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FDD Talk: How Much Does a Midas Franchise Make (Average Revenues and/or Profits)?

Last updated on April 27, 2022 by Franchise Chatter Leave a Comment
in Auto Repair Franchise, Auto Service Franchise, Automotive Franchise, FDD Talk: Service Franchises, Franchise Earnings

Midas Auto Repair Franchise Photo by Lancastrian



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

  • Section I – Background information on the Midas franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Midas 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 Midas franchise, based on Items 5 and 6 of the company’s 2021 FDD
  • Section IV – Number of franchised and company-owned Midas 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 Midas’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
  • average, median, maximum, and minimum gross revenues on an annual basis for the most recent two calendar years of January 1, 2019 through December 31, 2020 for the 911 Midas shops that had operated for at least 24 consecutive months as of December 31, 2020, and reported gross revenues data to Midas for each month of the 2019 and 2020 years (by quartile)
  • 2020 average total income, cost of goods sold, gross profit, total labor, royalty and advertising, total occupancy, utilities, other expenses, total operating expenses, and net income from operations for the 239 Midas shops that had operated for at least 12 consecutive months as of December 31, 2020, and furnished financial data to Midas for year 2020 with information regarding expenses that Midas believes to be reliable (by quartile)

Section I – Background Information

16 Things You Need to Know About the Midas Franchise

Celebrates 65th Anniversary

America's Most Lucrative Franchises of the Year

1.  In late April 2021, TBC Corporation, parent company of Midas, celebrated 65 years of the Midas brand and said that just as its founder built a business responding to the market’s needs in 1956, the brand continued to do the same in 2021.

2.  Will Helton, vice president and general manager of Midas, said, “Our performance in the past year is a tribute to the ongoing strength of our 65-year brand and the drive, customer-commitment and entrepreneurial spirit of our franchisees. Thanks to them, we’ve shattered monthly sales records four times in the past nine months – after the initial COVID-19 outbreak. 2020 was tough, but we’ve fought through. Together with our franchisees and their teams, we are taking the brand to new heights. After 65 years, the Midas Touch is stronger than ever.”

Franchisee Named ‘Humanitarian of the Year’ by Tire Business

3.  In early November 2021, Ron Katz, a community-minded Midas franchisee with three stores in Florida, was presented with the 2021 Tire Business Tire Dealer Humanitarian Award, one of the industry’s most prestigious designations. The award, which is open to any car-repair center owner in the U.S., Canada, and Mexico, recognizes just one independent tire dealer each year who has made an especially significant contribution to the community. Katz was recognized on Monday, November 1, prior to the opening of the Specialty Equipment Market Association (SEMA) Show in Las Vegas.

4.  Don Detore, editor of Tire Business, said, “Ron has an impressive record of giving back. The independent panel that judged the candidates factored in the blood drives at his shops and Teacher of the Month sponsorships with local schools. In addition, he has taken a proactive role in hurricane relief efforts – in 2019 when Dorian hit the Bahamas and 2017 when Maria devastated Puerto Rico.” In total, Katz and his team delivered supplies totaling $100,000 for the two hurricane relief initiatives.


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5.  When Federal employees were furloughed in 2019, Katz offered them free services. His team recently acquired, repaired, and donated a car to the Sickle Cell Foundation of Palm Beach County and Treasure Coast. He staged a fundraiser for the wife of one of his favorite entertainers, who had esophageal cancer, raising close to $10,000. In 2021, he ran COVID-19 vaccination drives in two of his shops.

6.  Lenny Valentino, vice president and general manager of Midas, said, “We are proud to have Ron as member of the Midas family – and excited he has received this recognition. Ron has clearly taken the ‘Midas Fixes More Than Just Cars’ commitment to heart and is making an impact.”

7.  Katz, who opened his first Midas store in 2016 and was named Franchisee of the Year two years later, added, “Giving back just feels like the right thing to do. If I could, I would do it full time. Like most people, I’ve had good times in my life and tough times when I would have liked someone to help me. So it just feels good to be in a position to offer assistance.”

8.  In addition to receiving the award, Katz earned a $2,500 donation from Tire Business to his charity of choice: Saint Jude‘s Children’s Hospital. “I chose Saint Jude‘s because I like what it stands for,” he said. “St. Jude’s makes sure that when a child is sick, the parents never have to pay for the hospital stay. I cannot think of a better or more compassionate charity.”

Rises 14 Places in the Franchise Times Top 400

Franchises Ranked by Average Revenues and Profits

9.  In mid-October 2021, Midas announced that it had been listed in 66th position overall on the Franchise Times Top 400 for 2021 – up 14 spots from the previous year. The ranking capped a strong year for Midas, which shattered its monthly sales records three times during 2021. “We are excited to be the highest ranked full-service car care provider on the Top 400,” said Lenny Valentino, who leads the iconic, 65-year brand. “Being recognized is a tribute to the entrepreneurial spirit of our franchisees. They are the engine that drives Midas.”

10.  Valentino continued, “We have a wonderful mix of legacy franchisees that are innovating and expanding their footprint, as well as a new wave of investors who are bringing new energy – and helping to drive these sales increases. Better still, with a rising number of older cars on the road, industry trends are in our favor as we head toward 2022.”

11.  Midas has a track record of innovation, reinventing itself multiple times over the years to meet the changing needs of the market. Formerly a muffler and brake specialist, Midas today is a one-stop shop that can handle tires, brakes, oil…everything. Heading into 2022, the company is targeting further growth by reaching out to a younger demographic.

12.  “We have a lot to offer the next generation of drivers,” said Valentino, “Including the broadest menu in the business, highly competitive prices when compared to new-car dealerships, and a customer-service commitment that has resulted in more than 100,000 5-star reviews.”

Company History

13.  Midas, an acronym of Muffler Installation Dealers’ Associated Service, was founded in 1956 by Nate H. Sherman in Macon, Georgia. Sherman had years of experience in the automotive industry as he operated a family business in Chicago that manufactured car mufflers. As car ownership grew during that time period, Sherman recognized that the traditional mom and pop corner gas stations would not be able to keep up with the growing demand for automotive services.

14.  Sherman developed the concept for a service station where he could sell his mufflers directly to consumers and eliminate the need for distributors. Midas was a success from the start and by 1957, there were 100 shops across 40 states. The first franchise opened not long after Sherman launched Midas.

15.  Over the next few decades, Midas grew rapidly and by 1985, there were 1,400 franchised locations in the United States as well as 400 international locations. Midas’ success continued into the 21st century and the company has grown into one of the largest providers of automotive services in the world. In 2012, Midas was acquired by TBC Corporation, which also owns Big O Tires.

Entrepreneur’s Franchise 500

16.  Midas ranked No. 150 on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

  • Detailed estimates of Midas franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Detailed information on Midas’ 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:  1,000
  • Outlets at the End of the Year:  986
  • Net Change:  -14

2019

  • Outlets at the Start of the Year:  986
  • Outlets at the End of the Year:  992
  • Net Change:  +6

2020

  • Outlets at the Start of the Year:  992
  • Outlets at the End of the Year:  977
  • Net Change:  -15

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:  0
  • Net Change:  0

2020

  • 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, 2021 FDD) and Analysis

Part 1 – Annual Gross Revenues

  • Part 1 of this financial performance representation includes the historical average annual Gross Revenues for U.S. Midas Shops that operated from January 1, 2019 through December 31, 2020 and met the following criteria: (i) the Shop had operated for at least 24 consecutive months as of December 31, 2020, and (ii) the Shop reported Gross Revenues data to Midas for each month of the 2019 and 2020 years.
  • There were 1,038 total operating Shops in the U.S. as of December 31, 2020, however only 911 met the criteria (the “Part 1 Reporting Shops”), representing approximately 87.8% of the total franchised U.S. Shops. The 61 Shops operating as Midas/SpeeDee Co-Branding Shops as of December 31, 2020 are excluded from this Part 1. There were 71 Shops that closed for various reasons during 2019 and 2020, 2 of which had been open less than 12 months.
  • “Gross Revenues” means all revenue from a franchised outlet as reported by royalty sales.

Top Quartile (228 Outlets)

  • Maximum:  $3,930,364
  • Minimum:  $981,211
  • Median:  $1,204,076
  • Average:  $1,291,805
  • Number and Percentage That Exceeded Average:  72 (32%)

2nd Quartile (228 Outlets)

  • Maximum:  $978,948
  • Minimum:  $792,521
  • Median:  $877,715
  • Average:  $881,897
  • Number and Percentage That Exceeded Average:  114 (50%)

3rd Quartile (228 Outlets)

  • Maximum:  $792,315
  • Minimum:  $606,091
  • Median:  $697,780
  • Average:  $699,687
  • Number and Percentage That Exceeded Average:  110 (48%)

4th Quartile (227 Outlets)

  • Maximum:  $605,127
  • Minimum:  $167,177
  • Median:  $512,066
  • Average:  $489,404
  • Number and Percentage That Exceeded Average:  128 (56%)

Top 10%

  • Maximum:  $3,930,364
  • Minimum:  $1,252,570
  • Median:  $1,442,700
  • Average:  $1,573,349
  • Number and Percentage That Exceeded Average:  27 (29%)

Bottom 10%

  • Maximum:  $479,607
  • Minimum:  $167,177
  • Median:  $419,830
  • Average:  $399,298
  • Number and Percentage That Exceeded Average:  45 (49%)
  • Of the Part 1 Reporting Shops included, 42.7% exceeded the overall average annual Gross Revenues of all Part 1 Reporting Shops of $841,084.

Part 2 – Gross Revenues and Cost Analysis

  • Part 2 of this financial performance representation includes the average Total Income, Gross Profit, and Net Income, in addition to certain expense and margin information for U.S. Midas Shops that operated from January 1, 2020 through December 31, 2020 and met the following criteria: (i) the Shop had operated for at least 12 consecutive months as of December 31, 2020, and (ii) the Shop furnished financial data to Midas for year 2020 with information regarding expenses that Midas believes to be reliable.
  • There were 1,038 total operating Shops in the U.S. as of December 31, 2020 and 239 met the criteria (the “Part 2 Reporting Shops”), representing approximately 23% of the total franchised U.S. Shops. The 61 Shops operating as Midas/SpeeDee Co-Branding Shops as of December 31, 2020 are excluded from this Part 2. There were 71 Shops that closed for various reasons during 2020, 2 of which had been open less than 12 months.

Top Quartile (60 Outlets) Averages

  • Total Income:  $1,509,342 (100.0%)
  • Cost of Goods Sold:  $453,331 (30.0%)
  • Gross Profit:  $1,056,011 (70.0%)
  • Total Labor:  $450,993 (29.9%)
  • Royalty and Advertising:  $139,770 (9.3%)
  • Total Occupancy:  $112,237 (7.4%)
  • Utilities:  $16,436 (1.1%)
  • Other Expenses:  $136,932 (9.1%)
  • Total Operating Expenses:  $856,369 (56.7%)
  • Net Income From Operations:  $217,373 (14.4%)

2nd Quartile (60 Outlets) Averages

  • Total Income:  $1,054,447 (100.0%)
  • Cost of Goods Sold:  $328,530 (31.2%)
  • Gross Profit:  $725,917 (68.8%)
  • Total Labor:  $293,873 (27.9%)
  • Royalty and Advertising:  $102,727 (9.7%)
  • Total Occupancy:  $82,525 (7.8%)
  • Utilities:  $14,168 (1.3%)
  • Other Expenses:  $132,622 (12.6%)
  • Total Operating Expenses:  $625,916 (59.4%)
  • Net Income From Operations:  $133,058 (12.6%)

3rd Quartile (60 Outlets) Averages

  • Total Income:  $831,558 (100.0%)
  • Cost of Goods Sold:  $239,982 (28.9%)
  • Gross Profit:  $591,575 (71.1%)
  • Total Labor:  $230,876 (27.8%)
  • Royalty and Advertising:  $76,150 (9.2%)
  • Total Occupancy:  $85,090 (10.2%)
  • Utilities:  $12,519 (1.5%)
  • Other Expenses:  $109,929 (13.2%)
  • Total Operating Expenses:  $514,564 (61.9%)
  • Net Income From Operations:  $87,241 (10.5%)

4th Quartile (59 Outlets) Averages

  • Total Income:  $603,316 (100.0%)
  • Cost of Goods Sold:  $191,156 (31.7%)
  • Gross Profit:  $412,160 (68.3%)
  • Total Labor:  $183,626 (30.4%)
  • Royalty and Advertising:  $55,909 (9.3%)
  • Total Occupancy:  $67,808 (11.2%)
  • Utilities:  $10,748 (1.8%)
  • Other Expenses:  $66,891 (11.1%)
  • Total Operating Expenses:  $384,982 (63.8%)
  • Net Income From Operations:  $35,879 (5.9%)
  • The average Total Income of all of the Part 2 Reporting Shops was $1,001,320 and the following averages represent a percentage of income of these Part 2 Reporting Shops: Cost of Goods Sold, 30.5%; Gross Profit, 69.5%, Total Labor, 29.0%; Royalty and Advertising, 9.4%; Total Occupancy, 9.2%; Utilities, 1.4%; Other Expenses, 11.5%; Total Operating Expenses, 60.5%; Net Income From Operations, 10.8%.
  • Both of the tables show historic financial performance representations. Part 1 is an historic financial performance representation reflecting the average franchisee Annual Gross Revenues for the Part 1 Reporting Shops on an annual basis for the most recent two calendar years of January 1, 2019 through December 31, 2020. Part 2 is an historic financial performance representation reflecting the average franchisee Total Income, Gross Profit, and Net Income for the Part 2 Reporting Shops for the year from January 1, 2020 through December 31, 2020.
  • For purposes of this Item 19, “Gross Revenues” or “Total Income” means the total revenue of a Midas Shop, less taxes, discounts, rebates, and returns.
  • In Part 2, “Gross Profit” means the Total Income less the Cost of Goods Sold, and “Net Income From Operations” means the Gross Profit less those “Operating Expenses” identified in the table (total labor, the royalty paid to Midas, advertising expenses, total occupancy expenses, utilities, and other expenses).
  • The “median” for purposes of these tables means the results of the Shops falling in the middle of each group in terms of each relevant category of data, or, where there is an even number of Shops, the average of the results of the two Shops falling in the middle of the group.
  • The Costs of Goods Sold generally includes the cost of products sold which may include the cost of exhaust systems, brake components, suspension parts, heating and cooling system parts, tires and batteries and other motor vehicle parts, and other goods purchased for resale from Midas or others, but does not include labor costs.
  • The “Other Expenses” portion of the Total Operating Expenses generally includes other expenses incurred toward generating income, but excluding the labor, royalty, advertising, occupancy, and utility expenses otherwise noted. Your additional expenses may include wages and reimbursements for yourself, personal expenses, and other fees and expenses.
  • The revenue and income information in the tables was compiled based on actual reported sales by existing U.S. Midas Shop outlets during the applicable periods based on monthly sales reports submitted to Midas by its franchisees for the purpose of computing royalty fees. The expense and Net Income data in Part 2 was compiled based on the financial data of the Part 2 Reporting Shops that were submitted to Midas.
  • There were no company-owned Midas Shops as of December 31, 2020, and no company-owned Midas Shops are reflected in these tables.
  • Some outlets have earned these amounts. Your individual results may differ. There is no assurance you will earn as much.

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