Maaco Franchise: Average Sales ($1.42M) vs. Cost ($276K-$1.01M)

Section I – Estimated initial investment (franchise costs) for a Maaco franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Maaco franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Maaco outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the Maaco franchise opportunity

Section V – Presentation and analysis of Maaco’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 average, median, lowest, and highest gross receipts and certain key performance indicators for the 354 franchised Maaco Centers that had operated for at least 2 full years as of the end of the 2022 fiscal year, operated as a full production (as opposed to satellite) location, and reported gross receipts data to the franchisor for the full 2022 fiscal year

• 2022 average gross receipts, direct labor, parts, materials & sublet, gross profit, indirect labor, miscellaneous expense, royalty, advertising, total operating expense, and income for the 249 Maaco Centers that had operated for at least 2 full years as of the end of the 2022 fiscal year, operated as a full production (as opposed to satellite) location, and reported gross receipts and expense data to the franchisor for the full 2022 fiscal year

• gross receipts ramps for 19 Maaco Centers operated by franchisees that developed and opened their Maaco Centers during the 3-year period from December 30, 2018 through December 25, 2021

Section VI – Key ratios, comparables, computations, and analyses for the Maaco franchise opportunity (exclusive content for Platinum subscribers)

Section I – Maaco Franchise Costs

• Maaco franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $45,000
• Initial Training and Opening Fee:  $7,000 for 1 person ($2,500 for each additional attendee)
• Initial Advertising Contribution:  $20,000
• Living Expenses During Training:  $2,500 to $3,500
• Equipment, Signage, and Initial Computer Hardware:  $61,500 to $240,000
• Opening Inventory and Supplies:  $15,000 to $25,000
• Construction, Design, Tenant Improvements, and Miscellaneous Start-Up Costs:  $75,000 to $600,000
• Additional Funds for 3 Months:  $50,000 to $75,000
• Total Estimated Maaco Franchise Costs:  $276,000 to $1,015,500

Section II – Maaco’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Maaco’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  $20,000 to $45,000
• Royalty Fee:  9% of gross receipts (except that if you develop the Center as a new Maaco Center, you will pay 4% of gross receipts of the Center for the first 6 months the Center is open to the public as a Maaco Center)
• Weekly Marketing Fee:  $1,000, or an amount equal to the weekly marketing budget of franchisees operating in your designated market area as of the date of the Franchise Agreement, whichever is greater

Section III – Number of Franchised and Company-Owned Maaco Outlets

Franchised

2020

• Outlets at the Start of the Year:  459
• Outlets at the End of the Year:  426
• Net Change:  -33

2021

• Outlets at the Start of the Year:  426
• Outlets at the End of the Year:  411
• Net Change:  -15

2022

• Outlets at the Start of the Year:  411
• Outlets at the End of the Year:  398
• Net Change:  -13

Company-Owned

2020

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

2021

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

2022

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

Section IV – News Updates on the Maaco Franchise

• Maaco and Their Franchise Owners Will Celebrate Maaco’s 50th Anniversary at the 2022 Maaco Convention

• Maaco Celebrates 50th Anniversary Milestone

• Maaco Did Not Rank on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Maaco Franchise (Item 19, 2023 FDD)

Part 1 – Gross Receipts and Key Performance Indicators

• Part 1 of this financial performance representation includes the historical average and historical median gross receipts and certain key performance indicators for 354 franchised Maaco Centers that operated from December 26, 2021 through December 31, 2022 (the “2022 Fiscal 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 2022 Fiscal Year;
• (ii) the Maaco Center operated as a full production (as opposed to satellite) location; and
• (iii) the Maaco Center also reported gross receipts data to the franchisor for the full 2022 Fiscal Year.

• As of the end of the 2022 Fiscal Year, there were a total of 398 Maaco Centers in operation. However, Maaco excluded the performance of: (a) 12 Maaco Centers because they had not been open and operating for at least 2 full years as of the end of the 2022 Fiscal Year; (b) 30 Maaco Centers that failed to submit weekly gross receipts reports for the entire 2022 Fiscal Year; and (c) 2 Maaco Centers that operated as satellite 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 19 Maaco Centers that closed during the 2022 Fiscal 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, from, or in connection with the Maaco Center, and the dollar amount of sales attributable to work completed by the franchisee but not paid for by the customer for 90 days after such work was completed, including sublet labor and new and used replacement parts, less sales or equivalent taxes.

• The franchisor separated the 354 Maaco Centers into the top performing 50% and bottom performing 50% based on average gross receipts, with the top performing 50% reflecting the results of those Maaco Centers with the highest average gross receipts for the 2022 Fiscal Year, and the bottom performing 50% reflecting the results of those Maaco Centers with the lowest average gross receipts for the 2022 Fiscal Year.

• 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 25 years.

Top 50%

• Number of Maaco Centers:  177
• Average Gross Receipts:  $1,873,624
• Lowest Gross Receipts:  $1,282,501
• Highest Gross Receipts:  $6,564,897
• Median Gross Receipts:  $1,635,011
• Number That Met or Exceeded Average Gross Receipts:  58
• Percentage That Met or Exceeded Average Gross Receipts:  33%

• Trade %:  37.1%
• Conversion %:  48.8%
• Retention %:  53.5%

Bottom 50%

• Number of Maaco Centers:  177
• Average Gross Receipts:  $982,552
• Lowest Gross Receipts:  $269,724
• Highest Gross Receipts:  $1,279,937
• Median Gross Receipts:  $1,013,200
• Number That Met or Exceeded Average Gross Receipts:  95
• Percentage That Met or Exceeded Average Gross Receipts:  54%

• Trade %:  28.6%
• Conversion %:  46.2%
• Retention %:  51.0%

All

• Number of Maaco Centers:  354
• Average Gross Receipts:  $1,428,088
• Lowest Gross Receipts:  $269,724
• Highest Gross Receipts:  $6,564,897

• Trade %:  32.8%
• Conversion %:  47.5%
• Retention %:  52.3%

• There were 3 Maaco Centers that were open for more than 1 full year and less than 2 full years as of the end of the 2022 Fiscal Year. These Maaco Centers had average gross receipts of $988,049, median gross receipts of $1,126,889, lowest gross receipts of $655,535, and highest gross receipts of $1,181,723 for the 2022 Fiscal Year. Of these 3 Maaco Centers, 2 Maaco Centers (or 67%) met or exceeded the average gross receipts.

• “Trade %” means the percentage of vehicles serviced by the Maaco Centers resulting from national fleet accounts, as well as local trade business.

• “Conversion %” means the number of estimates written by the Maaco Centers divided by the number of total leads received (excluding leads Maaco received from its Online Estimating Tool – OET). A lead is any inquiry about services provided by a Maaco Center, whether through a phone call, website, or walk-in customer. The franchisor tracks this metric to determine a Maaco Center’s eligible level of certification.

• “Retention %” means the number of customers retained by the Maaco Centers divided by the number of estimates written. This KPI measures the conversion of estimates written to actual buying customers.

Part 2 – Gross Receipts and Cost Analysis

• Part 2 of this financial performance representation includes the average and median gross receipts and certain cost and expense information for the 2022 Fiscal Year, as reported by 249 Maaco Centers that met the criteria in Part 1 of this financial performance representation and also reported expense information to the franchisor for the full 2022 Fiscal Year through weekly summary business reports.

• The franchisor excluded from this financial performance representation a total of 105 Maaco Centers that did not submit the required expense information. The Maaco Centers in this financial performance representation have operated for an average of 24.5 years.

• The franchisor separated the 249 Maaco Centers into the top performing 50% and bottom performing 50% based on gross receipts similar to Part 1 of this financial performance representation for purposes of detailing their cost and expense information. However, the average and median gross receipts of the Maaco Centers depicted in the chart below are not entirely representative of the average and median gross receipts of the Maaco Centers depicted in Part 1 of this financial performance representation because there are fewer Maaco Centers in this Part 2.

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

Top 50%

• Number of Maaco Centers:  124
• Average Gross Receipts:  $1,906,226
• Average Direct Labor:  $405,077
• Average Parts, Materials, and Sublet:  $500,788
• Average Gross Profit:  $1,000,361
• Average Indirect Labor:  $201,832
• Average Miscellaneous Expense:  $261,085
• Average Royalty:  $139,596
• Average Advertising:  $52,000
• Average Total Operating Expense:  $654,513
• Average Income:  $345,849 (18.1%)

Bottom 50%

• Number of Maaco Centers:  125
• Average Gross Receipts:  $1,045,794
• Average Direct Labor:  $242,757
• Average Parts, Materials, and Sublet:  $234,431
• Average Gross Profit:  $568,606
• Average Indirect Labor:  $124,642
• Average Miscellaneous Expense:  $202,139
• Average Royalty:  $78,365
• Average Advertising:  $52,000
• Average Total Operating Expense:  $457,146
• Average Income:  $111,460 (10.7%)

All

• Number of Maaco Centers:  249

Average Gross Receipts:  $1,474,282 (100.0%)

• Average Direct Labor:  $323,591 (21.9%)
• Average Parts, Materials, and Sublet:  $367,074 (24.9%)
• Average Total Cost of Goods Sold:  $690,665 (46.8%)

Average Gross Profit:  $783,617 (53.2%)

• Average Indirect Labor:  $163,082 (11.1%)
• Average Miscellaneous Expense:  $231,494 (15.7%)
• Average Royalty:  $108,858 (7.4%)
• Average Advertising:  $52,000 (3.5%)
• Average Total Operating Expense:  $555,433 (37.7%)

Average Income:  $228,184 (15.5%)

• “Direct Labor” includes any labor that is associated with a repair, such as the painter.

• “Parts, Materials, and Sublet” includes costs for parts, materials, and third-party vendor costs, such as glass windshield replacement or other subcontracted services.

• “Indirect Labor” includes labor that is not associated with a repair, such as payroll tax for the Center’s labor. Some Maaco Centers, however, also report owner’s payroll, managers’ salaries, and the cost of administrative assistance in this expense category.

• “Miscellaneous Expense” includes any additional expenses in running the Maaco Center, such as office supplies, bank charges, donations, cleaning supplies, hygiene items (soap and paper towels), and other miscellaneous costs. This also includes fixed costs associated with the premises, the property, or the Maaco Center, such as insurance, rent, and notes on loans and utilities.

• “Royalty” is the total royalty fees paid by franchisees under the franchise agreement. Because Maaco calculates royalty fees based on the cash a franchisee collects, as opposed to the sales invoices it generates, there may be differences in royalty fee rates among franchisees. Also, some franchisees signed development agreements which provide for varying royalty incentives. Maaco Centers in Part 2 of this financial performance representation paid royalty fees of between 4.8% and 8.0% of gross receipts.

• “Advertising” are the weekly marketing fees of $1,000 paid by franchisees under the franchise agreement. Some franchisees, however, may pay higher weekly marketing fees based on the weekly marketing budget of the franchisees operating in a franchisee’s designated market area.

• “Income” are the amounts that remain when all expenses listed in the chart are subtracted from gross receipts.

Part 3 – New Maaco Center Gross Receipts Ramp

• Part 3 of this financial performance representation reflects the historical average gross receipts ramps for 19 Maaco Centers operated by franchisees that developed and opened their Maaco Centers during the 3-year period from December 30, 2018 through December 25, 2021.

• There were 20 total new Maaco Centers that opened during this period. Maaco has excluded 1 Maaco Center from this financial performance representation that failed to submit all of its weekly gross receipts reports to Maaco for its first full year of operation and then subsequently closed (which Center operated for more than 12 months before closure).

• Maaco separated the gross receipts ramp results of the 19 Maaco Centers included in Part 3 of this financial performance representation by the fiscal year in which they opened for business as a Maaco Center within the Maaco franchise network.

FY 2019 Openings

• Average Gross Receipts – Year 1 (9 Maaco Centers):  $562,040
• Average Gross Receipts – Year 2 (8 Maaco Centers):  $840,735
• Average Gross Receipts – Year 3 (7 Maaco Centers):  $1,129,766

FY 2020 Openings

• Average Gross Receipts – Year 1 (6 Maaco Centers):  $738,670
• Average Gross Receipts – Year 2 (5 Maaco Centers):  $948,122

FY 2021 Openings

• Average Gross Receipts – Year 1 (4 Maaco Centers):  $870,868

Section VI – Maaco Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️