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 2020 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 2020 FDD

• Section IV – Number of franchised and company-owned Maaco outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Maaco’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average, median, lowest, and highest gross receipts for the 405 Maaco Centers that had operated for at least 2 full years as of the end of the 2019 year, operated as a full production (as opposed to satellite or non-traditional) location, and reported gross receipts data to the franchisor for the full 2019 year, by quartile

• 2019 average gross receipts, direct labor, materials expense, parts expense, sublet expense, gross profit, indirect labor, fixed expense, royalty, advertising, payroll tax, general expense, total operating expense, and income for the 184 Maaco Centers that had operated for at least 2 full years as of the end of the 2019 year, operated as a full production (as opposed to satellite or non-traditional) location, and reported gross receipts and expense data to the franchisor for the full 2019 year, by quartile

• first year gross receipts ramp (months 1 to 13) for the 82 Maaco Centers that opened during the period from January 4, 2014 through December 29, 2018

Section I – Background Information

23 Things You Need to Know About the Maaco Franchise

Drives Business to Franchisees Through National Fleet Program

1.  In late January 2020, Maaco discussed how the brand utilizes fleet business opportunities as part of its three-pronged business model and to drive traffic at its franchise locations. The unique 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, and revenue from national fleet contract work, provided through Maaco’s National Fleet program. These three revenue streams provide a consistent flow of business for Maaco franchisees and help to make the brand’s business model recession-resistant.

2.  Helmuth Mayer, owner of five Maaco centers in the Dallas area and past winner of the Maaco MSO of the Year Award, talked about the importance of the fleet opportunities to his business. “Along with the additional revenue that the fleet business brings,” said Mayer, “it also helps with employee retention, as it keeps the shop workflow steady during times of the year when the retail or collision work may slow.”

3.  Farzad Shoaee-Tehrani, Maaco owner from Gaithersburg, Maryland, added, “The fleet business that the Driven Fleet program brings in is the best thing that has happened to our shop. My team is always happy when they see a vehicle from one of our fleet partners come into the shop. It keeps our technicians busy and our paint booth productive.”

4.  “The Maaco Fleet program helps to provide additional revenue for my business,” said Ron Raio, who has been a Maaco franchise owner in Delran, NJ for 18 years. “It’s a real benefit of being a part of the Maaco national network.”

5.  The Maaco National Fleet program utilizes over 25,000 fleet maintenance partnerships with car rental, fleet management, government, ride share, and last-mile delivery companies nationwide to provide painting, repair, and maintenance through its national footprint. With nearly 500 Maaco locations across North America, fleet partners are never far from a Maaco location.

6.  According to Frank Petrane, senior vice president of Driven Fleet at Driven Brands, “Fleet has always been a part of the Maaco DNA. As part of the Driven Brands family, we offer a fleet partner a comprehensive program of oil change and maintenance through our Meineke Car Care Centers or Take 5 Oil Change, and painting and accident management through our Maaco locations. It’s everything they need to keep their automotive fleet on the road. That’s a real benefit for our partners and our franchisees that most companies cannot match.”

7.  To participate in the National Fleet program, a Maaco location must achieve an internal certification, based on meeting certain key performance indicators, and equipment and training requirements to ensure they can deliver the quality and service levels expected. Petrane cited that more than 90 percent of all Maaco locations currently participate in the program.

Ensures Centers Are Prepared to Service Customers Safely in Today’s Environment

8.  As the COVID-19 pandemic hit the U.S. in March 2020, Maaco Collision Repair and Auto Painting, the leader in the $43 billion automotive paint and collision industry, and part of the Driven Brands family of automotive brands, implemented a three-stage strategy for dealing with the crisis, and helping its franchisees plan for the future. Maaco’s first step was rallying around its franchisees and owners to help them navigate the uncertainty.

9.  Dave Gross, regional vice president of operations for Maaco, said, “In stage one, the corporate support teams shifted their focus quickly from daily operations to supporting the franchise owners in other ways, providing guidance and assistance with the application process for government and Driven Brands programs available for business and employee financial relief. Through our communication platform, Rally Point, we share information and best practices among the family of franchise owners, as well as the franchise owners sharing best practices peer to peer.”

10.  “When the pandemic hit, the world stopped spinning for a lot of people,” said Tim Wright, owner of a Maaco center in Farmington, MI. “But the Maaco management team was quick to make the adjustments necessary to support their franchisees when it was needed the most.”

11.  The second stage of support was to prepare the centers to address the new operating procedures in a COVID-19 era, keeping customers and employees safe. Maaco named the program R.A.M.P. (Readiness-Attitude-Management-People), which included a six-week series of webinars on such topics as maintaining social distancing on the production line, implementing a touchless intake process, proper disinfecting procedures, and proper use of personal protective equipment (PPE).

12.  “The R.A.M.P program was a collaborative effort among the operations, training, and marketing teams, along with franchisees, to share learnings and best practices,” said Gross. “Our franchise operators are on the front lines and have a lot to share.”

13. “What was great about the R.A.M.P. program was that the franchisees were involved in providing and presenting the content to their peers,” Wright said.

14.  Joe Houghton, 31-year Maaco franchisee in West Springfield, MA, seconded the importance of teamwork and communication with Maaco’s corporate team and the franchisees. “The COVID-19 pandemic was a unique situation that no one has ever faced before,” said Houghton, “and communication was critical to success. There was constant communication between the advisory council and the Maaco management team, where everyone could share their concerns and ideas. This provided a support system that helped everyone focus on what needed to be done to be safe and keep business coming in. The corporate teams did a great job of coming together, and with our collective input, creating programs to support the franchisees while implementing all the safety procedures needed to keep our customers and employees safe.”

15.  In late June 2020, Maaco’s network entered stage three, as all Maaco Collision Repair and Auto Painting centers were open for business and implementing the practices that they learned to not only make proper and safe auto repairs but to keep customers and employees safe as well in the process. A side benefit of the situation is that the centers used the time to make upgrades to their facilities and utilize the time for more skills training for technicians.

16.  Tyson Disbennett, director of certification for Maaco, added, “During the state shutdowns, even though we were classified as essential, business had slowed as it did for the rest of the repair industry. That gave owners and technicians more time to complete I-CAR training and make the enhancements to their operations needed to become Platinum certified. We now have more centers that are Platinum Certified, meaning they are qualified to perform national fleet repairs, then we did pre-pandemic. That translates to more revenue opportunities for those centers.”

Celebrates 2020 Franchise Performance Virtually

17.  At the end of November 2020, Maaco announced that it would hold that year’s annual North American Maaco Convention virtually on December 2, 2020. The 2020 Maaco Convention was a time to showcase successes from the year as the event aimed to provide key company updates along with celebrating its top-performing franchisees with its annual awards.

18.  Kicking off the digital event was Chris Dawson, president of Maaco. Franchisees then heard important updates from key departments like operations, marketing, and franchise services. The event also addressed the ongoing challenges presented by the pandemic, answered industry questions, and highlighted how Maaco has continuously come out on top throughout it all.

19.  Dawson said, “The theme of the 2020 Maaco Convention is Moving Mountains and that’s what we have done thanks to the resiliency of our franchise family. Attendance at this year’s convention is easier than ever and we look forward to sharing this exciting digital convention with our outstanding network, which I am so proud to lead.”

Company History

20.  Maaco was founded in 1972 by Anthony A. Martino and Daniel I. Rhode in Wilmington, Delaware. A decade before starting Maaco, Martino founded AAMCO Transmissions with partner Robert Morgan. Martino created both names by using the first letters from his name (Anthony A. Martino). Using his years of experience in the automotive services industry, Martino launched Maaco to provide affordable automotive painting services.

21.  Using AAMCO’s brand recognition, Martino was able to quickly grow Maaco into a successful franchise. Within five years, Maaco grew to nearly 200 locations around the U.S. In the 1980s, Maaco expanded its services to include auto body repairs. Over the next few decades, Maaco continued to grow around the U.S. as well as in Canada and Puerto Rico.

22.  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 grown into the largest auto paint and collision repair provider in the United States.

Entrepreneur’s Franchise 500

23.  Maaco ranked No. 357 on Entrepreneur’s 2020 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

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:  471
• Net Change:  -20

2019

• Outlets at the Start of the Year:  471
• Outlets at the End of the Year:  459
• Net Change:  -12

Company-Owned

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

2019

• 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, 2020 FDD) and Analysis

Part 1 – Gross Receipts

• Part 1 of this financial performance representation includes the historical average and median gross receipts for 405 Maaco Centers that operated from December 30, 2018 through December 28, 2019 (the “2019 Year”) and that met the following criteria:

• (i) the Maaco Center had operated for at least 2 full years as of the end of the 2019 Year;
• (ii) the Maaco Center operated as a full production (as opposed to satellite or non-traditional) location; and
• (iii) the Maaco Center also reported gross receipts data to the franchisor for the full 2019 Year.

• As of the end of the 2019 Year, there were a total of 459 Maaco Centers in operation. However, the performance of 23 Maaco Centers is not included below because they had not been open and operating for at least 2 full years as of the end of the 2019 Year.

• The franchisor also excluded the performance of: (a) 22 Maaco Centers that failed to submit weekly sales reports for the entire 2019 Year; and (b) the remaining 9 Maaco Centers because they operated as satellite or non-traditional locations and therefore do not use the prototypical business format and operating procedures for a Maaco Center that form the basis of the franchise opportunity that the franchisor offers in the disclosure document.

• Also excluded are 24 Maaco Centers that closed during the 2019 Year (none of which operated for less than 12 months).

• “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 franchisor separated the 405 Maaco Centers into 4 quartiles based on average gross receipts, with Quartile 1 reflecting the results of those Maaco Centers with the highest average gross receipts for the 2019 Year, and Quartile 4 reflecting the results of those Maaco Centers with the lowest average gross receipts for the 2019 Year. Quartiles 2 and 3 reflect the results of those Maaco Centers with the second highest and second lowest average gross receipts for the 2019 Year, respectively.

• The Maaco Centers in this financial performance representation operate throughout the United States in both urban and suburban areas and have operated for an average of 22.1 years.

Quartile 1