Meineke: $969K Average Sales vs. $226K-$561K Franchise Cost

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

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

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

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

Section V – Presentation and analysis of Meineke’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, highest, and lowest gross revenues and certain key performance indicators for the 496 franchised Meineke Centers that operated from December 26, 2021 through December 31, 2022 (the “2022 Fiscal 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 2022 Fiscal 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 2022 Fiscal Year

• 2022 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 107 Meineke Centers that met the criteria in Part 1 of the financial performance representation and also participated in Meineke’s Franchisee Profitability Program

• average, median, highest, and lowest gross revenues within the first year of operation for the 66 franchised Meineke Centers that opened during the period from December 30, 2018 through December 25, 2021

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

Section I – Meineke Franchise Costs

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

• Initial Franchise Fee:  $45,000
• Living Expenses During Initial Training:  $7,500 to $10,000
• Real Estate Rent and Security Deposit:  $5,585 to $12,600
• Opening Inventory:  $10,000 to $15,000
• Equipment, Signs, Small Tools, Installation:  $35,000 to $155,870
• Freight:  $3,500 to $7,500
• Point-of-Sale Software and Computer Hardware:  $4,871 to $10,000
• Center Supplies:  $4,318 to $6,318
• Insurance:  $10,000 to $12,000
• Initial Marketing:  $20,000
• Legal and Accounting Expenses:  $1,000 to $12,400
• Building Improvements and Building Design:  $30,000 to $180,000
• Additional Funds – 3 Months:  $50,000 to $75,000
• Total Estimated Meineke Franchise Costs:  $226,774 to $561,688

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

• Meineke’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 Fees:  you are required to pay the greater of an annual minimum royalty in the amount of $20,800 or a calculated royalty based on the following percentages of Gross Revenues on the identified categories of Authorized Products and Services: 7% of exhaust systems; 5.5% of replacement of engines or transmissions, engine diagnostics, engine seals, mounts and gaskets, transmission mounts, scheduled maintenance; 4% of batteries; 3% of tires, state inspections, towing services, emissions inspections; 5% of all other Authorized Products and Services
• Meineke Advertising Fund (the “MAF”) Contributions:  8% of your Gross Revenues; however, your MAF contribution will be 1.5% of your Gross Revenues from the sale of tires, towing services, and government-regulated inspections

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

Franchised

2020

• Outlets at the Start of the Year:  733
• Outlets at the End of the Year:  712
• Net Change:  -21

2021

• Outlets at the Start of the Year:  712
• Outlets at the End of the Year:  706
• Net Change:  -6

2022

• Outlets at the Start of the Year:  706
• Outlets at the End of the Year:  705
• Net Change:  -1

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 Meineke Franchise

• All 13 Award Winners at Recent 2022 Annual Meineke Convention Are AutoVitals Clients

• Driven Brands Holdings Inc. Reports Record Year of Revenue and Profitability in Fiscal 2022; Issues Fiscal 2023 Guidance

• Meineke Did Not Rank on Entrepreneur’s 2024 Franchise 500 List

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

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 496 franchised Meineke Centers that operated from December 26, 2021 through December 31, 2022 (the “2022 Fiscal 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 2022 Fiscal 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 2022 Fiscal Year.

• As of the end of the 2022 Fiscal Year, there were a total of 705 Meineke Centers in operation. However, the performance of 52 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 2022 Fiscal Year.

• Meineke also excluded the performance of: (a) 17 Meineke Centers because they did not report Gross Revenues data to Meineke for the full 2022 Fiscal Year; and (b) 140 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.

• These 140 excluded Meineke Centers averaged 3.8 repair bays and had average Gross Revenues of $747,108, median Gross Revenues of $685,270, lowest Gross Revenues of $27,656, and highest Gross Revenues of $2,418,664 for the 2022 Fiscal Year. Of these 140 Meineke Centers, 59 Meineke Centers (42%) met or exceeded the average Gross Revenues.

• Also excluded are 24 Meineke Centers that closed during the 2022 Fiscal 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:  248
• Average Gross Revenues:  $1,276,598
• Call Lead Conversion:  32.3%
• Call Success %:  90.0%
• Google Rating:  4.22
• Lowest Gross Revenues:  $897,691
• Highest Gross Revenues:  $4,611,540
• Median Gross Revenues:  $1,177,668
• Number That Met or Exceeded Average Gross Revenues:  90
• Percentage That Met or Exceeded Average Gross Revenues:  36%

Bottom 50%

• Number of Meineke Centers:  248
• Average Gross Revenues:  $662,610
• Call Lead Conversion:  26.2%
• Call Success %:  86.6%
• Google Rating:  4.14
• Lowest Gross Revenues:  $146,453
• Highest Gross Revenues:  $897,099
• Median Gross Revenues:  $688,237
• Number That Met or Exceeded Average Gross Revenues:  142
• Percentage That Met or Exceeded Average Gross Revenues:  57%

Median for All Meineke Centers

• Number of Meineke Centers:  496
• Median Gross Revenues:  $897,395
• Call Lead Conversion:  28.9%
• Call Success %:  89.8%
• Google Rating:  4.3

Average for All Meineke Centers

• Number of Meineke Centers:  496
• Average Gross Revenues:  $969,604
• Number That Met or Exceeded Average Gross Revenues:  220
• Percentage That Met or Exceeded Average Gross Revenues:  44%
• Call Lead Conversion:  29.3%
• Number That Met or Exceeded Average Call Lead Conversion:  244
• Percentage That Met or Exceeded Average Call Lead Conversion:  49%
• Call Success %:  88.3%
• Number That Met or Exceeded Average Call Success %:  292
• Percentage That Met or Exceeded Average Call Success %:  59%
• Google Rating:  4.18
• Number That Met or Exceeded Average Google Rating:  293
• Percentage That Met or Exceeded Average Google Rating:  59%

• There were 25 Meineke 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 and reported Gross Revenues data to Meineke for the full 2022 Fiscal Year. These Meineke Centers had average Gross Revenues of $604,854, median Gross Revenues of $538,588, lowest Gross Revenues of $136,749, and highest Gross Revenues of $1,400,224 for the 2022 Fiscal Year. Of these 25 Meineke Centers, 11 Meineke Centers (or 44%) met or exceeded the average Gross Revenues.

• “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).

• “Call Success %” means the percentage of answered telephone calls that are longer than 15 seconds divided by the total number of calls received during business hours only. Calls are considered “unsuccessful” if they were unanswered, abandoned while on hold, abandoned while transferring to another line, or reached voicemail.

• “Google Rating” means the average rating from all Google reviews received by the Meineke Centers during the 2022 Fiscal Year. The lowest rating available is “1,” and the highest rating available is “5.”

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 2022 Fiscal Year, as reported by 107 Meineke Centers that met the criteria in Part 1 of this financial performance representation and also participated 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 participate in the Franchisee Profitability Program.

• There were a total of 240 Meineke Centers participating in Meineke’s Franchisee Profitability Program for the 2022 Fiscal Year; however, only 107 of these Meineke Centers had submitted a full year of Gross Revenues and expense information for the 2022 Fiscal Year and had operated for a full 2 years by the end of the 2022 Fiscal Year.

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

• 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:  $1,334,497
• Cost of Goods Sold:  $351,864
• Gross Profit:  $982,633 (74%)
• Total Labor:  $275,723
• Royalty:  $92,441
• Advertising:  $108,857
• Occupancy:  $100,397
• Other Operating Expenses:  $69,204
• Total 4-Wall Operating Expenses:  $646,624
• 4-Wall EBITDA:  $336,010 (25.2%)

• Lowest Gross Revenues:  $999,603
• Highest Gross Revenues:  $2,396,349
• Median Gross Revenues:  $1,235,751
• Number That Met or Exceeded Average Gross Revenues:  20
• Percentage That Met or Exceeded Average Gross Revenues:  38%

Bottom 50%

• Number of Meineke Centers:  54
• Gross Revenues:  $736,786
• Cost of Goods Sold:  $195,869
• Gross Profit:  $540,917 (73%)
• Total Labor:  $152,201
• Royalty:  $34,936
• Advertising:  $43,563
• Occupancy:  $85,953
• Other Operating Expenses:  $84,858
• Total 4-Wall Operating Expenses:  $401,512
• 4-Wall EBITDA:  $139,405 (18.9%)

• Lowest Gross Revenues:  $401,463
• Highest Gross Revenues:  $984,132
• Median Gross Revenues:  $743,176
• Number That Met or Exceeded Average Gross Revenues:  28
• Percentage That Met or Exceeded Average Gross Revenues:  52%

Median for All Meineke Centers

• Number of Meineke Centers:  107
• Gross Revenues:  $984,132
• Cost of Goods Sold:  $258,966
• Gross Profit:  $725,167 (74%)
• Total Labor:  $188,595
• Royalty:  $62,835
• Advertising:  $78,269
• Occupancy:  $93,809
• Other Operating Expenses:  $63,596
• Total 4-Wall Operating Expenses:  $487,104
• 4-Wall EBITDA:  $238,063 (24.2%)

Average for All Meineke Centers

• Number of Meineke Centers:  107
• Gross Revenues:  $1,032,848 (100.0%)
• Cost of Goods Sold:  $273,137 (26.4%)
• Gross Profit:  $759,711 (73.6%)
• Total Labor:  $213,385 (20.7%)
• Royalty:  $63,420 (6.1%)
• Advertising:  $75,905 (7.3%)
• Occupancy:  $93,108 (9.0%)
• Other Operating Expenses:  $77,104 (7.5%)
• Total 4-Wall Operating Expenses:  $522,923 (50.6%)
• 4-Wall EBITDA:  $236,789 (22.9%)

• “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 historical average and historical 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 66 franchised Meineke Centers that opened during the period from December 30, 2018 through December 25, 2021.

• A total of 74 new Meineke Centers opened during this period. Meineke excluded from this financial performance representation: (i) 5 Meineke Centers that opened during the period that operate with less than 5 repair bays; and (ii) 3 Meineke Centers that failed to submit weekly sales reports for their entire first full year of operation.

1st Quarter

• Number of Meineke Centers:  66
• Average Gross Revenues:  $115,766
• Number That Met or Exceeded Average Gross Revenues:  27
• Percentage That Met or Exceeded Average Gross Revenues:  41%
• Median Gross Revenues:  $97,893
• Highest Gross Revenues:  $286,884
• Lowest Gross Revenues:  $28,558

2nd Quarter

• Number of Meineke Centers:  66
• Average Gross Revenues:  $142,486
• Number That Met or Exceeded Average Gross Revenues:  24
• Percentage That Met or Exceeded Average Gross Revenues:  36%
• Median Gross Revenues:  $126,016
• Highest Gross Revenues:  $376,514
• Lowest Gross Revenues:  $45,722

3rd Quarter

• Number of Meineke Centers:  66
• Average Gross Revenues:  $154,627
• Number That Met or Exceeded Average Gross Revenues:  27
• Percentage That Met or Exceeded Average Gross Revenues:  41%
• Median Gross Revenues:  $140,327
• Highest Gross Revenues:  $326,833
• Lowest Gross Revenues:  $34,915

4th Quarter

• Number of Meineke Centers:  66
• Average Gross Revenues:  $171,710
• Number That Met or Exceeded Average Gross Revenues:  30
• Percentage That Met or Exceeded Average Gross Revenues:  46%
• Median Gross Revenues:  $165,267
• Highest Gross Revenues:  $409,993
• Lowest Gross Revenues:  $24,340

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