Meineke Car Care: a Profitable Franchise with a 4Yrs Payback

Despite a significant decrease in the number of shops it operates (-21% over 2018 to 2022), Meineke Car Care still is one the leading car servicing franchise in the US today with 700 franchised-owned shops.

Meineke Car Care is an interesting franchise: it has a rather low investment upfront ($384,000 on average) compared to the revenue per unit ($853,000 per year). What about profits?

In this article we are looking at Meineke Car Care to find out all you should know about this franchise: how much it really costs and how profitable it really is. Let’s find out!

Key stats

Franchise fee	$45,000
Royalty fee	5% to 7%
Marketing fee	8.00%
Investment (mid-point)	$384,000
Average sales	$897,000
Sales to investment ratio	-
Payback period	[franchise_value_investment_payback]
Minimum net worth	$250,000
Minimum liquid capital	$110,000

What is Meineke Car Care?

Meineke Car Care Centers is a chain of franchised auto repair shops headquartered in Charlotte, North Carolina.

It was founded in 1972 by Sam Meineke in San Antonio, Texas.

The Meineke Car Care Centers offer oil changes, exhaust & muffler services, brake repair, tire service, A/C services, steering & suspension, batteries and CV joint installation.

The chain began franchising in 1972 and it now has over 900 locations in the US. It is a subsidiary of Driven Brands Holdings Inc.

Meineke Car Care franchise: pros and cons

The Pros:

• Quality training: The franchisor provides its franchisees with a detailed online and on-the-job program to train them about its products and services, customer service, hiring quality technicians and how to best launch their automotive centers and set them up for success.
• Solid marketing strategies: Meineke Car Care Centers provides its franchisees with innovative marketing and advertising techniques to drive customers to their care centers. Franchisees can leverage the brand’s popularity, the local market and national campaigns, social media and the brand’s loyalty app to conveniently manage customer appointments.
• Third-party financing: The franchisor has established relationships with third-party partners to offer funding to its franchisees for their franchise fees, startup costs and ongoing costs.
• Technology and innovation: The brand utilizes technology and tools to improve franchise efficiency. Franchisees can stand out from other competitors by using the brand’s KPI dashboard, which offers valuable business data and improves performance efficiency or its management portal, which helps them prioritize and manage customer jobs and order products centrally.
• Exclusive territory protection: The franchisor grants its franchisees the right to operate in a protected area. The franchisees can grow their businesses without facing competition from other franchises or affiliates controlled by the parent company.
• Scalable business model: Meineke Car Care Centers provides its franchisees with an opportunity to grow into multi-unit operations. 
• Real estate and site selection: The franchisor helps its franchisees with real estate site selection and the development of their automotive centers.

The Cons:

• Not a home-based opportunity: A Meineke Car Care Centers franchise cannot be operated from home or a vehicle. The franchisor requires its franchisees to have established office spaces.
• Not a passive business: The franchise does not allow for absentee ownership. Franchisees must fully participate in the day-to-day decision-making and operations of their automotive centers.
• Competition: The franchise faces competition from Midas, Tires Plus Total Care and Car Care Aware to name a few.

How much does a Meineke franchise cost?

You would have to invest $380,000 to open a new Meineke Car Care franchised center on average.

The investment covers all the start-up costs you may need to open a Meineke Car Care franchise. You must pay the franchisor an initial franchise fee of $45,000. In addition to this franchise fee, the investment also covers:

• Formulation costs: initial training, building improvements and building design, legal and accounting expenses, etc.
• Equipment: equipment, signs, small tools, installation, point-of-sale software, and computer hardware.
• Initial Marketing: initial local advertising, grand opening expenses
• Operating costs: insurance, inventory, freight, rent, working capital for the first 3 months, etc.

Startup costs

Here’s the full breakdown of costs:

Type of Expenditure	Amount
Initial franchise fee	$45,000
Formulation costs	$18,500 – $202,400
Equipment	$39,871 – $165,870
Initial Marketing	$20,000
Operating costs	$83,403 – $128,418
Total	$206,774 – $561,688

How much revenue does a Meineke franchise make?

On average, a Meineke Car Care Centres franchise makes $853,000 in revenue per year. This is the average revenue per centre for 540 of the 700 franchised centres operating in all of 2021.

The revenue per shop actually ranges from $148,000 to $3,800,000.

How profitable is a Meineke franchise?

On average, a Meineke Car Care Centres franchise makes $168,000 in profits per year. This corresponds to a 20% EBITDA margin.

Note that a 20% EBITDA margin is well above the industry average for car servicing franchises. As such, Meineke is a very profitable business.

We calculated this number using the information available in the Franchise Disclosure Document 2022. Fortunately, Meineke Car Care Centres provides detailed information on the cost structure of its franchised-owned centres which we are summarizing below.

Profit and loss	Amount	% revenue	Source
Revenue	$853,406	100%	as per FDD
COGS	$(234,375)	27%	as per FDD
Gross Profit	$619,031	73%	as per FDD
Labor	$(195,751)	23%	as per FDD
Rent	$(79,090)	9%	as per FDD
Royalty	$(42,670)	5%	as per FDD
Advertising	$(68,272)	8%	as per FDD
Other operating costs	$(65,247)	8%	as per FDD
EBITDA	$168,000	20%

Should you invest in a Meineke franchise?

So should you buy a Meineke Car Care franchise? Are the profits worth the initial investment of $380,000? Well we think so.

Indeed, if we compare profits to the upfront investment cost of $380,000, we obtain a payback of 4 to 5 years as per our estimates. In other words, you would reimburse the total investment within 4 to 5 years on average, using the profits generated by your franchised shop.

No need to tell you this is an excellent payback for a car servicing franchise. This is due to the fact that the investment is rather low when compared to the profits. And, as we just saw earlier, Meineke Car Care is indeed a profitable business (20% EBITDA margin).

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