Loading...
Take 5 Franchise Payback Period Is Long in 2024
Written by: Patrick Findaro
Last Updated by
Ailen Faiad: June 20, 2024
Download our Exclusive Automotive Franchise Free Guide
Download NowThis article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.
This article is based on its 2022 FDD.
Take 5 franchise is an American oil change company that has 674 locations, as of 2022, in 25 U.S. states and three in British Columbia, Canada. The company is owned by Driven Brands Company, which is also the parent company of other well-known car care companies such as Maaco and Meineke.
Contents
Follow the podcast
How Is Take 5 Franchise Positioned in the Automotive Industry?
The U.S. has one of the largest car industries in the world. Auto manufacturing deeply depends on thousands of suppliers, materials, retail, and vehicle maintenance. It is an industry that delivers economic benefits and creates jobs in many different sectors in all 50 states. The Auto industry supports a total of 9.9 million American jobs, about 5.1% of private-sector employment. In addition, it is an industry that provides great global trade benefits: In 2017, $99 billion in exports of cars and parts were shipped from U.S. ports.
The U.S. Automotive industry accounts for 2.7% of the gross domestic product (GDP), or $545.4 billion. Of that, $327 billion was auto manufacturing and $218 billion was vehicle retail sales.
How Much Is a Take 5 Franchise?
The initial Take 5 Franchise Fee is $35,000. You have to pay this upfront fee when opening a Take 5 franchise.
Take 5 Franchise Cost
The estimated total investment necessary to begin the operation of a Take 5 Franchise ranges from $734,497 – $1,307,888. The following costs are part of the upfront costs included in the initial investment for a Take 5. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Take 5 franchise in 2022 .
| Type of expediture | Amount | To Whom Payment Is To Be Made |
|---|---|---|
| Initial franchise fee | $35,000 | Us |
| Building costs | ||
| Building work | $250,000 – $400,000 | Contractors |
| General site work | $108,000 – $375,000 | Contractors |
| General conditions and fees | $103,000 – $166,000 | Contractors |
| Due diligence, permits, design and plans | $35,000 – $80,000 | Contractors |
| FF&E Package | $30,997 – $39,388 | Us, Spire Supply and/or another affiliate |
| Software Installation Fee | $3,000 | Us or affiliate |
| Used oil system | $7,000 – $15,000 | Supplier |
| Signage | $25,000 – $40,000 | Sign company |
| Total estimated building costs (excluding real estate) | $561,997 – $1,118,388 | |
| Other costs and expenses | ||
| Opening Inventory | $23,000 – $35,000 | Us, Spire Supply, and/or another affiliate |
| 3 month’s rent and security deposit | $20,000 | Us or landlord |
| Training fees, salaries and expenses during training | $15,000 – $20,000 | Employees, third parties and us |
| Grand opening advertising and marketing | $20,000 | Us |
| Insurance | $7,500 | Insurance broker |
| Total estimated non-building costs (excluding real estate) | $85,500 – $102,500 | |
| Additional funds- 3 months | $52,000 | Employees, suppliers, and other third parties |
| TOTAL (excluding real estate costs) | $734,497 – $1,307,888 |
Take 5 Franchise Requirements
The following are Take 5’s requirements from their franchise website:
- Have a net worth of $1.5M+.
- Be an experienced business owner or a Franchise Owner of another brand who is looking to diversify, build wealth, and be first to market.
- Have management experience and a mentorship mentality.
- Have strong operations experience.
Owning a Take 5 Franchise Requires Ongoing Fees
Royalty: 7% of Gross Sales
Marketing Fee: 5% of Gross Sales
How Much Do Take 5 franchise Owners Make?
| Bottom 50% | Top 50% | All Centers | |
|---|---|---|---|
| Lowest Gross Sales | $411,087 | $1,038,101 | $411,087 |
| Highest Gross Sales | $1,024,116 | $2,552,419 | $2,552,419 |
| Median Gross Sales | $833,877 | $1,327,311 | $1,031,108 |
| #Met Exceeded Average | 44 | 25 | 63 |
| %Met Exceeded Average | 54% | 30% | 38% |
2021 Take 5 Median Franchise Sales: $1,031,108
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $1,021,192 | 10% | $103,110 | 11.5 years |
| 15% | $154,666 | 9 years | |
| 20% | $206,221 | 6.5 years |
Based on the median sales provided by Take 5’s franchise locations, at an average of a 15% profit margin:
It will take around 9 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store, such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other Automotive stores; and the extent of market penetration and brand awareness that Take 5 stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Take 5 Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Take 5 franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.58
When you go to sell a Take 5 franchise based on the median multiple of .58 and net sales in 2021 of $1,031,108, it would sell for $598,042. This is significantly lower than the midpoint investment of $1,021,192.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators
Driven Systems (Franchisor) Income Statement Key Insights
| For the years ended | ||
|---|---|---|
| December 25, 2021 | December 26, 2020 | |
| Revenue: | ||
| Franchise fee revenue | $173,404 | $134,239 |
| Other revenue | $35,360 | $23,276 |
| Total revenue | $208,764 | $157,515 |
| Costs and expenses: | ||
| Operating expenses | $66,909 | $62,024 |
| Amortization | $8,925 | $9,206 |
| Total costs and expenses | $75,384 | $71,230 |
| Net income | $132,930 | $86,285 |
Take 5 is a profitable business for the franchisor with retained earnings of $132,930 in 2021. Compared to $86,285 million in 2020, they saw an increase of almost 175% from 2020 to 2021. This is a good indication of high growth as a company overall
How Many Take 5 Units Have Opened and Closed?
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 7 | 30 | +23 |
| 2020 | 30 | 64 | +34 | |
| 2021 | 64 | 134 | +70 | |
| Company-Owned | 2019 | 336 | 447 | +111 |
| 2020 | 447 | 483 | +36 | |
| 2021 | 483 | 536 | +53 | |
| Total Outlets | 2019 | 343 | 477 | +134 |
| 2020 | 477 | 547 | +70 | |
| 2021 | 547 | 670 | +123 |
Over the last three years, the company has been rapidly expanding albeit with a long payback period for franchisees. Both franchising units and company-operated stores have increased. Over the last three years, franchises have opened at a rate of 42 units a year.
Conclusion
Take 5 offers people the opportunity to be a part of a competitive industry where they can seek to differentiate themselves. While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Automotive industry.
