Midas Franchise: Profits Worth the $541K Cost? (2023 Stats)
This article was updated with the 2023 Franchise Disclosure Document
With close to 1,000 franchised-owned service centers across the US, Midas is undeniably one of the leading car repair and service franchise in the country today. So if you’re looking to get into the car repair franchise industry, Midas is an obvious alternative. But is this a profitable business?
You would invest on average $541,000 to open a new Midas franchised service center. In comparison, one Midas franchise generates on average $1,080,000 in turnover per year. Sounds like a great business? What about the profits?
In this article we are looking at Midas franchises and the latest Franchise Disclosure Document to answer questions like: how much does it really costs? Or how profitable is it really? Let’s find out!
Key stats
Franchise fee | $35,000 |
Royalty fee | 10.00% |
Marketing fee | 6.00% |
Investment (mid-point) | $541,000 |
Average sales | $1,080,000 |
Sales to investment ratio | - |
Minimum net worth | $250,000 |
Minimum liquid capital | $75,000 |
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Midas | |
FRANCHISE FEE | $35,000 |
ROYALTY FEE | 10.00% |
INITIAL INVESTMENT | $104,000 – $1,043,000 |
AVERAGE REVENUE | $1,080,000 |
About Midas
Midas is an American chain of automotive maintenance and service centers headquartered in Palm Beach Gardens, Florida.
The chain was founded in 1954 by Nate H. Sherman in Macon, Georgia.
Its centers sell and install motor vehicle exhaust systems, brake components, suspension parts, heating and cooling system parts, tires, batteries and other motor vehicle parts. Also, they perform general and scheduled vehicle maintenance services.
Midas began franchising in 1956 and currently has over 1,900 locations, with 973 franchises in the US.
Midas franchise pros and cons
Pros
- Comprehensive training and coaching: Midas provides its franchisees with a detailed training program to establish and build successful businesses. Franchisees are trained about the business concept, products and services, inventory control, and staff management. Also, it offers them a grand opening and ongoing training.
- Multiple revenue streams: Midas has established a variety of channels to help its franchisees offer excellent services while boosting their earnings. These include automotive services, tire installation, and sales, and fleet services.
- Site selection and construction: The brand helps its franchisees with site selection to identify the right location for their centers. This includes site approval, lease negotiations, development, merchandising, and inventory management.
- Marketing and advertising: The brand provides its franchisees with effective marketing tools and resources to reach a wider geographical area. These include national and local campaigns, social media, email marketing, ad templates and loyalty program apps.
- Flexible designs: The franchisor utilizes modern and simple franchise designs, providing franchisees with the opportunity to convert their existing automotive businesses into Midas centers at a lower cost.
- Extensive corporate and ongoing support: Midas provides them with ongoing support, periodic performance reviews, safety and security procedures, conventions, and field operations.
- Third-party financing: Midas has established third-party relationships to provide its franchisees with funding for the franchise fee, startup costs, and ongoing costs.
Cons
- No exclusive territory protection: Franchisees do not receive the rights to operate in an exclusive territory or market. They may face competition from franchisees granted by the franchisor or from competitive channels it controls.
- Not a part-time business: The franchise cannot be operated on a part-time basis. Franchisees must keep their centers operating full-time.
- No absentee ownership: A Midas franchise does not present a part-time business. Franchisees are actively involved in the decision-making and running of their businesses.
- Not a home-based business. The franchise cannot be operated from home or a mobile unit. Franchisees need a retail facility, office space or a warehouse.
- Competition: Top competitors include Jiffy Lube, Meineke and Pepboys.
Midas franchise costs
You would have to invest, on average, $547,000 to open a new Midas franchise shop.
Note that this is the investment required to open a new 8-bay Midas Shop. Indeed, there are 2 types of formats you can choose from to open your Midas body shop, either a new body shop or a reconversion instead:
- New shop (8-bay): $547,000
- Convert an operating automotive repair facility: $495,000
- Co-Branding shop: $581,000
Yet note that the investment presented here is an average. Indeed, it varies based on many factors, such as the location of your shop, its size, etc. Here are the low and high estimates from the Franchise Disclosure Document:
Here’s the full breakdown of costs per shop format:
Startup costs (New 8-car bay Midas shop)
Startup costs | Amount |
---|---|
Initial franchise fee | $10,000 – $35,000 |
Equipment and tools | $52,500 – $375,000 |
Initial inventory and supplies | $25,000 – $100,000 |
Insurance 3 months | $1,500 – $4,500 |
Additional Funds 3 Months | $40,000 – $65,000 |
Other | $80,150 – $305,390 |
Total | $209,150 – $884,890 |
Startup costs (reconversion)
Startup costs | Amount |
---|---|
Initial franchise fee | $10,000 – $35,000 |
Equipment and tools | $0 – $375,000 |
Initial inventory and supplies | $0 – $100,000 |
Insurance 3 months | $1,500 – $4,500 |
Additional Funds 3 Months | $40,000 – $65,000 |
Other | $52,150 – $306,140 |
Total | $103,650 – $885,640 |
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Midas | |
FRANCHISE FEE | $35,000 |
ROYALTY FEE | 10.00% |
INITIAL INVESTMENT | $104,000 – $1,043,000 |
AVERAGE REVENUE | $1,080,000 |
Midas franchise revenue
On average, a Midas franchise makes $1,080,000 in revenue per year.
This is the average revenue per shop for 936 out of the 963 franchised shops operating in all of 2022. Here’s the breakdown by quartile: whilst the bottom 25% shops made $652,000 in revenue per year on average, the top 25% made $1,612,000 instead.
Midas franchise profits
A Midas franchise makes $135,000 in profits per year on average (13% EBITDA margin).
We calculated this number using the information available in the Franchise Disclosure Document 2022. Luckily, Midas Shop provides detailed information on the cost structure of its franchised-owned shops which helped us calculating the profit and loss below.
Profit and loss | Amount | % revenue | Source |
---|---|---|---|
Revenue | $1,079,925 | 100% | as per FDD |
COGS | $(306,699) | 28% | as per FDD |
Gross Profit | $773,226 | 72% | as per FDD |
Staff | $(330,457) | 31% | as per FDD |
Royalty and marketing fees | $(104,753) | 10% | as per FDD |
Rent | $(79,914) | 7% | as per FDD |
Other operating costs | $(123,111) | 11% | as per FDD |
EBITDA | $134,991 | 13% |
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Midas | |
FRANCHISE FEE | $35,000 |
ROYALTY FEE | 10.00% |
INITIAL INVESTMENT | $104,000 – $1,043,000 |
AVERAGE REVENUE | $1,080,000 |
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