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 2020 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 2020 FDD
- Section IV – Number of franchised and company-owned Meineke 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 Meineke’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average, median, highest, and lowest gross revenues for the 509 franchised Meineke Centers that operated from December 30, 2018 through December 28, 2019 (the “2019 Year”) and that met the following criteria: (i) the Meineke Center had operated for at least 2 full years as of the end of the 2019 Year; (ii) the Meineke Center operated with at least 5 repair bays; and (iii) the Meineke Center reported Gross Revenues data to Meineke for the full 2019 Year, grouped by quartile
- 2019 average gross revenues, cost of goods sold, gross profit, total labor, shop efficiency, royalty, advertising, software fee, occupancy, utilities, other operating expenses, total operating expenses, and EBITDA for the 87 franchised Meineke Centers that met the criteria in Part 1 of the financial performance representation and also were enrolled in Meineke’s Franchisee Profitability Program, grouped by quartile
Section I – Background Information
16 Things You Need to Know About the Meineke Car Care Centers Franchise
Helps Franchisees Improve Operations with Profitability Portal
1. In mid-January 2020, Meineke Car Care Centers announced the launch of its new Meineke Profitability Portal. Meineke provides franchisees with a proven playbook backed by 47 years’ experience, along with the technology to help support the financial health of their operation. Through the Meineke Profitability Portal, franchisees receive monthly financial performance metrics comparing them to key benchmarks – such as peer and overall network averages. This allows them to drill down to find specific areas for improvement.
2. Franchisees benefit from having real-time data of their store’s financial performance against key benchmarks that also link to a performance correction plan, and coaching support to execute that plan. With support from the Meineke Operations team of coaches, the franchisee and coach then work together to execute the improvement plan, bringing performance and profitability back in line with expectations.
3. Ben Leffell, a franchise partner in Morningside Texas Holdings, which owns nine Meineke Car Care Centers in Texas, said, “Meineke is a data-driven brand. They provide us with the tools to collect data and use it to help enhance our business. That’s the kind of support multi-store owners need to be successful.”
Franchisee Donates Profits from Oil Changes to Local Healthcare Facilities
4. In late April 2020, the Meineke Car Care Center in Gardener, Massachusetts said that it would be donating the profits it makes from oil changes during the month of May to its local healthcare facilities and those in need. According to the press release, all of the money made from oil changes during the month would be donated to the Gardener Community Action Committee, a non-profit organization focused on serving the needs of economically disadvantaged individuals, and Heywood Healthcare.
5. Meineke owner Russell Blake said, “We’d recently done a few food drives and they were a great success, so we wondered what else we could do without asking people for more food. So instead of asking for donations, we’ll just donate our profits from oil changes for the month.” He said any customer who would like to participate in the fundraiser could call the shop or schedule an appointment online.
6. In addition to the oil change fundraiser, Blake’s Meineke Car Care Center also hosted a raffle, with prizes including footballs autographed by NFL stars Tom Brady and Rob Gronkowski, with all of the proceeds donated to local food banks. Blake, who employs seven full- and part-time employees, said he has only had to lay off one employee because of the COVID-19 shutdown.
Experienced Substantial Growth in 2019
7. In early November 2019, Meineke Car Care Centers announced that it had seen substantial growth in new store openings and 38 new license signings in the five previous months before the press release. In addition to the new store openings, Meineke announced new limited-time incentives for entrepreneurs looking to become a Meineke franchise owner and for current franchisees interested in opening additional centers. Investors, entrepreneurs, and existing franchisees who sign a franchise agreement by December 31, 2019, were eligible to receive significant financial incentives during their first year of ownership.
8. Joe Cooper, the owner of seven franchise locations throughout the greater Charlotte, N.C. area, opened his first center in 2014 with five employees and has grown his business to seven centers and 65 employees. Cooper continues this growth plan and has signed on to open 10 more centers in the greater Charlotte area. “Meineke is a leader in the industry,” said Cooper. “They are on the cutting edge of technology, and that’s important to me because they are always introducing programs to help grow our business.”
9. Ben Leffell and Colin Farrell of Morningside Texas Holdings acquired their first seven Meineke locations in March 2018. Around the time of the announcement, they added a ninth location in Farmers Branch, adding to locations in Dallas, Ft. Worth, Garland, Austin, Arlington, Lewisville, Pantego, and Pflugerville, TX. They have plans to continue their growth through same-store sales increases and expansion to new locations. “Meineke is a data-driven brand,” said Leffell. “They collect data and use it to help owners enhance their business. That’s the kind of support multi-store owners need to be successful.”
10. Kishan Chaniyara and his family recently added two Meineke licenses in the Virginia area to their multi-brand portfolio, which includes Dunkin’, Baskin-Robbins, and Sonic. According to Chaniyara, “What set Meineke apart from other options we looked at in the automotive space is how they are moving forward with technology – for example, their eInspection system. Being a millennial, the technology is what really attracted me to the brand.”
11. Jon Gaiman, chief development officer of Driven Brands, added, “High brand recognition, cutting edge technology and a robust playbook are what ends up being the deciding factors for our franchise owners. They can see how we approach business, how data-driven we are, how we can diagnose exactly where the opportunities lie in their market and how to realize those opportunities.”
12. Meineke Car Care Centers was founded in 1971 by Sam Meineke in Houston, Texas. Meineke had previously started a chain of auto parts stores with his friend and business partner Edward Bass. After selling his share of the business to Bass, Meineke was looking for his next business venture when he turned to the muffler industry. At the time, the only major muffler company was Midas, and Meineke thought that there was room in the industry for a midsize operation.
13. Shortly after the establishment of his first muffler shops in 1971, Meineke hired Harold Newell, a former operations manager with AAMCO Transmissions. With Newell’s help, Meineke developed Meineke Discount Muffler Shops into a viable franchise in 1972.
14. Over the next few decades, Meineke grew rapidly around the United States and became Midas’ biggest competitor. In 2003, Meineke Discount Muffler Shops became Meineke Car Care Centers to reflect the brand’s move toward full-service auto repairs.
15. A few years later, Meineke Car Care Centers’ parent company, Meineke Holding Company, became Driven Brands, Inc. and acquired the quick oil change company, Econo Lube N’ Tune. In 2008, Driven Brands acquired Maaco, Auto Qual, and Drive N Style. It expanded again over the next several years with a few more acquisitions. In 2015, Driven Brands and all of the franchises it owned, including Meineke, were acquired by private equity firm Roark Capital Group.
Entrepreneur’s Franchise 500
16. Meineke Care Care Centers did not rank on Entrepreneur’s 2021 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 2020 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 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- 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: 758
- Outlets at the End of the Year: 727
- Net Change: -31
- Outlets at the Start of the Year: 727
- Outlets at the End of the Year: 726
- Net Change: -1
- Outlets at the Start of the Year: 14
- Outlets at the End of the Year: 10
- Net Change: -4
- Outlets at the Start of the Year: 10
- Outlets at the End of the Year: 1
- Net Change: -9
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 0
- Net Change: -1
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
Part 1 – Gross Revenues
- Part 1 of this financial performance representation includes the historical average and median Gross Revenues for 509 Meineke Centers that operated from December 30, 2018 through December 28, 2019 (the “2019 Year”) and that met the following criteria: (i) the Meineke Center had operated for at least 2 full years as of the end of the 2019 Year; (ii) the Meineke Center operated with at least 5 repair bays; and (iii) the Meineke Center reported Gross Revenues data to Meineke for the full 2019 Year.
- As of the end of the 2019 Year, there were a total of 726 Meineke Centers in operation. However, the performance of 32 Meineke 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.
- Meineke also excluded the performance of the remaining 185 Meineke Centers because they operate with less than 5 repair bays and therefore do not use the prototypical business format and operating procedures for a Meineke Center that form the basis of the franchise opportunity that Meineke offers in the disclosure document.
- Also excluded are 27 Meineke Centers that closed during the 2019 Year (none of which operated for less than 12 months).
- “Gross Revenues” means all revenue from a franchised Meineke Center location. Gross Revenues does not include sales tax, credit card fees, and check guaranty fees.
- The Meineke Centers in this financial performance representation operate throughout the United States in both urban and suburban areas and have operated for an average of 20.3 years.