Week 13: Costa Oil & Spiffy
Week 13: Costa Oil & Spiffy
Mobile car washing franchise + an oil change brand
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To Franchise Owners,
Hello again and welcome to Week 13 of Franchise Breakdowns! Below I’m covering 2 franchises in the auto industry, one an oil change franchise, and the other a mobile car washing franchise.
When I am digging through the financials of franchises, I am always looking for brands that demonstrate a “good” return relative to the initial investment they outline. Unfortunately a lot of brands don’t include any performance data financial, as it’s not actually a requirement.
My goal is to provide analysis on the brands that do include performance data - ideally down to the net income of franchisees. In the absence of that, I’ll look for revenue that is massive compared to the initial investment. My starting point for a “good return” is a revenue to investment ratio of 2:1, or an investment to net profit ratio of 3:1.
Of today’s brands, Costa Oil shows the potential for the 3:1 ratio , while Spiffy’s easily surpasses the 2:1 revenue ratio. Let’s get to it!
DISCLAIMER: DO NOT CONSIDER ANYTHING WRITTEN BELOW AS INVESTMENT ADVICE. IF YOU DECIDE TO PURCHASE A FRANCHISE, YOU MUST DO YOUR OWN RESEARCH, AND REALIZE ANY INVESTMENT MAY GO TO $0.00.
Costa Oil
Fast Facts
Background
Founded in 2017, franchising since October 2020
13 corporate location as of 2020, zero franchised
Provides 10 minute oil changes with speed & quality
Fees + Investment
Royalty: 6.5% of gross sales
Brand Fund: 2% of gross sales
Franchise Fee: $54,900
Initial Investment: $128,250 - $196,900
Financial Performance
The following table contains financial performance data from 4 existing affiliate outlets that are standalone locations, open for the full year 2020, and have a total operating time of longer than 24 months
The Wolf’s Take 🍟
After subtracting the royalty/brand fees from the net income, you’re left with a pretty healthy return given that the investment is a little below $200k on the high end. This brand (like most) would be a multi-unit play to achieve some serious cash flow through scale, but there’s no doubt that the affiliate locations are performing well.
A question to consider is of the longevity of a model that depends on oil changes given the rise of electric vehicles.
Recent Press
Could not find recent press, but here is their website: https://costaoils.com/franchising/
Twitter Watch 👀
My thread on why successful franchise owners decided to buy franchises instead of start their own businesses, or acquire existing small businesses:
https://twitter.com/franchisewolf
Spiffy
Fast Facts
Background
Founded in 2014, franchising since 2020
24 company owned locations, 8 franchised as of 2021
Schedule a cleaning via their website or app, and they come to you to clean your car
Fees + Investment
Royalty: 7% of gross sales
Brand Fund: 2% of gross sales
Franchise Fee: $40,000
Initial Investment: $91,300 - $149,150
Financial Performance
The table below represents performance data from 17 existing affiliate outlets. Note that all 17 reporting units have been operating for longer than 1 year, but only two have been operating for 6+ years
The Wolf’s Take 🍟
By year 2, the average affiliate was producing gross revenue 3x times the initial investment, and 6x by year four!
Of course there are various costs to consider (I’d guess labor i.e. your employees who wash the cars would be an expensive line item), but this is an interesting business model that could capture demand from the growing number of consumers who value convenience over affordability.
Recent Press
That’s it for this week’s Franchise Breakdowns. Feel free to reply with any questions or feedback, or leave a comment. If someone sent this your way and you haven’t subscribed yet, you can also do that below. Thanks and see you next week!
NOTICE REGARDING FRANCHISE INFORMATION
The Wolf of Franchises does NOT guarantee the financial performance of any franchise mentioned. The decision to purchase a licensed affiliate or franchise must be based on your own independent research. The Wolf of Franchises is not liable for any representation made by an affiliate, associate, marketing material, or Franchise Disclosure Document of a franchise with respect to real estate, financial, operations, or marketing performance of the business being acquired.
This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for informational purposes only, and any financial data and/or projections is clearly based upon information provided by franchises in their respective Franchise Disclosure Document. The offer of a franchise can only be made through the delivery of a franchise disclosure document, from a certified seller of the brand, which The Wolf of Franchises makes no claim to be. Do not consider any information here as a guarantee of financial performance. The Wolf of Franchises has no affiliation or relationship of any kind with any of the brands covered in this newsletter, but simply provides data that is publicly available online or in Franchise Disclosure Documents.
All data from Franchise Disclosure Document’s is based on past performance, and if you were to purchase a franchise covered in the Wolf of Franchises newsletter, it is entirely possible that you lose your entire investment and go bankrupt.