Midas Franchise: Average Sales ($1.11M) vs. Cost ($209K-$884K)

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

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

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

Section III – Number of franchised and company-owned Midas 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 Midas franchise opportunity

Section V – Presentation and analysis of Midas’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 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, 2021 through December 31, 2022 for the 936 Midas shops that had operated for at least 24 consecutive months as of December 31, 2022, and reported gross revenues data to Midas for each month of the 2021 and 2022 years (by quartile)

• 2022 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 343 Midas shops that had operated for at least 12 consecutive months as of December 31, 2022, and furnished financial data to Midas for year 2022 with information regarding expenses that Midas believes to be reliable (by quartile)

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

Section I – Midas Franchise Costs

• Midas franchise costs (for a new 8-bay Midas Shop), based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee, Minimum Site Payment, or Deposit:  $10,000 to $35,000
• Marketing Support Program or Other Grand Opening Advertising:  $20,000 to $25,000
• Travel and Living Expenses While Training:  $1,000 to $7,800
• Security Deposit, Licenses, and Permits:  $0 to $40,000
• Rent and Real Estate Taxes (3 months):  $15,000 to $60,000
• Warranty Registration Fee (3 months):  $150 to $2,000
• Equipment and Tools:  $52,500 to $375,000
• Shipping and Installation Costs – Equipment:  $5,000 to $40,000
• Computer, Hardware, and Telephone System:  $10,000 to $13,000
• Office and Waiting Room Furniture and Point-of-Purchase Materials:  $10,000 to $30,000
• Branding:  $10,000 to $40,000
• Shipping and Installation Costs – Signage:  $5,000 to $25,000
• Initial Inventory and Supplies:  $25,000 to $100,000
• R.O. Writer Software, Installation, and Training Fees:  $0 to $12,500
• R.O. Writer Software Maintenance Fee (3 months):  $0 to $1,200
• Smart eCat Epicor Parts and Labor Guide Subscription (3 months):  $0 to $390
• Insurance (3 months):  $1,500 to $4,500
• Legal and Accounting:  $1,000 to $3,500
• Additional Funds (3 months):  $40,000 to $65,000
• Miscellaneous:  $3,000 to $5,000
• Total Estimated Midas Franchise Costs:  $209,150 to $884,890

Section II – Midas’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

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

• Initial Franchise Fee:  $5,000 to $35,000
• Royalty:  2-10% of Net Revenue, up to 11% in certain cases for a Co-Branded Shop franchise
• Marketing/Advertising:  each calendar year, Midas will expend an amount equal to not less than one-half of the royalties it actually receives from its Midas franchisees for media costs, commissions and fees, production, and other associated costs for marketing and promoting the products and services sold and performed by Midas Shops

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

Franchised

2020

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

2021

• Outlets at the Start of the Year:  977
• Outlets at the End of the Year:  970
• Net Change:  -7

2022

• Outlets at the Start of the Year:  970
• Outlets at the End of the Year:  963
• Net Change:  -7

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 Midas Franchise

• LWG Acquires New Midas Location in Omaha, Nebraska

• Midas, Big O, RNR Earn High Marks From Entrepreneur Magazine

• Midas Named No. 1 Auto Service Brand by Entrepreneur

• Midas Ranked No. 103 on Entrepreneur’s 2023 Franchise 500 List

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

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, 2021 through December 31, 2022 and met the following criteria: (i) the Shop had operated for at least 24 consecutive months as of December 31, 2022, and (ii) the Shop reported Gross Revenues data to Midas for each month of the 2021 and 2022 years.

• There were 967 total operating Shops in the U.S. as of December 31, 2022, however only 936 met the criteria (the “Part 1 Reporting Shops”), representing approximately 96.8% of the total franchised U.S. Shops. The 58 Shops operating as Midas/SpeeDee Co-Branding Shops as of December 31, 2022 are excluded from this Part 1. There were 40 Shops that closed for various reasons during 2021 and 2022, one 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 (234 Outlets)

• Maximum:  $5,256,172
• Minimum:  $1,320,852
• Median:  $1,611,549
• Average:  $1,765,406
• Number and Percentage That Exceeded Average:  83 (35%)

2nd Quartile (234 Outlets)

• Maximum:  $1,318,478
• Minimum:  $1,022,793
• Median:  $1,146,867
• Average:  $1,153,924
• Number and Percentage That Exceeded Average:  111 (47%)

3rd Quartile (234 Outlets)

• Maximum:  $1,022,523
• Minimum:  $792,608
• Median:  $909,200
• Average:  $910,275
• Number and Percentage That Exceeded Average:  116 (50%)

4th Quartile (234 Outlets)

• Maximum:  $791,845
• Minimum:  $203,082
• Median:  $652,082
• Average:  $628,062
• Number and Percentage That Exceeded Average:  130 (56%)

Top 10%

• Maximum:  $5,256,172
• Minimum:  $1,704,169
• Median:  $1,988,219
• Average:  $2,180,157
• Number and Percentage That Exceeded Average:  35 (37%)

Bottom 10%

• Maximum:  $613,927
• Minimum:  $203,082
• Median:  $527,231
• Average:  $513,842
• Number and Percentage That Exceeded Average:  55 (59%)

• Of the Part 1 Reporting Shops included, 40.7% exceeded the overall average annual Gross Revenues of all Part 1 Reporting Shops of $1,114,417.

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, 2022 through December 31, 2022 under the same business entity and met the following criteria: (i) the Shop had operated for at least 12 consecutive months as of December 31, 2022, and (ii) the Shop furnished financial data to Midas for year 2022 with information regarding expenses that Midas believes to be reliable.

• There were 967 total operating Shops in the U.S. as of December 31, 2022 and 343 met the criteria (the “Part 2 Reporting Shops”), representing approximately 87.1% of the total franchised U.S. Shops. The 58 Shops operating as Midas/SpeeDee Co-Branding Shops as of December 31, 2022 are excluded from this Part 2. There were 17 Shops that closed for various reasons during 2022, none of which had been open less than 12 months.

Top Quartile (85 Outlets) Averages

• Total Income:  $1,935,652 (100.0%)
• Cost of Goods Sold:  $534,026 (27.6%)
• Gross Profit:  $1,398,930 (72.3%)
• Total Labor:  $592,053 (30.6%)
• Royalty and Advertising:  $183,357 (9.5%)
• Total Occupancy:  $128,499 (6.6%)
• Utilities:  $21,292 (1.1%)
• Other Expenses:  $197,597 (10.2%)
• Total Operating Expenses:  $1,122,799 (58.0%)
• Net Income From Operations:  $276,132 (14.3%)

2nd Quartile (86 Outlets) Averages

• Total Income:  $1,306,278 (100.0%)
• Cost of Goods Sold:  $370,402 (28.4%)
• Gross Profit:  $930,573 (71.2%)
• Total Labor:  $399,846 (30.6%)
• Royalty and Advertising:  $126,903 (9.7%)
• Total Occupancy:  $96,334 (7.4%)
• Utilities:  $17,894 (1.4%)
• Other Expenses:  $148,712 (11.4%)
• Total Operating Expenses:  $789,689 (60.5%)
• Net Income From Operations:  $140,884 (10.8%)

3rd Quartile (86 Outlets) Averages

• Total Income:  $1,036,362 (100.0%)
• Cost of Goods Sold:  $278,936 (26.9%)
• Gross Profit:  $752,955 (72.7%)
• Total Labor:  $322,900 (31.2%)
• Royalty and Advertising:  $102,920 (9.9%)
• Total Occupancy:  $91,356 (8.8%)
• Utilities:  $16,740 (1.6%)
• Other Expenses:  $119,800 (11.6%)
• Total Operating Expenses:  $653,716 (63.1%)
• Net Income From Operations:  $95,768 (9.2%)

4th Quartile (86 Outlets) Averages

• Total Income:  $680,072 (100.0%)
• Cost of Goods Sold:  $193,780 (28.5%)
• Gross Profit:  $486,292 (71.5%)
• Total Labor:  $216,530 (31.8%)
• Royalty and Advertising:  $65,716 (9.7%)
• Total Occupancy:  $74,646 (11.0%)
• Utilities:  $14,340 (2.1%)
• Other Expenses:  $97,645 (14.4%)
• Total Operating Expenses:  $468,877 (68.9%)
• Net Income From Operations:  $17,415 (2.6%)

• The average Total Income of all of the Part 2 Reporting Shops was $1,237,562 and the following averages represent a percentage of income of these Part 2 Reporting Shops: Cost of Goods Sold, 27.8%; Gross Profit, 72.0%; Total Labor, 30.9%; Total Operating Expense, 61.2%; Net Income From Operations, 10.7%.

• 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, 2021 through December 31, 2022. 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, 2022 through December 31, 2022.

• 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, 2022, 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.

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