
- “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 2017 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 still has 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.