Midas Franchises: are Profits Worth the $470,000 Cost?

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 $470,000 to open a new Midas franchised service center. In comparison, one Midas franchise generates on average $1,098,000 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	$22,500
Royalty fee	6.0%
Marketing fee	2.0%
Investment (mid-point)	$470,000
Average sales	$1,098,000
Sales to investment ratio	2.3x
Payback period*	9 years
Minimum net worth	$250,000
Minimum liquid capital	$75,000

What is 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 franchises 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.

How much does a Midas franchise cost?

You would have to invest, on average, $470,000 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): $469,000
• Convert an operating automotive repair facility: $417,000
• Co-Branding shop: $504,000

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 – $270,000
Initial inventory and supplies	$25,000 – $100,000
Insurance 3 months	$1,500 – $4,500
Additional Funds 3 Months	$40,000 – $65,000
Other	$70,150 – $265,372
Total	$199,150 – $739,872

Startup costs (reconversion)

Startup costs	Amount
Initial franchise fee	$10,000 – $35,000
Equipment and tools	$0 – $270,000
Initial inventory and supplies	$0 – $100,000
Insurance 3 months	$1,500 – $4,500
Additional Funds 3 Months	$40,000 – $65,000
Other	$42,150 – $266,122
Total	$93,650 – $740,622

How much revenue does a Midas franchise make?

On average, a Midas franchise makes $1,098,000 in revenue per year.

This is the average revenue per shop for 306 out of the 970 franchised shops operating in all of 2021. Here’s the breakdown by quartile: whilst the bottom 25% shops made $616,000 in revenue per year on average, the top 25% made $1,713,000 instead.

How profitable is a Midas franchise?

A Midas franchise makes $138,000 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	$1,097,874	100%	as per FDD
COGS	$(299,720)	27%	as per FDD
Gross Profit	$798,154	73%	as per FDD
Staff	$(330,460)	30%	as per FDD
Royalty and marketing fees	$(87,830)	8%	as per FDD
Rent	$(99,907)	9%	as per FDD
Other operating costs	$(141,626)	13%	as per FDD
EBITDA	$138,332	13%	as per FDD

Is Midas a good franchise investment?

So should you buy the franchise and open a new Midas service center? Are the profits worth the initial investment of $470,000?

In order to answer this question, you must look at the payback period: the time it takes for your initial investment to be reimbursed by the profits generated by the franchise itself.

We found that Midas has a 9 years payback: it would take you 9 years on average to repay all creditors (banks) and investors including yourself if you were to invest $470,000 to open a new Midas franchised service center today.

In the car repair and automotive industry, a 9 years payback is average. Therefore, even though it’s not excellent either, Midas seems to be a solid franchise investment when we compare profits to the initial investment.

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