FDD Talk 2021: 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 2021 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 2021 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 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Jiffy Lube’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, median, high, and low net adjusted sales and vehicle count for the 1,828 franchised Jiffy Lube service centers that were open for 12 full months in 2020 (system-wide and by quartile)

• 2020 average, median, high, and low net adjusted sales and vehicle count for the 17 new franchised Jiffy Lube service centers that opened in 2019 and were open for 12 full months in 2020

• average sales revenue, cost of goods sold, labor, operating expenses, and net income for the 73 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

• 2020 average, median, high, and low net adjusted sales for the new Jiffy Lube Multicare service centers (open 7+ months, 18+ months, 30+ months, 42+ months, 54+ months, and 66+ months)

Section I – Background Information

18 Things You Need to Know About the Jiffy Lube Franchise

Appoints New President

1.  In late July 2020, Jiffy Lube International, Inc. announced that Edward Hymes had been appointed president, responsible for the management and growth of the Jiffy Lube franchise, including oversight of more than 2,000 independently-owned Jiffy Lube service centers in the U.S. and Canada.

2.  Machteld de Haan, president of Shell Lubricants Americas, said, “Edward’s extensive retail experience coupled with his real estate and business investment expertise position him well to lead the Jiffy Lube business. His operational and marketing insights will be incredibly valuable as the brand continues to expand its store base and evolve its service offerings to meet consumers’ needs.”

3.  Since joining Shell in 2001, Hymes has held numerous leadership roles in strategy and business development across the Upstream and Downstream value chain. Previously, he served as e-commerce director/general manager with an internet start-up company, responsible for new market development. Hymes began his career in retail with Kmart Corporation where he held multiple store operations leadership positions in addition to corporate operations and brand management roles.

4.  Hymes said, “This is a pivotal time for Jiffy Lube, as the brand focuses on digitizing and personalizing the vehicle maintenance experience to best support consumers’ expectations. The evolving category and consumer behaviors demand an entrepreneurial approach to innovation, and I am excited to lead this path forward. As Jiffy Lube is a franchised network, I am also looking forward to working closely with the franchisee community to deliver a one-stop shop of expanded services and quality care that consumers trust.”

Opens First Michigan Location

5.  In early August 2020, Jiffy Lube expanded into the Greater Detroit Metropolitan Area with the acquisition of a service center that previously operated as A Plus Express Lube and Auto Repair. Located at 23 Mile Road in Shelby Township, the service center offers a wide range of automotive services including brakes, tires, and engine diagnostics.

6.  Additionally, the location offers the Jiffy Lube Signature Service Oil Change, comprehensive preventive maintenance to check, change, inspect, and fill essential systems and components of the vehicle. Technicians vacuum the interior of the vehicle as well as clean exterior windows. And, with every Jiffy Lube Signature Service Oil Change, customers receive complimentary fluid top off service on vital fluids.

7.  The new Jiffy Lube service center is owned and operated by existing Jiffy Lube franchisee, Premium Velocity Auto, LLC. “We are excited to expand into Michigan and look forward to being a part of the Shelby Township community,” said Kevin Lyng, president of Premium Velocity Auto, LLC. “While you may not be familiar with Jiffy Lube, during your next visit to the location, you will be greeted by the same friendly and professional technicians that served you previously.”

8.  A Plus Express Lube owner Nick Mikhael added “Since opening in 2008, we have prided ourselves on being the premier automotive shop in Shelby Township. And, now, we are also proud to be part of the Jiffy Lube team, the brand that pioneered the industry.”

Teamed Up with Muscular Dystrophy Association for 9th Annual Muscle Up! Campaign

9.  In early August 2020, Jiffy Lube and the Muscular Dystrophy Association (MDA) announced that they were teaming up for the ninth annual Muscle Up! campaign. Throughout the month of August, Jiffy Lube customers were invited to make a donation of $3 or more to MDA at participating locations. In return, customers would receive a Muscle Up! savings book containing discounts on services at Jiffy Lube.

10.  Proceeds from the campaign support MDA’s efforts to fund medical care, support research and front-line medical care teams at over 150 MDA Care Centers at the nation’s top medical institutions.

11.  Sara Smith, director of marketing for Jiffy Lube International, Inc., said, “Now, more than ever, Jiffy Lube and its franchisees are committed to supporting our communities. Through our partnership with MDA, we are focused on giving those with muscular dystrophy the freedom to move forward. Joining forces with our customers through Muscle Up! allows us to keep the momentum going.”

12.  Each year, MDA provides care, research, and advocacy for over 250,000 people in the United States living with muscular dystrophy, ALS, and related neuromuscular disease. Since launching Muscle Up! in 2012, the campaign has raised nearly $7 million. These critical funds have led in part to the development of nine new treatments in just the past five years, making an impact in support of families living with neuromuscular diseases.

13.  Lynn O’Connor Vos, president and CEO of MDA, added, “We are deeply grateful for the continued partnership by the leadership, employees and customers of Jiffy Lube. The impact of this support is felt by our families in every community Jiffy Lube serves, and by our researchers, multi-disciplinary medical teams and the children and adults currently receiving life-saving support for neuromuscular diseases.”

Company History

14.  Jiffy Lube was founded in 1971 by Edwin H. Washburn in Ogden, Utah. Washburn wanted Jiffy Lube to focus on providing oil changes. Over the next few years, Washburn opened a few more Jiffy Lube stores around Utah.

15.  In 1979, W. James Hindman bought all of Washburn’s locations and established Jiffy Lube International. Headquarters were moved to Baltimore, Maryland and 1979 is cited as the year that Jiffy Lube was founded in material directly released by the company.

16.  Over the next decade, Jiffy Lube continued to grow around the United States and by the beginning of the 1990s, there were over 1,000 locations. Additionally, Jiffy Lube began expanding its services to include those offered by typical automotive repair shops.

17.  In 1991, Jiffy Lube became a subsidiary of Pennzoil. Following the merger of Pennzoil and Quaker State in 1998, all Q Lube stores were converted into Jiffy Lubes. A few years later, in 2002, Pennzoil-Quaker State was acquired by Shell Oil Company. Today, there are Jiffy Lube shops all across the United States and Canada.

Entrepreneur’s Franchise 500

18.  Jiffy Lube ranked No. 77 on Entrepreneur’s 2021 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 2021 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 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  1,923
• Outlets at the End of the Year:  1,917
• Net Change:  -6

2019

• Outlets at the Start of the Year:  1,917
• Outlets at the End of the Year:  1,923
• Net Change:  +6

2020

• Outlets at the Start of the Year:  1,923
• Outlets at the End of the Year:  1,927
• Net Change:  +4

Company-Owned

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:  10
• Net Change:  +10

2020

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  33
• Net Change:  +23

Section V – Financial Performance Representations (Item 19, 2021 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 2020 calendar year. All franchised service centers which were open for 12 full months in 2020 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.

• With respect to the data set forth in this Item 19, in 2020, the financial performance of the network experienced a material adverse impact due to the effects of the COVID-19 pandemic, which resulted in a decline in business. Jiffy Lube also anticipates a material adverse impact to the financial performance of the network in 2021 due to the effects of the COVID-19 pandemic.

Part 1 – Annual Sales (2020)

First Quartile (457 stores)

• Low:  $167,582.17
• Average:  $465,415.81
• High:  $573,893.53
• Median:  $480,279.73
• Number/Percent Above Average:  263/57.5%

Second Quartile (457 stores)

• Low:  $574,031.10
• Average:  $660,465.04
• High:  $748,139.02
• Median:  $661,325.72
• Number/Percent Above Average:  230/50.3%

Third Quartile (457 stores)

• Low:  $748,323.75
• Average:  $864,353.79
• High:  $1,007,179.49
• Median:  $858,710.15
• Number/Percent Above Average:  219/47.9%

Fourth Quartile (457 stores)

• Low:  $1,007,734.02
• Average:  $1,298,669.20
• High:  $2,477,070.56
• Median:  $1,212,368.45
• Number/Percent Above Average:  174/38.1%

System (1,828 stores)

• Low:  $167,582.17
• Average:  $822,225.96
• High:  $2,477,070.56
• Median:  $748,231.38
• Number/Percent Above Average:  748/40.9%

Part 2 – Annual Vehicle Count (2020)

First Quartile (458 stores)

• Low:  1,969
• Average:  5,406
• High:  6,623
• Median:  5,625
• Number/Percent Above Average:  270/59%

Second Quartile (457 stores)

• Low:  6,627
• Average:  7,573
• High:  8,481
• Median:  7,579
• Number/Percent Above Average:  232/50.8%

Third Quartile (456 stores)

• Low:  8,491
• Average:  9,739
• High:  11,105
• Median:  9,699
• Number/Percent Above Average:  221/48.5%

Fourth Quartile (457 stores)

• Low:  11,122
• Average:  14,101
• High:  33,316
• Median:  13,009
• Number/Percent Above Average:  164/35.9%

System (1,828 stores)

• Low:  1,969
• Average:  9,202
• High:  33,316
• Median:  8,481
• Number/Percent Above Average:  773/42.3%

Part 3 – Annual Net Adjusted Sales of New Stores (2020)

• Except as described below, the following tables describe sales and vehicle counts of all new service centers established in the 2020 calendar year.

• A new service center is a service center that is newly constructed, and not converted from a pre-existing service center or similar automotive service business.

• The charts provide sales and vehicle information only for those new service centers which were in operation for all of 2020.

• Number of Stores:  17
• Low:  $412,721.05
• Average:  $734,622.89
• High:  $1,178,505.64
• Median:  $784,189.53
• Number/Percent Above Average:  9/52.9%

Part 4 – Annual Vehicle Count of New Stores (2020)

• Number of Stores:  17
• Low:  3,786
• Average:  7,053
• High:  10,368
• Median:  6,679
• Number/Percent Above Average:  8/47.1%

Part 5 – Jiffy Lube Breaks and Services Average Annual P&L (Profit and Loss)

• Jiffy Lube has worked to expand its operating model to include additional automotive repair services at its existing service centers. Some of the expanded services include repairs such as brakes, suspension, spark plugs, and tires.

• 73 stores showed that these additional services added to existing quick lube services yielded an increase in store sales versus Jiffy Lube’s unit average. Additionally, other financial metrics measured from the pilot, during December 2015 to December 2016, are provided below.

• Sales Revenue:  $957,260.52 (100.0%)
• Cost of Goods Sold:  $277,147.65 (29.0%)
• Labor:  $304,808.65 (31.8%)
• Operating Expenses:  $270,193.69 (28.2%)
• Net Income:  $105,110.53 (11.0%)

Part 6 – New Jiffy Lube Multicare Service Centers

• Beginning in 2014, Jiffy Lube began offering Brakes and Services. This was followed by the deployment of a new store layout to support the implementation of the full Jiffy Lube Multicare business model. These new service center prototypes featured a minimum of four bays, an expanded service offering, and enhanced customer lounges.

• The net sales of these new stores are as follows:

7+ Months Open

• Number of Stores:  62

• Average Year 1 Sales:  $734,860
• High Year 1 Sales:  $1,262,130
• Low Year 1 Sales:  $246,415
• Median Year 1 Sales:  $737,731

18+ Months Open

• Number of Stores:  45

• Average Year 1 Sales:  $762,762
• High Year 1 Sales:  $1,262,130
• Low Year 1 Sales:  $405,298
• Median Year 1 Sales:  $752,066

• Average Year 2 Sales:  $890,666
• High Year 2 Sales:  $1,603,537
• Low Year 2 Sales:  $469,246
• Median Year 2 Sales:  $889,096

30+ Months Open

• Number of Stores:  34

• Average Year 1 Sales:  $767,012
• High Year 1 Sales:  $1,262,130
• Low Year 1 Sales:  $405,298
• Median Year 1 Sales:  $750,477

• Average Year 2 Sales:  $912,078
• High Year 2 Sales:  $1,603,537
• Low Year 2 Sales:  $469,246
• Median Year 2 Sales:  $901,248

• Average Year 3 Sales:  $976,316
• High Year 3 Sales:  $1,560,870
• Low Year 3 Sales:  $507,329
• Median Year 3 Sales:  $1,042,134

42+ Months Open

• Number of Stores:  17

• Average Year 1 Sales:  $752,052
• High Year 1 Sales:  $1,156,530
• Low Year 1 Sales:  $454,284
• Median Year 1 Sales:  $734,112

• Average Year 2 Sales:  $879,620
• High Year 2 Sales:  $1,265,398
• Low Year 2 Sales:  $469,246
• Median Year 2 Sales:  $892,394

• Average Year 3 Sales:  $947,786
• High Year 3 Sales:  $1,289,806
• Low Year 3 Sales:  $540,330
• Median Year 3 Sales:  $982,405

• Average Year 4 Sales:  $998,535
• High Year 4 Sales:  $1,528,077
• Low Year 4 Sales:  $496,044
• Median Year 4 Sales:  $1,071,807

54+ Months Open

• Number of Stores:  10

• Average Year 1 Sales:  $855,603
• High Year 1 Sales:  $1,156,530
• Low Year 1 Sales:  $514,930
• Median Year 1 Sales:  $875,821

• Average Year 2 Sales:  $997,062
• High Year 2 Sales:  $1,265,398
• Low Year 2 Sales:  $552,507
• Median Year 2 Sales:  $1,011,835

• Average Year 3 Sales:  $1,074,990
• High Year 3 Sales:  $1,289,806
• Low Year 3 Sales:  $540,545
• Median Year 3 Sales:  $1,136,400

• Average Year 4 Sales:  $1,157,431
• High Year 4 Sales:  $1,528,077
• Low Year 4 Sales:  $564,163
• Median Year 4 Sales:  $1,214,154

• Average Year 5 Sales:  $1,193,328
• High Year 5 Sales:  $1,468,531
• Low Year 5 Sales:  $617,694
• Median Year 5 Sales:  $1,234,924

66+ Months Open

• Number of Stores:  3

• Average Year 1 Sales:  $1,020,917
• High Year 1 Sales:  $1,156,530
• Low Year 1 Sales:  $891,761
• Median Year 1 Sales:  $1,014,460

• Average Year 2 Sales:  $1,049,610
• High Year 2 Sales:  $1,159,353
• Low Year 2 Sales:  $889,096
• Median Year 2 Sales:  $1,000,379

• Average Year 3 Sales:  $1,056,009
• High Year 3 Sales:  $1,180,451
• Low Year 3 Sales:  $935,329
• Median Year 3 Sales:  $1,052,248

• Average Year 4 Sales:  $1,126,221
• High Year 4 Sales:  $1,301,609
• Low Year 4 Sales:  $981,557
• Median Year 4 Sales:  $1,095,496

• Average Year 5 Sales:  $1,180,654
• High Year 5 Sales:  $1,409,868
• Low Year 5 Sales:  $1,041,775
• Median Year 5 Sales:  $1,090,320

• Average Year  Sales:  $1,166,841
• High Year 6 Sales:  $1,409,370
• Low Year 6 Sales:  $1,006,384
• Median Year 6 Sales:  $1,084,768

• If a store has been open for the full 12 months of any one-year period, the sales amount used in the calculation of the average net adjusted sales in the above chart is the store’s actual sales for the store.

• If a store has been open for less than a full 12 months of any one-year period, the sales amount used in the calculation of the average net adjusted sales in the above chart is derived by subtracting sales from the first month the store was open from total sales, dividing the remaining number by the number of full months the store was open, multiplied by twelve.

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