Big O Tires Franchise Costs $376K – $1.6M (+ 2024 Profits)

Big O Tires is a prominent player in the automotive service industry, specializing in tires and related services. Founded in 1962 by a group of independent tire dealers, the company emerged in response to the growing market for replacement tires. Originally conceived as a tire-buying cooperative, Big O Tires has grown into a well-established franchise model, which began in the years following its foundation.

Headquartered in Palm Beach Gardens, Florida, Big O Tires operates as a subsidiary of TBC Corporation, one of North America’s largest marketers of automotive replacement tires. The brand is particularly noted for its commitment to customer service, often emphasizing its status as “The Team You Trust.”

Big O Tires offers a comprehensive franchise model that appeals to entrepreneurs looking to invest in the automotive industry.

Type of Expenditure	Amount
Initial Franchise Fee/Minimum Deposit	$10,000 – $17,500
Initial Training Fees, Travel & Lodging Expenses	$1,000 – $9,000
Real Estate Leases (Three Months’ Rent Plus Security Deposit)	$24,000 – $100,000
Equipment, fixtures and other fixed assets	$135,000 – $395,000
Construction, Remodeling, Leasehold Improvements and Decorating Costs	$25,000 – $500,000
Signs	$10,000 – $75,000
Grand Opening Advertising	$10,000 – $50,000
Initial Inventory	$75,000 – $187,500
Insurance and Other Security (3 months)	$10,000 – $20,000
Computer Hardware and Software	$20,500 – $33,500
Non-recurring Pre-opening Costs	$5,000 – $35,000
Additional Funds (up to 12 months)	$50,000 – $150,000
Total	$376,000 – $1,573,000

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Franchise Fee

The initial franchise fee for Big O Tires is $17,500. This fee is structured as follows:

• $10,000 is due when you submit a franchise application and sign a Franchise Deposit Receipt Agreement.
• The remaining $7,500 is due when you sign the Franchise Agreement and before you commence your training.

Royalty Fee

Royalty fees are calculated as 5% of weekly gross sales.

Marketing/Advertising Fee

The National Marketing Fee is 3.5% of weekly gross sales.

Technology Fee

Technology fees include various charges related to system use and support, typically ranging between $100 to $200 monthly.

Transfer Fees

Transfer fees are typically $5,000, applicable during the transfer of a franchise agreement.

Renewal Fees

Renewal fees are usually around $10,000, payable upon the renewal of a franchise term.

Franchise pros and cons

The pros:

• Site selection and construction: Big O Tires provides its franchisees with site selection guidance regarding population, size and dimensions, traffic flow, access and exits. It also provides them with floor plan prototypes and equipment layouts for their stores.
• Marketing strategies: The franchisor assists its franchisees with robust marketing and advertising techniques to help their centers grow. These include expert national marketing, regional advertising, social media and local marketing campaigns.
• Franchise training: The franchisor has a detailed online and classroom program for franchisees to learn how to establish and grow their tire centers. It trains them on the best practices, customer service, inventory management, bookkeeping and leveraging excellent vendor relationships.
• Flexible franchise models: Big O Tires offers its franchisees two franchise models to choose from: product distribution franchises and business format franchises. Franchisees can also choose to open a new store, convert their existing store or explore the possibility of taking ownership of an existing store, which gives them the freedom to operate according to their interests and budgets.
• Exclusive territory protection: The franchisor grants the franchisees the right to operate in a designated trade area. It does not authorize any other franchise or itself to establish a competing unit in the agreed-upon area.
• Financial assistance: Big O Tires offers its franchisees financing through third-party lenders for the franchise fee, startup costs, equipment, inventory and payroll.
• Extensive ongoing support: The brand offers its franchisees management and ongoing support to grow their franchises. It also provides them on-site visits and continuous support from franchise business consultants.

The cons:

• Not a passive investment: The franchise does not present an absentee ownership opportunity. The franchisees must be actively involved in the daily operations of their franchises.
• Not a home-based business: A Big O Tires franchise cannot be operated from a home or mobile unit. Franchisees must have an office space, warehouse or retail facility.
• Competition: The franchise faces competition from Christian Brothers Automotive, Sullivan Tire Co. and Tire Distributors Inc.

How to open A Big O Tires franchise

Opening a Big O Tires franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Big O Tires franchise.

1. Initial Inquiry and Application

• Research the Franchise: Begin by understanding what Big O Tires offers, including their business model, support, training, and financial requirements.
• Submit an Inquiry: Reach out through the Big O Tires franchise website to express your interest and provide your contact information.
• Formal Application: Fill out the application form provided by Big O Tires to formally start the process. This will likely require detailed information about your financial status, background, and business experience.

2. Attend Discovery Day

• Invitation to Discovery Day: If your initial application is approved, you’ll be invited to attend a Discovery Day at Big O Tires’ headquarters.
• Meet the Team: Use this opportunity to meet the franchisor team, understand the company culture, and get a firsthand look at the operations.
• Ask Questions: Discuss any queries you may have about the franchise operation, expectations, and your potential role as a franchisee.

3. Review Franchise Disclosure Document (FDD)

• Receive the FDD: Big O Tires will provide you with their Franchise Disclosure Document that outlines important information about the franchise.
• Consult with Professionals: It’s advisable to review the FDD with a lawyer and a financial advisor to understand the legal and financial implications fully.
• Clarify Terms and Conditions: Ensure all your concerns are addressed before moving forward, especially those related to fees, territory rights, and obligations.

4. Secure Financing

• Assess Your Financial Needs: Determine the total investment required, including franchise fees, startup costs, and working capital.
• Explore Financing Options: Big O Tires may offer financing options, or you may need to approach banks, credit unions, or other financial institutions.
• Prepare Financial Statements: You’ll likely need to provide proof of funds, a business plan, and financial projections to secure financing.

5. Sign Franchise Agreement

• Finalize Terms: Once you are clear about the financial and legal aspects, and your financing is in place, you can sign the franchise agreement.
• Commitment to the Franchise: Signing the agreement formalizes your commitment to owning and operating a Big O Tires franchise.

6. Complete Training Program

• Undergo Training: Participate in Big O Tires’ comprehensive training program, which covers all aspects of the business, from technical know-how to customer service.
• Operational Training: Learn about the daily operations, including how to use the company’s proprietary technology and systems.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

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