FDD Talk 2019: 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 2019 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 2019 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 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Jiffy Lube’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 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 2018 (system-wide and by quartile)

• 2018 average, median, high, and low net adjusted sales and vehicle count for the 33 new franchised Jiffy Lube service centers that opened in 2017 and were open for 12 full months in 2018

• 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

• 2018 average, median, high, and low net adjusted sales for the new Jiffy Lube Multicare service centers (open 7+ months, 18+ months, 30+ months, and 42+ months)

Section I – Background Information

14 Things You Need to Know About the Jiffy Lube Franchise

Focuses on Growth

1.  At the end of February 2019, Jiffy Lube announced that it was accelerating its growth in 2019, expanding into new markets and communities. Based on current development plans, Jiffy Lube will open more new stores this year than the brand has opened in any given year over the past decade.

2.  At the time of the announcement, ten new locations were slated to open in the first quarter of this year. In January, three franchise-owned Jiffy Lube service centers opened in the Southwest including Maricopa, Arizona; Las Vegas, Nevada; and Thornton, Colorado.

3.  Patrick Southwick, president of Jiffy Lube International, Inc., said, “Our strategic growth plan aligns with one of our key brand attributes, which is convenience. We want to ensure that Jiffy Lube meets consumers’ needs by offering the services they need to maintain their vehicle at a location convenient to their home or place of work.”

4.  According to Chris Dykes, director of network development for Jiffy Lube International, Inc., “Whether existing or prospective Jiffy Lube franchisees are looking to self-develop new locations, acquire locations or participate in a turnkey program, we offer several incentive programs and provide numerous resources to support new growth.”

Teams Up With Muscular Dystrophy Association for Annual MUSCLE UP! Campaign

5.  At the beginning of August 2018, Jiffy Lube and the Muscular Dystrophy Association (MDA) teamed up for the seventh annual MUSCLE UP! campaign, which aims to help transform the lives of families affected by muscular dystrophy, ALS, and related muscle-debilitating diseases.

6.  Denny Reiner, director of marketing for Jiffy Lube International, Inc., said, “Jiffy Lube and its franchisees are passionate about giving back to the communities in which we live and operate, so we are enthusiastic to support MDA for the seventh consecutive year. The MUSCLE UP! program is a natural fit for Jiffy Lube because it draws parallels between the body’s muscular system and a vehicle’s engine structure.”

7.  Throughout the month of August, Jiffy Lube customers were invited to make a donation, at participating locations, of $3 or more to MDA, helping to fund programs for families in their community. In return, customers received a MUSCLE UP! savings book containing offers totaling more than $100 from Jiffy Lube and other national retailers, including Men’s Wearhouse, Fuddruckers, and Office Depot.

8.  One hundred percent of the funds raised benefit MDA and its life-enhancing programs such as state-of-the-art clinics and support groups, as well as the MDA Summer Camp, a week-long camp that provides opportunities for kids living with neuromuscular diseases to discover new interests, gain self-confidence, and experience the independence of being away from home in an environment where barriers do not exist.

9.  Since launching MUSCLE UP! in 2012, the campaign has raised more than $5.5 million in support of research and MDA services and has sent more than 2,750 children to MDA Summer Camp.

10.  Karen Lewis Alexander, executive vice president and chief philanthropy officer of MDA, said, “Support from partners like Jiffy Lube makes it possible to accelerate research to find urgently needed treatments and cures for muscle-debilitating diseases. In the past year, four new drugs have been approved by the FDA for the treatment of Duchenne muscular dystrophy, spinal muscular atrophy and amyotrophic lateral sclerosis (ALS). These are milestones that would not have been possible without the generosity of loyal Jiffy Lube franchisees, service center employees and customers. We are so grateful for our partnership.”

Company History

11.  Jiffy Lube was founded in 1971 by Edwin H. Washburn in Ogden, Utah. As full-service gas stations declined in the 1970s, Washburn saw an opportunity to open a specialty shop that focused on automotive oil changes. Throughout the 1970s, Washburn opened additional Jiffy Lube centers around Utah. In 1979, W. James Hindman, then-football coach at Western Maryland College, bought out Washburn’s seven franchises. Because of this, Jiffy Lube cites 1979 as its founding year.

12.  Hindman changed the company’s official name to Jiffy Lube International and relocated its headquarters to Baltimore, Maryland. National franchising of Jiffy Lube began immediately under Hindman’s leadership and by 1989, there were over 1,000 franchised locations across the United States.

13.  In 1991, Jiffy Lube became a subsidiary of Pennzoil. When Pennzoil and Quaker State merged in 1998, the 581 Q Lube stores were rebranded as Jiffy Lubes, which had 1,541 stores open at the time. Jiffy Lube continued to grow over the next few years and in 2002, Pennzoil-Quaker State was acquired by Royal Dutch Shell. Today, there are Jiffy Lube stores in the United States, Canada, and South America.

Entrepreneur’s Franchise 500

14.  Jiffy Lube ranked No. 90 on Entrepreneur’s 2019 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 2019 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 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

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:  1,923
• Net Change:  +12

2018

• Outlets at the Start of the Year:  1,923
• Outlets at the End of the Year:  1,919
• Net Change:  -4

Company-Owned

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

2018

• 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, 2019 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 2018 calendar year. All franchised service centers which were open for 12 full months in 2018 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 (2018)

First Quartile (473 stores)