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

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

• Section II – Estimated initial investment for a Maaco 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 Maaco franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Maaco 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 Maaco’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average gross receipts, direct labor, materials expense, parts expense, sublet expense, gross profit, indirect labor, fixed expense, royalties, payroll tax, general expense, total operating expense, and income for the 1st quartile, 2nd quartile, 3rd quartile, 4th quartile, and all 250 Maaco Centers that had been open and operating in the United States for more than 2 years as of December 31, 2018 and reported expense information for the entire 2018 year via weekly summary business reports (the “Reporting Centers”)

Section I – Background Information

13 Things You Need to Know About the Maaco Franchise

Launches Strategic Southeast Expansion Plans

1.  In late May 2019, Maaco announced a strategic regional growth initiative targeting more than 20 key existing markets in the Southeast. The proactive resale strategy will launch the brand into a new era, creating a stronger presence to support the company’s mission of restoring the safety and appearance of millions of vehicles as America’s No. 1 body shop.

2.  Jeff Todd, resale director for Maaco, said, “This proactive resale initiative will revitalize the franchise system and bring in a new generation of franchisees who are able to push the edges of possibility within the territory and grow the business far beyond its previous confines. In turn, it will help drive franchise development for the long term and ensure Maaco’s stronghold in the South persists and continues to operate at its highest potential.”

3.  As part of the franchising resale initiative, Maaco is focused on expanding its regional footprint in Alabama, Florida, Georgia, and Tennessee with qualified multi-unit investors who are motivated to pursue aggressive growth goals in their territories and diversify their portfolios in a strong industry like the aftermarket. This highly-calculated approach includes the opportunity to reopen existing Maaco centers in major markets across the south, including Atlanta.

4.  According to Maaco, the ideal franchisee is someone who has strong sales and marketing capabilities and has a commitment to following a proven game plan – they are process-oriented, strong business developers, and adept at managing a team of technicians. Franchisees should be community-focused with a desire to ingratiate the business among local residents and organizations.

New Leadership and Enhanced Operations Drive New Levels of Performance

5.  Early April 2019 marked the 47th anniversary of Maaco’s founding, and the company celebrated the milestone by highlighting the changes that are driving the company’s future, including dynamic leadership, a renewed focus on customer service, a new platform for operational excellence, and an aggressive growth plan.

6.  With these strategic enhancements, Maaco has seen improvements in performance across the North American network, with even stronger potential for growth in 2019. As a member of the Driven Brands Inc. family – North America’s leading automotive aftermarket brand franchisor – Maaco has unparalleled resources in operational experience, purchasing power, real estate support, and marketing.

7.  According to Bob Benjamin, president of Maaco, “Maaco is well positioned with a unique business model for the automotive paint and collision repair industry. The combination of consumer-paid painting and collision repair work, insurance repairs and fleet business results in a high-margin, always in demand business.”

8.  Benjamin added, “We have reinvented Maaco over the past year to drive operational improvements, expand our insurance relationships and enhance our profitability model, all behind a renewed focus on the customer experience. This makes Maaco an even better investment for someone who wants a community-based business that generates strong revenue, is backed by a well-known national brand, has deep corporate resources and experience in operations, purchasing and marketing, and a long history of success.”

9.  In the press release, Benjamin also highlighted five key benefits of the Maaco model for an investor, an entrepreneur looking for a new business, or an automotive professional who is ready to own their own repair facility. The benefits are as follows:

• A 47-Year-Old Proven Playbook – Maaco provides the process and operational support that comes with 47 years of success in the automotive service industry. Over its history, Maaco has turned thousands of entrepreneurs and automotive professionals into independent business owners, many with multiple franchises. The power of the Maaco model is that no automotive experience is needed to own and manage a Maaco franchise – the Maaco team provides the guidance necessary to succeed in the Maaco network.

• 94-Percent Brand Recognition Among Consumers – With a North American footprint consisting of more than 500 locations, the Maaco brand has almost 50 percent market share and no national competition for its niche in the marketplace. Known as “North America’s body shop,” it’s “Uh-Oh, Better Get Maaco” tag line is one of the longest-lasting and most memorable among consumers.

• Recession-Resistant Business – The Maaco business model has a diverse customer base bringing revenue opportunities from consumer-paid work for cosmetic painting and collision repair, insurance paid collision repair, as well as revenue from national fleet contract work, provided through Maaco’s participation in the Driven Fleet program. This provides a consistent flow of business. In addition, Maaco’s national and local marketing efforts reach consumers around the country to drive demand to the repair locations.

• Exceptional Training and Support – Maaco introduced a new Maaco University in 2018 to accelerate the training and support for franchise owners and their staff. The online training program offers video coursework on standard repair procedures, customer service, shop operations, and more. In addition, the Maaco field support staff and the Maaco vendor partners provide hands-on training and support throughout North America.

• Work-Life Balance – With a business model that typically operates Monday through Friday, from 8 a.m. to 5 p.m. with limited Saturday operations, Maaco franchisees enjoy the benefits of being an independent business owner while still maintaining time for family and other endeavors.

10.  Benjamin added that there are tremendous opportunities for new Maaco facilities across North America. He said, “While we have more than 500 locations today, there are many cities and growing suburbs that are ideal for a Maaco facility. Our Driven Brands development team has a strategic real estate development model that helps evaluate the best locations for new Maaco facilities based on local growth, economic development, area demographics, local transportation trends and more. This helps ensure our Maaco franchisees are located in the best area to drive traffic to their door and set the foundation for their success.”

Company History

11.  Maaco was founded in 1972 by Anthony A. Martino and Daniel I. Rhode in Wilmington, Delaware. Martino had founded AAMCO Transmissions nearly two decades before with his business partner Robert Morgan. Sensing another opportunity to transform the automotive industry, Martino launched Maaco as an affordable auto painting center. Like AAMCO, Martino used his initials – Martino, Anthony A. and Co. – to name his new company.

12.  Building on the success and reputation of AAMCO, Martino was able to quickly turn Maaco into a successful franchise. Within five years, Maaco had grown to 200 locations and is now the largest auto paint and collision repair provider in the United States. In late 2008, following the death of Martino, Driven Brands of Charlotte, N.C., a holding company which owns Meineke Car Care Centers, Inc. as well as Econo Lube and other auto service related brands, acquired Maaco from the Martino family for an undisclosed amount. Today, Maaco has locations across the United States and Canada.

Entrepreneur’s Franchise 500

13.  Maaco ranked No. 180 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Maaco 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 Maaco’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:  450
• Outlets at the End of the Year:  483
• Net Change:  +33

2017

• Outlets at the Start of the Year:  483
• Outlets at the End of the Year:  491
• Net Change:  +8

2018

• Outlets at the Start of the Year:  491
• Outlets at the End of the Year:  470
• Net Change:  -21

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

• The following financial performance representation includes the average gross receipts and certain cost and expense information for the period January 1, 2018 through December 31, 2018 (the “2018 Year”), as reported by 250 Maaco Centers that met the following criteria:

• (i) the Maaco Center is operated in the United States;
• (ii) the Maaco Center had been open and operating for more than 2 years as of December 31, 2018; and
• (iii) the Maaco Center reported expense information for the entire 2018 Year via weekly summary business reports (WSBRs) (the “Reporting Centers”).

• As of December 31, 2018, there were 470 Maaco Centers open and operating in the United States. Maaco excluded from this financial performance representation a total of 220 Maaco Centers, 46 of which operated for less than 2 years as of December 31, 2018, 13 of which failed to submit weekly gross receipt reports for the entire 2018 Year, another 152 that failed to report expense information for the entire 2018 Year, and 9 Satellite Stores or otherwise non-production model Maaco Centers. (Also excluded are the 35 Maaco Centers that closed during the 2018 Year, none of which operated for less than 12 months.)

• These Reporting Centers use the prototypical business format and operating procedures for a Maaco Center that form the basis of the franchise opportunity that Maaco offers in the disclosure document. The Reporting Centers operate throughout the country in both urban and suburban areas, and have operated for an average of 24 years.

• As used in this Item 19, “gross receipts” means the amount of all cash collected, or other consideration received, for all sales of merchandise and services of any nature at or from or as a result of a Maaco Center, including sublet labor and new and used replacement parts, less sales or equivalent taxes.

• The gross receipts and cost and expense information is presented in the table below on an aggregate basis for all 250 Reporting Centers. Maaco segregated the 250 Reporting Centers into equally distributed quartiles based on their applicable gross receipts.

• The list of costs and expenses below is not all-inclusive. Maaco franchisees will incur additional expenses in the operation of their Maaco Centers that do not appear in this financial performance representation.

• A Maaco Center’s actual gross receipts and operating costs (impacting net income) may vary widely. Numerous factors will affect a particular Maaco Center’s gross receipts, including goodwill and name recognition in the market; length of time in business; nearby businesses; nearby working and living population; number of vehicles; the local market and competition; general economic conditions; the franchisee’s management skill, experience, business acumen, and ability to promote and market its Maaco Center effectively in the local market; service levels and customer satisfaction; and the degree of adherence to Maaco’s methods and procedures in operating the Maaco Center.

1st Quartile (Average)