Costa Oil – 10 Minute Oil Change Franchise Cost & Fees

Costa Oil – 10 Minute Oil Change Franchise Cost & Fees

Date of Incorporation:  2013
Franchising Since: 2017
Headquarters: Gaithersburg, MD

Business Description: The franchisor is Costa Oil – 10 Minute Oil Change International, Inc., a wholly owned subsidiary of Pennzoil-Quaker State Company. Costa Oil – 10 Minute Oil Change service centers oil change and lubrication services for cars and light trucks, as well as light repair services and other similar or ancillary products and services, some of which the franchisor requires to be offered and some of which are approved, but optional.

Franchise Offer: Franchisees will be required to strictly comply with the Franchise Agreement and the Policies and Procedures Manual, which together will govern the relationship.

Training and Assistance: Before the opening of the franchised service center, the franchisee, or day-to-day decision makers (i.e., manager or delegate), of the franchised service center and, in the case of a corporation, the officers responsible for the operation of the franchised service center, must successfully complete the franchisee operations training program. The intent of this training course is to provide the franchisee and his/her decision-maker(s) with a solid understanding of the Operations (J-Team Service Standards) as they relate to the Brand and Customer Value Proposition. While the franchised business is operating, the franchisor will continue to offer management training courses for service center managers, or managers who replace the franchisee or the initial manager at the service center. Franchisees and their managers must attend training every five years. The franchisor may require additional, ongoing training of service center managers and employees.

Territory: Subject to any rights Costa Oil – 10 Minute Oil Change has already granted to other franchisees, without the franchisee’s consent the franchisor will not permit another franchisee to open a Costa Oil – 10 Minute Oil Change service center within three miles of the service center; or establish or operate a Costa Oil – 10 Minute Oil Change service center, within three miles of the service center. Costa Oil – 10 Minute Oil Change can license another franchisee to open a Costa Oil – 10 Minute Oil Change service center or establish or operate a service center at any location outside of a three-mile ring; the franchisee won’t have any rights of first refusal or similar rights to acquire a new franchise outside of the three-mile ring.

Term of Agreement and Renewal: The length of the term of the franchise agreement is 20 years. Renewal or extension of the term is available for one 10-year term.

Obligations and Restrictions: A franchised Costa Oil – 10 Minute Oil Change service center must be under the personal supervision of franchisee, or under the personal supervision of a manager who has successfully completed the operations training course. The franchisees cannot sell or offer to perform any product or services that would detract from the Costa Oil – 10 Minute Oil Change concept. That is, the franchisee cannot offer major engine overhauls, transmission overhauls, muffler installation, automobile painting, or any other services that are not related to the services approved by Costa Oil – 10 Minute Oil Change. The franchisee cannot sell or offer to perform a lube-only service, or a lube-oil-filter only service, or an oil and filter only service other than as approved under the VOCP service. The franchisee cannot sell any automobile parts or supplies that are not related to the services Costa Oil – 10 Minute Oil Change offers, or any non-automobile related products or services, unless the parts or supplies or products or services are approved.

Estimated Number of Units: 2,085

Investment Tables:

Initial Investment

Name of Fee

Low

High

Initial Franchise Fee

$0

$35,000

Conversion Fee

$17,500

$17,500

First Month’s Rent and Security Deposit

$8,000

$20,000

Equipment, Signs and Fixtures

$120,000

$225,000

Initial Inventory

$20,000

$30,000

Opening Marketing Expense

$15,000

$20,000

Insurance

$10,000

$20,000

Training expenses incurred by franchisee or employees (does not include wages or salaries of attendees)

$1,000

$5,000

Additional Funds (working capital) – 6 months

$45,000

$45,000

ESTIMATED TOTAL

$219,000

$400,000

Other Fees

Type of Fee

Amount

Royalty

Under the Non-Product Supply Franchise Agreement, 5% (or 4% of Gross Sales if the franchisee pays the Royalty on or before the due date).

Under the Product Supply Franchise Agreement, for new-to-system locations (either conversion sites or new build locations),

  1. 0% of Gross Sales for 1st 6-month period of operation, and

  2. 4% (or 3% of Gross Sales if you pay the Royalty on or before the due date), for 7th month of operation onward (5% if the Product Supply Franchise Agreement is terminated).

Remedial Expenses

An amount that Costa Oil – 10 Minute Oil Change specifies if the franchisee has breached a provision of the Franchise Agreement and such breach results in harm to the Costa Oil – 10 Minute Oil Change brand or the franchisor or other Costa Oil – 10 Minute Oil Change franchisees.

POS Support Charge

The then-current fee, which will not exceed $160 per month per POS System installed, unless approved by TSAB or required under contract with Costa Oil – 10 Minute Oil Change’s POS System support provider that has been approved by the franchisor and the TSAB.

Hardware Support

Currently $68 per month (prices are subject to change on 30 days’ notice upon the approval of TSAB).

Data Delivery Service (optional)

Monthly fee based on the number of stores operated by the franchisee (currently $200 for 1 to 25 stores, $400 for 26 to 99 stores, or $850 for >99 stores) plus operational and maintenance expenses.

Training Expenses

Expenses Costa Oil – 10 Minute Oil Change incurs when it offers training for franchisees or their managers; this does not include wages or salaries of attendees, which the franchisee is responsible for.

Product Testing Expense

Expenses Costa Oil – 10 Minute Oil Change incurs in testing a product the franchisee wants to use, but which Costa Oil – 10 Minute Oil Change hasn’t included in a list of similar products that meet standards.

Fleet Processing Charge

An amount Costa Oil – 10 Minute Oil Change may specify at times during the term of the Franchise Agreement. Currently $0.50 per fleet invoice where automatically approved by the Auto Integrate fleet invoice verification program.

Brakes & Services National Warranty Program

$7.00 per month.

Audit Expenses

Expenses Costa Oil – 10 Minute Oil Change incurs in the course of auditing the franchisee’s books or financial records.

Service Charges

The lesser of (a) 2% per month or (b) the highest rate permitted on all past due amounts.

Transfer Fee

$3,500 plus Costa Oil – 10 Minute Oil Change’s actual expenses.

Renewal Fee

$10,000 for the renewal term, subject to adjustment using the Consumer Price Index (utilizing 1982-84 = 100 as a base year).

Relocation Fee

$7,500

National Advertising Fund (the “Ad Fund”) Contributions

1.5% of Gross Sales under the Product Supply Franchise Agreement; Not applicable to franchisees operating under a Non-Product Supply Franchise Agreement.

Cooperative Advertising

Under the Non-Product Supply Franchise Agreement, 5% of Gross Sales;
Under the Product Supply Franchise Agreement, 2,5% of Gross Sales if the franchisee must contribute to the Ad Fund.

Local Advertising

5% of Gross Sales; 4% if the franchisee signs the Product Supply Franchise Agreement.

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