Midas Franchise in 2024: Costs, Fee & FDD
Looking to invest in a trusted automotive franchise? Discover why Midas, with its strong brand reputation, diverse services, and extensive support system, could be a great opportunity for franchisees seeking success in the auto repair industry.
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Midas is one of the most recognized names in the automotive repair and maintenance industry, with a rich history dating back to its founding in 1956 by Nate Sherman. The franchise became a pioneer in offering lifetime-guaranteed mufflers and set itself apart by ensuring consistent quality across its service centers. Over the years, Midas has built a reputation for reliability, serving customers with a wide range of automotive repair services. Its iconic slogan, “Trust the Midas Touch,” captures the essence of what it offers: top-notch service and peace of mind for car owners.
The core services Midas provides include brake repair, oil changes, tire services, and, of course, exhaust system repairs. In addition, Midas offers a variety of maintenance services such as fluid checks and replacements, alignments, and other minor repairs. Their target customers are everyday drivers who rely on Midas to keep their cars in safe, working order. This includes families, commuters, and even businesses that operate fleets. Midas positions itself as a one-stop shop for anyone needing regular vehicle maintenance and repair.
Currently, Midas has grown into a global brand, with more than 2,000 locations spread across multiple countries. The franchise operates in the U.S., Canada, and several other international markets. Each day, Midas serves thousands of customers, leveraging its extensive footprint to cater to both urban and suburban areas, ensuring that motorists have access to reliable service no matter where they are.
What makes Midas particularly appealing to franchisees is its strong support system. The franchise offers comprehensive training programs that cover both technical and operational aspects of running a Midas shop. From hands-on mechanical training to business management workshops, Midas ensures that its franchisees are well-prepared. Additionally, Midas provides marketing support and continuous updates on new technology and best practices, helping franchise owners stay ahead in the competitive automotive industry.
Midas Franchise Insights
- Midas has built a strong reputation for customer loyalty, with many customers returning for multiple services over the life of their vehicles, thanks to the trust and reliability the brand has established over decades.
- Franchisees benefit from Midas’ ongoing innovation, such as integrating new technologies for vehicle diagnostics, keeping the brand competitive in a rapidly changing automotive industry.
- Midas is well-known for its flexibility, offering a broad range of services beyond just muffler repairs, allowing franchisees to capture multiple revenue streams from routine maintenance to complex repairs.
- The brand’s longstanding advertising presence, including memorable campaigns like “Trust the Midas Touch,” continues to build strong brand recognition, making marketing efforts easier for franchisees.
- Midas emphasizes environmental responsibility by offering services like tire recycling and eco-friendly oil changes, helping franchisees attract customers who are conscious of sustainability.
Midas Franchise Key indicators
Unit Growth YOY (%)
1%
vs industry 0%
Total U.S. Franchised Units
967
3-Year Failure Rate
7%
vs industry 10%
Sales-to-Investment ratio
2.5:1
How much does it cost to open a Midas franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Midas franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Midas franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Midas below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee, Minimum Site Payment, or Deposit | $10,000 | $35,000 |
| Marketing Support/Grand Opening Advertising | $20,000 | $25,000 |
| Travel & Living Expenses | $1,500 | $7,800 |
| Training Security Deposit, Licenses & Permits | $0 | $40,000 |
| Rent and Trade Fixtures (3 months) | $15,000 | $75,000 |
| Warranty Registration Fee (3 months) | $150 | $2,000 |
| Equipment & Tools | $175,000 | $375,000 |
| Shipping & Installation Costs - Equipment | $15,000 | $40,000 |
| Computer, Hardware & Telephone System | $10,000 | $30,000 |
| Office & Waiting Room Furniture/Point of Purchase Materials | $10,000 | $30,000 |
| Branding | $10,000 | $40,000 |
| Shipping & Installation Costs - Signage | $5,000 | $25,000 |
| Initial Inventory & Supplies | $25,000 | $100,000 |
| R.O. Writer Software, Installation, and Training Fees | $0 | $12,500 |
| R.O. Writer Software Maintenance Fee (3 months) | $0 | $1,200 |
| Smart eCat Labor Guide Subscription (3 months) | $0 | $390 |
| Equipment & Parts Explorer (3 months) | $1,500 | $4,500 |
| Legal & Accounting | $1,000 | $3,500 |
| Additional Funds (3 months) | $40,000 | $65,000 |
| Miscellaneous | $3,000 | $5,000 |
| Total Estimated Initial Investment | $341,650 | $916,890 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
For Midas, the required capital, liquid assets, and net worth align with general standards in the automotive service franchise industry. Based on available estimates and industry benchmarks:
- Initial Investment Midas’s initial investment typically ranges from $342,000 to $917,000. This covers the franchise fee, equipment, and construction costs to set up a new location. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Franchisees are generally expected to have liquid assets between $75,000 and $250,000 to support operational costs and ensure smooth cash flow during the startup phase.
- Net Worth The recommended net worth for Midas franchisees is estimated to be around $250,000 to $500,000. This ensures financial capacity to handle both startup and ongoing expenses as the business grows.
These figures are estimates and can vary based on the specific location and market conditions. It’s always advisable to confirm with Midas for precise financial requirements.
How much does a Midas franchise owner make?
Calculating the salary of a Midas franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Midas franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Midas Revenue & Gross Sales
Based on the most recent analysis, Midas franchises achieved a median gross sales of $1,287,000, highlighting consistent demand for automotive services and the potential for substantial revenue generation. This strong performance reflects the brand’s trusted reputation and ability to maintain steady growth in the competitive repair and maintenance industry.
Which key factors impact the average revenue performance of Midas franchisees?
Several factors likely contributed to the performance of U.S. franchisee median gross sales for Midas in recent years. One key factor is the increasing demand for vehicle maintenance and repairs as more drivers are keeping their cars longer, which boosts the need for services like brake repairs, oil changes, and tire replacements. Additionally, Midas’s reputation for offering reliable, lifetime-guaranteed products likely enhances customer retention and repeat business. The brand’s ongoing investment in technology, such as online appointment scheduling and customer engagement tools, may have also improved operational efficiency and customer satisfaction, contributing to higher sales. Finally, the gradual economic recovery and increased consumer spending post-pandemic have likely bolstered the automotive service industry as a whole.
Midas Franchise Operational Costs
Operational costs for a franchise like Midas are the ongoing expenses required to run the day-to-day operations of the automotive service center. These costs are essential for maintaining the business’s functionality and ensuring smooth operations. For a Midas franchise, operational costs include:
- Parts and Materials Costs The expenses incurred from purchasing auto parts, tires, fluids, and other materials needed to perform repairs and maintenance services. This includes items like brake pads, oil, filters, and batteries.
- Labor Costs Wages, salaries, and benefits for technicians, service advisors, managers, and any other staff involved in daily operations. This also includes training and ongoing certification costs for technicians.
- Rent or Mortgage Payments The cost of leasing or owning the property where the service center is located. This includes monthly rent or mortgage payments, along with property taxes and insurance.
- Utilities Expenses for electricity, water, gas, internet, and other utilities necessary for running the service center and operating the equipment and customer facilities.
- Maintenance and Repairs Costs associated with the upkeep of diagnostic equipment, vehicle lifts, HVAC systems, and other tools and infrastructure. This includes routine maintenance as well as repairs due to wear and tear.
- Supplies and Inventory This includes everything from office supplies, cleaning products, uniforms, and small tools, to inventory management costs for auto parts and other consumables used in day-to-day services.
- Technology and Equipment Expenses for maintaining and upgrading diagnostic systems, point-of-sale software, customer management systems, and any other technological infrastructure used for business operations.
- Insurance Costs for various insurance policies, including property insurance, liability insurance, and worker’s compensation insurance to protect the business, employees, and customers.
- Marketing and Local Advertising Fees These costs help fund local promotional efforts such as print, online, or radio ads, and other efforts to attract and retain customers within the community.
- Miscellaneous Costs Other operational expenses such as licenses, permits, waste disposal fees (especially for hazardous materials), professional fees (e.g., legal and accounting services), and any other costs that arise from running the business.
Carefully managing and budgeting for these operational costs is crucial for the financial success of your Midas franchise.
Midas Franchise Fees
When considering a Midas franchise, it’s essential to understand the ongoing fees required to maintain operations and stay in compliance with the franchise agreement. These fees help support the broader Midas network while ensuring franchisees have access to vital resources. Here’s a breakdown of the ongoing fees you should be aware of:
- Royalty Fees Midas charges a royalty fee ranging from 2-10% of net revenue, which can reach up to 11% in certain cases for a Co-Branding Shop franchise. This is payable on the 10th of each month via ACH debit, with net revenue including all income from the franchised unit, excluding sales or gross receipts taxes.
There might be additional fees related to compliance, equipment upgrades, or specialized services required by the franchise, depending on the operational needs of your specific location.
Understanding these fees and budgeting accordingly is crucial for the financial success and smooth operation of your Midas franchise.
Midas Franchise Earnings
For a Midas franchise, earnings can vary depending on factors like location, market conditions, and operational efficiency. The median gross sales for a Midas franchise are approximately $1,287,000 annually, providing a solid revenue base for franchise owners. As a service-based business, managing costs like parts, labor, and utilities effectively is key to maximizing profitability. Franchisees who maintain a strong customer base and optimize service offerings can see healthy returns.
For an owner-operator, the estimated annual earnings are $155,000 based on industry profit margins. This figure reflects the potential income a hands-on franchisee can achieve by actively managing day-to-day operations, including overseeing staff, customer service, and expenses. By maintaining high service standards and operational efficiency, owner-operators can enhance their profitability while benefiting from the established Midas brand and support systems. These earnings provide a good return on investment for those looking to enter the automotive repair industry.
How to Open a Midas Franchise
Becoming a Midas franchisee involves several key steps, from the initial inquiry to the start of operations. Here’s a general overview of the process:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Application and Review After the initial inquiry, you’ll need to complete a formal application. This includes providing information about your financial background and business experience. The franchisor will review your application to ensure you’re a good fit.
- Discovery Day After reviewing the FDD, you may be invited to a Discovery Day. This is an in-person or virtual meeting where you can tour a Midas location, meet corporate staff, and ask any final questions about the franchise.
- Sign Franchise Agreement If both parties agree to move forward, you’ll sign the franchise agreement. This legally binds you to the terms of operating a Midas franchise.
- Secure Financing and Location Once the agreement is signed, you’ll work on securing financing if needed and finding a suitable location for your franchise. Midas’s team will assist with site selection and lease negotiations.
- Training and Setup Before opening, you will attend Midas’s comprehensive training program, which includes both classroom and on-site training. Simultaneously, the construction or setup of your facility will be underway, along with any equipment purchases.
- Grand Opening and Operations After completing training and setting up your location, you’ll be ready to open for business. Midas provides ongoing support, including marketing and operational assistance, to ensure a successful launch and long-term success.
Pros & Cons
Pros
Strong Brand Recognition: Midas is a well-established, trusted brand in the automotive repair industry, with decades of customer loyalty and a reputation for reliable service.
Diverse Service Offering: Midas offers a wide range of services, from basic maintenance to complex repairs, allowing franchisees to capture multiple revenue streams and meet varied customer needs.
Established Business Model: The franchise has a proven, time-tested business model, reducing the risk associated with starting from scratch and providing clear operational guidance.
Access to a Large Customer Base: With a strong presence across North America and millions of customers served annually, franchisees can tap into a wide, established customer base.
Cons
Competition in the Market: The automotive repair industry is highly competitive, with both national chains and local mechanics, which means franchisees must work hard to differentiate their services.
Hands-On Commitment: While Midas offers support, the business requires hands-on management, particularly for owner-operators, which may require significant time and effort.
Potential for Location-Specific Challenges: Success can vary depending on your chosen location. Factors like local competition, demographics, and economic conditions will heavily impact profitability.
