Valvoline Instant Oil Change Franchise: Worth The $1.7M Cost?

With more than 800 locations in the US alone, Valvoline is undeniably one of the leading car service and repair center franchise. Yet with an investment cost of $1,726,000 on average, it’s not the most affordable franchise either.

What about the profits? As per the latest Franchise Disclosure Document, we found that one Valvoline franchise makes on average $1,321,000 in revenue per year. Is this worth investing the $1.7 million upfront?

In this article we are looking at Valvoline and its Franchise Disclosure Document to find out all you should know about how much it really costs, and how profitable this business really is. Let’s dive in!

Key stats

Franchise fee	$30,000
Royalty fee	5.0%
Marketing fee	6.0%
Investment (mid-point)	$300,000
Average sales	$1,420,000
Sales to investment ratio	4.7x
Payback period	2 years
Minimum net worth	$1,000,000
Minimum liquid capital	$600,000

What is Valvoline Instant Oil Change?

Valvoline Instant Oil Change is an American chain of preventive maintenance service centers based in Lexington, Kentucky.

It was founded in 1986 by the Valvoline Company.

The franchise operates quick-service engine oil change facilities, offering chassis lubrication, certain routine maintenance checks and other automotive services.

Valvoline Instant Oil Change began franchising in 1988 and now has 1,573 locations globally, with 817 units in the US.

Valvoline franchises pros and cons:

Pros

• Third-party financing: The franchisor provides its franchisees with in-house financing arrangements to fund equipment costs. In addition, it has relationships with third-party lenders to fund its franchisees for the franchise fee, startup, equipment, inventory and payroll.
• Exclusive territory protection: The brand grants its franchisees the right to operate in an exclusive territory. It does not establish other franchises or operate competitive units in the designated area.
• Pre-opening training: Valvoline Instant Oil Change offers its franchisees a detailed online and classroom training program to train them about its concept and how to operate its centers successfully. It also trains them on the brand’s products and services, customer services and how to hire qualified technicians and prepares them for a successful grand opening.
• Marketing and public relations: The brand provides its franchisees with a dedicated marketing strategy to create awareness about their centers. Franchisees can leverage the brand’s popularity, national and local market promotional campaigns, social and online media, email marketing and loyalty program apps.
• Site selection and development: Valvoline Instant Oil Change provides its franchisees with site selection to help them identify a viable location in terms of competition and expansion potential. Also, it helps them with the designs, construction, equipment requirements and lease negotiations.
• Corporate and ongoing support: The brand provides its franchise with management support and successful business partners’ consultations to build and grow their centers. Also, it provides them with timely product and service updates, proprietary software, field operations and franchise performance audits.
• Convenience: The brand utilizes quick 15-minute drive-through oil changes with no appointment services. Franchisees can stand out from the competition and improve their profits.

Cons

• Not a part-time business: The franchise cannot be operated on a part-time basis or as a side business. Franchisees must adhere to the parent company’s working hours.
• Not a home-based business: The franchise cannot be operated from home or a vehicle. It requires franchisees to have fixed office space, a retail facility or a warehouse.
• No absentee ownership: A Valvoline Oil Change franchise does not present a passive investment opportunity. Franchisees must take part in the day-to-day operations of their centers.
• Competition: may include Mobil, Vioc and Castrol

How much does a Valvoline franchise cost?

You have to invest around $300,000 to open a Valvoline Instant Oil Change franchise service center.

This is an average; indeed, it varies based on many factors, such as the location of your center and its size, as well as on the fact that whether you are going lease the property or buy it.

In addition to the initial franchise fee of $30,000, which you must pay to the franchisor, you would also pay for the leasehold improvements, furniture and fixtures, equipment, opening inventory, insurance, etc.

Startup costs

Here’s the full breakdown of startup costs:

Type of Expenditure	Amount
Initial franchise fees	$30,000
Land and improvements	$33,000 – $2,750,000
Lube equipment and signage	$3,025 – $250,000
Insurance	$12,000 – $17,000
Additional funds -3 months	$50,000 – $65,000
Other	$41,725 – $158,550
Total	$204,750 – $3,270,550

How much revenue does a Valvoline franchise make?

A Valvoline Instant Oil Change franchise makes $1,420,000 in sales per year on average.

This is the average revenue per service center for 720 of the 827 franchised centers operating during all of 2022.

Revenue per franchise is steadily growing:

How profitable is a Valvoline franchise?

A Valvoline Instant Oil Change franchise makes $201,000 in profits per year on average. This corresponds to a 15% EBITDA margin.

We calculated this number using the information available in the Franchise Disclosure Document 2022. Fortunately, Valvoline Instant Oil Change provides detailed information on the cost structure of its franchised-owned service centers which we are outlining below.

Profit and loss	Revenue	% revenue	Source
Revenue	$1,320,761	100%	as per FDD
COGS	$(367,172)	28%	as per FDD
Gross Profit	$953,589	72%	as per FDD
Staff	$(381,700)	29%	as per FDD
Royalties	$(66,038)	5%	as per FDD
Advertising	$(66,407)	5%	as per FDD
Store expenses	$(145,472)	11%	as per FDD
Corporate administration*	$(92,453)	7%	assumption
EBITDA	$201,519	15%

Is Valvoline a good franchise investment?

So should you buy the franchise and invest to open a new Valvoline repair center? Are the profits worth the initial investment cost of $1,726,000 (on average)?

In order to answer this question we must look at the payback period: the time it takes for an investment to be reimbursed with the profits it generates in the future.

We found that Valvoline has a 16 years payback on average. This means that you would wait 16 years on average before you can fully repay the bank, investors and yourself. Whilst not necessarily bad, it’s not the best payback we found for automotive and repair shop franchises.

That being said, keep in mind that this is purely an estimate based on the average performance of the franchises as disclosed in the FDD. Your franchise may perform better (or worse) than the numbers presented here.

Also, costs and profits shouldn’t be the only factor to take into consideration when choosing a franchise. Instead, also think about the pros and cons discussed earlier in this article.

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All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.