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 2021 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 2021 FDD

• Section IV – Number of franchised and company-owned Meineke 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 Meineke’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, median, highest, and lowest gross revenues and certain key performance indicators for the 500 Meineke Centers that operated from December 29, 2019 through December 26, 2020 (the “2020 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 2020 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 2020 Year

• 2020 average gross revenues, cost of goods sold, gross profit, total labor, royalty, advertising, occupancy, other operating expenses, total 4-wall operating expenses, and 4-wall EBITDA for the 106 Meineke Centers that met the criteria in Part 1 of the financial performance representation and also were enrolled in Meineke’s Franchisee Profitability Program

• average, median, highest, and lowest gross revenues within the first year of operation for the 70 Meineke Centers that opened during the period from January 1, 2017 through December 28, 2019

Section I – Background Information

16 Things You Need to Know About the Meineke Car Care Centers Franchise

Meineke Rewards Voted Best Loyalty Program by Newsweek

1.  In late June 2021, Meineke Car Care Centers’ rewards program was voted among America’s best loyalty programs for automotive repair by Newsweek. The brand’s robust customer rewards program, Meineke Rewards, provides convenient, mobile device access for customers to redeem points earned through services and maintenance bonuses.

2.  There is no cost to sign up, and for each dollar spent at Meineke, reward users earn a point. Points can be used for free service visits. The mobile app can be used to book appointments online, track points, and store maintenance information.

3.  Jeff Todd, vice president of franchise development for Driven Brands, Meineke’s parent company, said, “At Meineke, our customers have always been our top priority, and the Meineke Rewards program helps us to ensure they continue to have a premier experience. It’s an honor to be named among other highly esteemed brands, and we look forward to continuing to provide our customers with standout service.”

4.  Newsweek compiled America’s Best Loyalty Programs through a comprehensive study of U.S. customers and reward programs that provided customers with benefits. To assess each loyalty program, customers evaluated the brand’s rewards on six criteria: ease and enjoyment, benefit, overall satisfaction, customer satisfaction, customer support, trust and recommendation. While Meineke Rewards earned its ranking in the automotive repair category, the list also highlights 241 other loyalty programs across 43 different industries.

eInspection Tool Meets Need by Providing Customers with Real-Time Updates

5.  In mid-November 2021, Meineke Car Care Centers highlighted its eInspection tool. Four out of five consumers say transparency is “very important” when choosing an automotive repair shop, according to a Maru public opinion poll conducted around the time of Meineke’s press release. The researchers’ findings boost the argument that new technologies, such as Meineke’s eInspection offering, are crucial in fostering transparency and building trust with consumers.

6.  Thanks to the commitment to transparency, customers are empowered to make informed decisions about auto repair services straight from their phones, when they receive real-time service updates, inspection pictures, and repair videos from Meineke technicians.

7.  The study showed that consumers want more from their auto repair shop than regular service alone, and local Meineke franchisees have experienced customers’ preferences firsthand. According to Bert Figearo, who owns 22 Meineke centers in Las Vegas, “Now more than ever, my customers want to know exactly what is going on with their vehicle. They want transparency about the pricing of our repair services, and they want to understand the work that is being done on their vehicle.”

8.  The eInspection tool allows customers to better understand services offered and recommended, including oil changes, exhaust and mufflers, brakes, tires and wheels, air conditioning, steering and suspension, and more. As a result, customers can make informed choices about their vehicles.

9.  The survey, conducted in early October 2021, assessed consumers’ preferences when selecting an automotive repair shop. Researchers also found that more than half of consumers are more likely to choose an auto repair shop that offers a loyalty program (59 percent) and gives back to its local community (54 percent).

10.  Kaitlin O’Malley, digital marketing manager of Meineke, said, “At Meineke, we’re proud to offer eInspection and a rewards program, so that our customers can see what technicians are working on in the garage, and they can earn points toward free maintenance services. We’re also excited that consumers share our commitment to supporting charitable organizations like Operation Homefront, which provides financial relief to military families in need.”

Company History

11.  Meineke Car Care Centers was founded in 1971 by Sam Meineke in Houston, Texas. Meineke had already been in the automotive industry for several years as he previously started a chain of auto parts stores with his friend and business partner Edward Bass. When Meineke started looking for a new business venture, he sold his share of the auto parts business to Bass.

12.  Meineke then turned to the muffler industry. The only other muffler company in operation at the time was Midas and Meineke felt that he could compete with Midas. Shortly after opening the first Meineke Car Care Center, Meineke hired Harold Nedell, a former operations manager with AAMCO Transmissions. With Nedell’s help, Meineke began franchising Meineke Car Care Centers in 1972.

13.  Over the next few decades, Meineke grew around the United States and expanded its services beyond mufflers. Initially called Meineke Discount Muffler Shops, Inc., the company changed its name to Meineke Car Care Centers in 2003.

14.  A few years later, in 2006, Meineke Car Care Centers’ parent company, Meineke Holding Company, became Driven Brands, Inc. and acquired the quick oil change company Econo Lube ‘N Tune Inc. Driven Brands also acquired MAACO, Auto Qual, and Drive N Style.

15.  In 2015, Driven Brands and all of the franchises it owned, including Meineke, was acquired by private equity firm Roark Capital Group. Today, there are Meineke Car Care Centers all across the United States. There are also international locations in Mexico, Canada, and the Caribbean.

Entrepreneur’s Franchise 500

16.  Meineke Car Care Centers did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Meineke 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 Meineke’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:  758
• Outlets at the End of the Year:  727
• Net Change:  -31

2019

• Outlets at the Start of the Year:  727
• Outlets at the End of the Year:  726
• Net Change:  -1

2020

• Outlets at the Start of the Year:  726
• Outlets at the End of the Year:  702
• Net Change:  -24

Company-Owned

2018

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  1
• Net Change:  -9

2019

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  0
• Net Change:  -1

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 – Gross Revenues and Key Performance Indicators

• Part 1 of this financial performance representation includes the historical average and median Gross Revenues and certain key performance indicators for 500 Meineke Centers that operated from December 29, 2019 through December 26, 2020 (the “2020 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 2020 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 2020 Year.

• As of the end of the 2020 Year, there were a total of 702 Meineke Centers in operation. However, the performance of 31 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 2020 Year.

• Meineke also excluded the performance of (a) 168 Meineke Centers because they did not report Gross Revenues data to Meineke for the full 2020 Year, 55 of which were temporarily closed during the 2020 Year; and (b) 3 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 50 Meineke Centers that closed during the 2020 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 21 years.

Top 50%

• Number of Meineke Centers:  250
• Average Gross Revenues:  $962,618
• Email Collection:  36%
• Call Lead Conversion:  33%
• Lowest Gross Revenues:  $683,417
• Highest Gross Revenues:  $3,064,610
• Median Gross Revenues:  $873,590
• Number That Met or Exceeded Average Gross Revenues:  93
• Percentage That Met or Exceeded Average Gross Revenues:  37%

Bottom 50%

• Number of Meineke Centers:  250
• Average Gross Revenues:  $490,181
• Email Collection:  28%
• Call Lead Conversion:  27%
• Lowest Gross Revenues:  $59,350
• Highest Gross Revenues:  $682,970
• Median Gross Revenues:  $510,330
• Number That Met or Exceeded Average Gross Revenues:  134
• Percentage That Met or Exceeded Average Gross Revenues:  54%

Median for All Meineke Centers

• Number of Meineke Centers:  500
• Median Gross Revenues:  $683,194
• Email Collection:  29%
• Call Lead Conversion:  30%

Average for All Meineke Centers

• Number of Meineke Centers:  500
• Average Gross Revenues:  $726,400
• Number That Met or Exceeded Average Gross Revenues:  219
• Percentage That Met or Exceeded Average Gross Revenues:  44%
• Email Collection:  32%
• Number That Met or Exceeded Average Email Collection:  225
• Percentage That Met or Exceeded Average Email Collection:  45%
• Call Lead Conversion:  30%
• Number That Met or Exceeded Average Call Lead Conversion:  253
• Percentage That Met or Exceeded Average Call Lead Conversion:  51%

• There were 11 Meineke Centers that were open for more than 1 full year and less than 2 full years as of the end of the 2020 Year and reported Gross Revenues data to Meineke for the full 2020 Year. These Meineke Centers had average Gross Revenues of $433,343, median Gross Revenues of $436,316, lowest Gross Revenues of $114,418, and highest Gross Revenues of $651,259 for the 2020 Year. Of these 11 Meineke Centers, 6 Meineke Centers (or 55%) met or exceeded the average Gross Revenues.

• “Email Collection” means the average number of emails collected by the Meineke Centers divided by the number of total customers serviced by the Meineke Centers.

• “Call Lead Conversion” means the percentage of unique callers matched to a phone number on a processed invoice (matched phone numbers divided by total invoices). Meineke tracks incoming phone calls to each Meineke Center through a phone database. If a phone number in the phone database matches a phone number listed on an invoice, Meineke associates that invoice with a phone call (as opposed to a walk-in customer).

Part 2 – Gross Revenue and Cost Analysis

• Part 2 of this financial performance representation includes the average and median Gross Revenues and certain cost and expense information for the 2020 Year, as reported by 106 Meineke Centers that met the criteria in Part 1 of this financial performance representation and also were enrolled in Meineke’s Franchisee Profitability Program.

• The Franchisee Profitability Program is a Driven Brands Shared Services department established in July 2018 that works with franchisees to prepare and submit standardized profit and loss information to Meineke directly with a focus on using the data to improve overall franchisee performance. All operating Meineke franchisees are eligible and encouraged to enroll in the Franchisee Profitability Program.

• There were a total of 362 Meineke Centers enrolled in Meineke’s Franchisee Profitability Program for the 2020 Year; however, only 118 of these Meineke Centers had submitted a full year of Gross Revenues and expense information for the 2020 Year and had operated for a full 2 years by the end of the 2020 Year. Meineke further excluded another 12 Meineke Centers because they operated with less than 5 repair bays.

• The Meineke Centers in this financial performance representation have operated for an average of 17 years, 1 month.

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

Top 50%

• Number of Meineke Centers:  53
• Gross Revenues:  $1,047,986
• Cost of Goods Sold:  $272,152
• Gross Profit:  $775,833 (74%)
• Total Labor:  $290,984
• Royalty:  $50,815
• Advertising:  $61,173
• Occupancy:  $96,856
• Other Operating Expenses:  $51,260
• Total 4-Wall Operating Expenses:  $551,088
• 4-Wall EBITDA:  $224,745 (21.4%)

• Lowest Gross Revenues:  $786,913
• Highest Gross Revenues:  $1,967,731
• Median Gross Revenues:  $959,736
• Number That Met or Exceeded Average Gross Revenues:  20
• Percentage That Met or Exceeded Average Gross Revenues:  38%

Bottom 50%

• Number of Meineke Centers:  53
• Gross Revenues:  $619,078
• Cost of Goods Sold:  $171,490
• Gross Profit:  $447,587 (72%)
• Total Labor:  $180,812
• Royalty:  $29,499
• Advertising:  $36,127
• Occupancy:  $85,419
• Other Operating Expenses:  $38,580
• Total 4-Wall Operating Expenses:  $370,437
• 4-Wall EBITDA:  $77,150 (12.5%)

• Lowest Gross Revenues:  $344,466
• Highest Gross Revenues:  $785,345
• Median Gross Revenues:  $640,759
• Number That Met or Exceeded Average Gross Revenues:  31
• Percentage That Met or Exceeded Average Gross Revenues:  58%

Median for All Meineke Centers

• Number of Meineke Centers:  106
• Gross Revenues:  $786,129
• Cost of Goods Sold:  $201,167
• Gross Profit:  $584,962 (74%)
• Total Labor:  $220,968
• Royalty:  $39,129
• Advertising:  $45,703
• Occupancy:  $86,131
• Other Operating Expenses:  $36,141
• Total 4-Wall Operating Expenses:  $428,072
• 4-Wall EBITDA:  $156,890 (19.9%)

Average for All Meineke Centers

• Number of Meineke Centers:  106
• Gross Revenues:  $833,532 (100.0%)
• Cost of Goods Sold:  $221,821 (26.6%)
• Gross Profit:  $611,710 (73.4%)
• Total Labor:  $235,898 (28.3%)
• Royalty:  $40,157 (4.8%)
• Advertising:  $48,650 (5.8%)
• Occupancy:  $91,137 (10.9%)
• Other Operating Expenses:  $44,920 (5.4%)
• Total 4-Wall Operating Expenses:  $460,763 (55.3%)
• 4-Wall EBITDA:  $150,948 (18.1%)

• “Cost of Goods” is the purchase cost for batteries, dealer parts, local parts, miscellaneous parts, oil and bulk fluid, supplies, tires, sublet materials, and merchant fees, less rebates received on such goods.

• “Total Labor” includes direct labor (technician wages, bonus and overtime, and subcontractor labor) and indirect labor (manager wages and incentive compensation, hourly wages and bonuses, vacation/holiday expense, payroll taxes, and employee benefits) associated with staffing each Meineke Center, and attempts to exclude any owner draw or distribution.

• “Royalty” is the total Royalty fees paid by franchisees under the Franchise Agreement. To present a more equalized summary of costs and expenses, Meineke adjusted the Royalty to 5% of Gross Revenues for all Meineke Centers in this financial performance representation (the overall rate taking into account the different royalty rate assessed for each type of service). All multi-unit developers who sign an Area Development Agreement with Meineke to open more than one Meineke Center will pay reduced Royalty Fees during the initial years of operation of each new Meineke Center they open.

• “Advertising” is the total MAF contributions paid by franchisees under the Franchise Agreement. Although franchisees signing Meineke’s Franchise Agreement agree to pay 8% of Gross Revenues to the MAF, all franchisees included in this financial performance representation – and generally in the Meineke franchise system – pay a lower MAF contribution under the Advertising Addenda to Franchise and Trademark Agreement, the fleet programs, and other advertising incentives. Accordingly, Meineke adjusted the Advertising to match the rate payable under the Advertising Addenda to Franchise and Trademark Agreement and the fleet programs (i.e., 6.2% of Gross Revenues) for all Meineke Centers in this financial performance representation.

• “Occupancy” costs include leases, rent, common area maintenance, and property taxes, as well as expenses for telephone, Internet, cable, gas, electricity, water, sewer, trash removal, and security.

• “Other Operating Expenses” includes the following: costs a Meineke Center chooses to incur for additional advertising beyond the advertising expenses required under the Franchise Agreement; office supplies; automobile; bad debt expense; bank fees and service charges; donations a Meineke Center may choose to make to charitable organizations; dues and subscriptions (like technical tools and ALLDATA or Mitchell on demand, magazine subscriptions, business association dues (e.g., Chamber of Commerce and BBB), and additional software fees for, among other things, QuickBooks); equipment leases; general liability insurance; licenses and permits; merchant fees; repair and maintenance (including repairs related to equipment and facilities); training fees; costs related to laundry and uniforms, small tools, hazardous waste, resolving warranty and customer complaints, and cash over/short; and software license fees payable to operate the Meineke Center’s point of sale system.

• “4-Wall EBITDA” is the amount that remains when all expenses listed in the chart are subtracted from Gross Revenues.

Part 3 – New Meineke Center Gross Revenues Ramp

• Part 3 of this financial performance representation provides information on the average and median Gross Revenues ramp of a Meineke Center within the first year of operation. Meineke included in the chart below the first year Gross Revenues ramp for 70 Meineke Centers that opened during the period from January 1, 2017 through December 28, 2019.

• A total of 94 new Meineke Centers opened during this period. Meineke excluded from this financial performance representation: (i) 1 Meineke Center that opened during the period that operates with less than 5 repair bays; and (ii) 23 Meineke Centers that failed to submit weekly sales reports for their entire first full year of operation.

1st Quarter

• Number of Meineke Centers:  70
• Average Gross Revenues:  $98,326
• Number That Met or Exceeded Average Gross Revenues:  27
• Percentage That Met or Exceeded Average Gross Revenues:  38.6%
• Median Gross Revenues:  $89,361
• Highest Gross Revenues:  $226,713
• Lowest Gross Revenues:  $13,907

2nd Quarter

• Number of Meineke Centers:  70
• Average Gross Revenues:  $112,946
• Number That Met or Exceeded Average Gross Revenues:  28
• Percentage That Met or Exceeded Average Gross Revenues:  40.0%
• Median Gross Revenues:  $105,380
• Highest Gross Revenues:  $262,057
• Lowest Gross Revenues:  $32,319

3rd Quarter

• Number of Meineke Centers:  70
• Average Gross Revenues:  $117,179
• Number That Met or Exceeded Average Gross Revenues:  30
• Percentage That Met or Exceeded Average Gross Revenues:  42.9%
• Median Gross Revenues:  $105,939
• Highest Gross Revenues:  $265,289
• Lowest Gross Revenues:  $28,164

4th Quarter

• Number of Meineke Centers:  70
• Average Gross Revenues:  $123,631
• Number That Met or Exceeded Average Gross Revenues:  29
• Percentage That Met or Exceeded Average Gross Revenues:  41.4%
• Median Gross Revenues:  $113,535
• Highest Gross Revenues:  $283,028
• Lowest Gross Revenues:  $31,674

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