Updated: 02.12 - Midas Franchise

Updated: 02.12.2015

Contents What Makes Midas an Iconic Auto Repair Franchise? ....................................................... 1 The Midas Story .......................................................................................................................... 3 What Are the Startup Costs? .................................................................................................. 5 What is Our Financial Performance? ..................................................................................... 9 Who Are Our Customers? ...................................................................................................... 10 How Advertising and Marketing Drive Business to Franchisees ....................................11 How Do I Find a Midas Location? ..........................................................................................13 Are Auto Repair Franchises Complicated?.........................................................................14 Midas Franchise Reviews.........................................................................................................15 How Auto Repair Has Changed .............................................................................................16 Midas Training and Support....................................................................................................17 Meet the Management Team ..................................................................................................19 FAQs ........................................................................................................................................... 20 Next Steps ..................................................................................................................................22

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WHAT MAKES MIDAS AN ICONIC AUTO REPAIR FRANCHISE? Learn about Midas and its more than 1,000 auto repair franchises throughout the United States Midas is an iconic brand that has been part of American car culture since the 1950s. In 2014, we were again named Entrepreneur magazine’s top-rated auto repair franchise, and

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©2014 Midas International Corporation

we have more than 1,000 shops in the United States and more than 2,000 worldwide. Our franchise owners provide total car care, and together they serve thousands of customers every day. We’ve evolved a lot over the years. We started in 1956 by selling the best muffler on the market and offering a lifetime warranty. Our excellent products, services, and warranties helped us build a strong reputation as an auto repair shop that stands behind the quality of its work. That reputation has continued as we have expanded into total

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car care, and it’s a major reason why our median franchises had average revenue of $620,760 in 2013, as outlined in our 2014 Franchise Disclosure Document. That is 33% higher than the industry average for a general repair garage according to the Automotive Aftermarket Industry Association. The Midas name brings in customers, and Midas systems help you serve them in a way that keeps them coming back. The market for general automotive repair was $37 billion in 2013, according to estimates by the AAIA. The AAIA expects that number to grow to $39.8 billion by 2016. To put that in perspective, that means the average licensed driver in the United States will spend about $200 annually on auto repairs and maintenance.

Midas is one of America’s original franchise systems

help you analyze your business and find ways to bring in more revenue, resulting in more pleasure from owning your business.

New vigor for a great brand Midas auto repair franchises are locally owned by independent franchisees. The Midas brand is owned by parent company TBC Corporation, which purchased the franchise system in 2012. TBC saw Midas as an elite brand that it could help grow by offering even more support, access to additional service lines (such as tires), and through strong national advertising campaigns. Midas already has seen tire sales spike since TBC became our parent company, and an advertising campaign, launched in 2013, has driven an increase in overall sales throughout the system. The national ad campaign, paired with local marketing, is introducing a new generation of customers to Midas.

We started franchising in the 1950s, and have been evolving ever since. In 1956, Midas changed the American landscape by creating free-standing auto repair garages. We continue to lead both the automotive and the franchise industries. Within the automotive industry, we helped develop standards of service that brought transparency to customers about which repairs were urgently needed, which ones were recommended, and which ones could wait for the future. Those standards — The Midas Way of treating customers — led to a better customer experience and a better industry. We also pioneered the idea of offering exceptional support to franchisees. When you become part of Midas, you get more than a great brand. You get a great team that consists of consultants and sales coaches who can

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THE MIDAS STORY How the Midas auto repair franchise became an elite automotive brand In 1931, Nate Sherman, a traveling auto parts salesman from Omaha, met a punch press operator named Joe Marx during a trip to Hartford, WS. Nate was a visionary who realized that all of the new cars that were filling America’s roads would need replacement parts,

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and he asked Joe if he could manufacture mufflers. They soon set up a factory to do just that. Nate realized that the mufflers they had developed were superior to any other. He and Joe figured out a way to make them even better by working with the Armour Institute of Technology to develop a coating to make the mufflers rust-resistant and added other design refinements to make their mufflers more durable.

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Once perfected, Nate turned his eyes toward the retail market for automotive parts. His idea was bold: He wanted to sell his mufflers through franchised repair shops. It was one of the first attempts to bring franchising to the automotive aftermarket. Hugh Landrum, who had been buying mufflers from Nate for years, became Franchisee No. 1 in 1956. Within a year, 100 repair shops would join the “Muffler Installation Dealers Associated Service” and MIDAS was born.

Building the brand National radio advertisements quickly made Midas a household name. A tweak of design also made Midas mufflers instantly recognizable: Brass flakes added to the rust protectant gave Midas mufflers a golden hue.

that offer Midas technicians and consumers clear explanations of the difference between a required service and a suggested service. Technicians also began receiving extensive training on how to communicate repair recommendations to customers. The standards have since been copied throughout the auto industry and have helped empower customers to make the best decisions about what to fix and when. By the end of the 1990s, Midas had evolved again, becoming a destination for total car care. Today, Midas still offers total car care, handling everything from mufflers and brakes to air conditioning and radiator repair, oil changes, transmission fluid exchanges, suspension work, tire repairs and sales, and so much more.

As car sales continued to rapidly increase throughout the 1960s, Midas kept pace, adding franchises to serve the needs of car and truck owners. Like KFC®*, Subway®*, McDonald’s®* and Burger King®*, all of which also started in the 1950s, Midas became an iconic American brand. When the Clean Air Act of 1975 forced changes in the way that mufflers were made, resulting in longer-lasting equipment from automakers, Midas diversified its services to include brakes. Brake service soon became big business for the Company. In 1988, Midas added computerized suspension and alignment service to its offerings. In the early 1990s, Midas took a leap forward for the entire auto industry by developing Standards of Service — a set of guidelines

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* KFC is a registered trademark of KFC Corporation. Subway is a registered trademark of Doctor’s Associates Inc. McDonald’s is a registered trademark of McDonald’s Corporation. Burger King is a registered trademark of Burger King Corporation.

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WHAT ARE THE STARTUP COSTS? Midas franchise startup costs — an overview How much does it cost to start a Midas automotive repair franchise? It depends on the route you choose to open your shop. Startup costs to open a newly constructed 8-bay Midas franchise range from $203,130 to $424,520.

Startup costs can be lower for franchisees who choose to convert an existing automotive shop to the Midas brand. Startup costs for a conversion range from $74,130 to $419,520. Here are detailed looks at the startup costs for a new 8-bay Midas and for conversion of an existing auto repair facility, as outlined in the 2014 Midas Franchise Disclosure Document. To learn more, download our free franchise report to start a conversation.

Your Estimated Initial Investment for a New (8-Bay) Midas Shop Type of Expenditure

Estimated Amount or Low-High Range

Method of Payment

When Due

Initial Franchise Fee

$0 - $30,000

Generally, lump sum

$5,000 with Application Us and balance paid at the time of execution of Franchise Agreement

Site Selection Fee

$1,000 - $2,500

Lump sum

At the time of execution MRC of Franchise Agreement

Marketing Support Program

$5,000

6 equal monthly installments

First 6 months of term of Franchise Agreement

Us

Travel & Living Expenses while Training

$1,000 - $7,800

As incurred

Before opening, as incurred

Third Parties

Security Deposit, Licenses & Permits

$4,000 - $10,500

Lump sum

Before occupancy and/ or at signing of lease or sublease

Third Parties

Rent and Real Estate Taxes (3 months)

$12,000 - $31,500

As arranged

First month’s rent is due MRC, MPI or Lessor before occupancy and/ or at signing of lease or sublease, then monthly

Warranty Registration Fee (3 months)

$150 - $2,000

As incurred

The fee is added to the Franchised Unit’s Trade Account Statement upon warranty registration, which payment is due, generally, by the 17th day of the month.

Us

Equipment & Tools

$50,000 - 128,000

As arranged

Before opening

Third Parties or Us

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To Whom Payment Is To Be Made

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Shipping and Installation Costs Equipment

$11,000 - $15,000

As incurred

Before opening

Third Parties

Computer, Hardware & Telephone System

$6,000

As arranged

Before opening

Third Parties

Office & Waiting Room Furniture & Point of Purchase Materials

$16,000

As arranged

Before opening

Third Parties

Signage

$10,000 - $20,000

As incurred

Before opening

Third Parties

Shipping and Installation Costs Signage

$6,000 - $9,000

As incurred

Before opening

Third Parties

Initial Inventory & Supplies

$25,000 - $50,000

As arranged

Before opening

Third Parties or Us

Grand Opening Activities

$10,000

One Lump Sum

Upon execution of the franchise agreement

Third Parties or Us

R.O. Writer Software Installation

$0 - $1,800

As incurred

Before opening

PAS

R.O. Writer Software Maintenance Fee (3 months)

$0 - $330

As incurred

Monthly, via credit card or ACH

PAS

R.O. Writer Express Software Maintenance Fee (3 months)

$0 - $90

As incurred


PAS

Technical Information Systems (3 months)

$480 - $1,000

As incurred


Third Parties

Insurance (3 months)

$1,500 - $4,500

As arranged

Before opening

Third Parties

Legal & Accounting

$1,000 - $3,500

As arranged

As incurred

Third Parties

Additional Funds (3 months)

$40,000 - $65,000

As needed

As incurred

Third Parties

Miscellaneous

$3,000 - $5,000

As needed

As incurred

Third Parties

TOTAL ESTIMATED INITIAL INVESTMENT

$203,130 - $424,520

General Note: It is impossible to provide the exact investment required of each Midas franchisee due to the many variables that influence the total project cost, such as location, amount of space leased, cost of land and building, and other costs peculiar to a specific site. The initial investment, as well as availability and terms of financing, will vary considerably depending on the methods and amount of financing, your creditworthiness, collateral you might have, and lending policies of financial

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institutions. The equipment and other items are shown in full, although they might be financed or leased. You are encouraged to discuss the operations of the Midas Shop with Midas franchisees (See Exhibits A-1 and A-2 in our FDD for lists of current and former Midas franchisees). You should also review these figures carefully with a business advisor before making any decision to purchase the Midas Shop franchise. None of the fees listed in this item are refundable, unless otherwise stated.

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Your Estimated Initial Investment to convert an Operating or Previously Operated Automotive Repair Facility to a Midas Shop Type of Expenditure

Estimated Amount or Low-High Range

Method of Payment

When Due

Initial Franchise Fee

$0 - $30,000

Generally, lump sum

$5,000 with Application Us and balance paid at the time of execution of the Franchise Agreement

Site Selection Fee

$0 - $2,500

Lump sum

At the time of execution MRC of Franchise Agreement

Marketing Support Program

$0 - $5,000

6 equal monthly installments

First 6 months of term Us of Franchise Agreement

Travel & Living Expenses while Training

$1,000 - $7,800

As incurred

Before opening, as incurred

Airlines, Hotels & Restaurants

Security Deposit, Licenses & Permits

$4,000 - $10,500

Lump sum

Before occupancy and/ or at signing of lease or sublease

Third Party Lessor, Utilities and/or Government Agencies

Rent and Real Estate Taxes (3 months)

$12,000 - $31,500

As arranged

First month’s rent is due MRC, MPI or Lessor before occupancy and/ or at signing of lease or sublease, then monthly

Warranty Registration Fee (3 months)

$150 - $2,000

As incurred

The fee is added to the Franchised Unit’s Trade Account Statement upon warranty registration, which payment is due, generally, by the 17th day of the month.

Us

Equipment & Tools

$0 - $128,000

As arranged

Before opening

Third Parties or Us and Third Parties

Shipping and Installation Costs Equipment

$0- $15,000

As incurred

Before opening

Third Parties or Us and Third Parties

Computer, Hardware & Telephone System

$2,000-$6,000

As arranged

Before opening

Third Parties

Office & Waiting Room Furniture & Point of Purchase Materials

$2,000-$16,000

As arranged

Before opening

Third Parties and/or Us

Signage

$0- $20,000

As incurred

Before opening


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To Whom Payment Is To Be Made

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Shipping and Installation Costs Signage

$0- $9,000

As incurred

Before opening


Initial Inventory & Supplies

$0 - $50,000

As arranged

Before opening

Third Parties, Designated Suppliers and/or Us

Grand Opening Activities

$10,000

As incurred

Before opening

Third Parties

R.O. Writer Software Installation

$0 - $1,800

As incurred

Before opening

PAS or its Designated Suppliers

R.O. Writer Software Maintenance Fee (3 months)

$0 - $330

As incurred


PAS

R.O. Writer Express Software Maintenance Fee (3 months)

$0 - $90

As incurred


PAS

Technical Information Systems (3 months)

$480 - $1,000

As incurred


Third Parties, PAS and/ or Us

Insurance (3 months)

$1,500 - $4,500

As arranged

Before opening

Insurance Companies, Agent or Broker

Legal & Accounting

$1,000 - $3,500

As arranged

As incurred

Third Parties

Additional Funds (3 months)

$40,000 - $65,000

As needed

As incurred

Third Parties, Employees

Miscellaneous

$3,000 - $5,000

As needed

As incurred

Third Parties

TOTAL ESTIMATED INITIAL INVESTMENT

$77,130 - $424,520

General Note: It is impossible to provide the exact investment required of each Midas franchisee due to the many variables that influence the total project cost, such as location, amount of space leased, cost of land and building, and other costs peculiar to a specific site. The initial investment, as well as availability and terms of financing, will vary considerably depending on the methods and amount of financing, your creditworthiness, collateral you might have, and lending policies of financial institutions. The equipment

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and other items are shown in full, although they might be financed or leased. You are encouraged to discuss the operations of the Midas Shop with Midas franchisees (See Exhibits A-1 and A-2 in our FDD for lists of current and former Midas franchisees). You should also review these figures carefully with a business advisor before making any decision to purchase the Midas Shop franchise. None of the fees listed in this item are refundable, unless otherwise stated.

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WHAT IS OUR FINANCIAL PERFORMANCE? Midas franchise owners significantly outperform the industry Midas franchise owners, on average, significantly outpace the performance of other general auto repair and maintenance businesses. In its 2014 Digital Factbook, the

Automobile Aftermarket Industry Association estimates that general repair garages produced average revenues of $466,024 in 2012. As you’ll see below, the average Midas store does much better. Our mid-tier franchisees had average revenues of $620,760 in 2013 — 33% higher than the industry. And the top third of our franchisees blew the industry averages away, with revenues of $921,611 in 2013. Here’s more detail from Item 19 of our Franchise Disclosure Document:

Top Third

Middle Third

Bottom Third

Number of Shops in Group

38

38

38

Average Sales Per Shop

$921,611

$620,760

$438,255

Cost of Goods Sold

23.40%

23.30%

24.40%

Technician Wages

17.60%

16.80%

17.80%

Franchise Royalties

4.80%

4.80%

4.80%

Advertising Royalties

4.80%

4.80%

4.80%

Other Variable Expenses

2.90%

3.40%

3.80%

Other Fixed Expenses

$35,840

$30,350

$24,143

Expenses as % of Sales

It’s important to note: The table immediately above excludes many other types of expenses often incurred by franchisees that are significant, including manager salaries, payroll, taxes, fringe benefits, rent, real estate taxes, insurance, business licenses, equipment leasing, professional fees, travel, entertainment, administrative salaries, depreciation, amortization, and interest expenses. These expenses have been excluded from the table above because they might be heavily influenced by discretionary factors and might vary significantly from what you might pay

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for them under normal market and business conditions. We encourage you to consult with your financial advisors in reviewing the information in Item 19, in particular, estimating the categories and amount of additional expenses that might be incurred in establishing and operating a Midas shop. Furthermore, you should be aware that any particular Midas shop’s financial performance might be affected by numerous factors that vary due to the individual characteristics

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of the Midas shop. These factors include: competition from car dealers and other auto service centers, appreciation and acceptance of the services and products that the Midas Shop offers in its community, a franchisee’s experience, business development and managerial skills, advertising programs, personnel and cost controls, geographic and socioeconomic conditions in the Midas area, business cycles, and performance of the economy locally, nationally, and worldwide.

WHO ARE OUR CUSTOMERS? Here’s why customers choose the Midas auto repair franchise Midas is one of the best known brands in the world and is known for complete car care, which makes us a magnet for drivers who are looking for a great mechanic. Once a vehicle’s warranty ends, most drivers stop going to the dealership for maintenance. They want options that are more convenient and have better prices. At the same time, they expect a high level of expertise.

third generation in his family to own Midas shops: His grandfather started the first Midas in Akron, OH, in 1956, and the family soon started expanding into other cities. They now have more than 110 Midas shops throughout the United States. A big part of our success has been making Midas a nicer place for customers,” Ian says. “We are experts and professionals, and it’s important for that to be reflected when a customer walks inside. We like it to be like a doctor’s office: clean and uncluttered waiting rooms with flat-screen TVs, free coffee and WiFi, and comfortable seating.” Another feature of Midas shops: large windows that look into the car maintenance bay. Midas pioneered the use of windows between the lobby and the shop, which allows customers to see everything that is happening to their cars. Whether a customer brings a car in for an oil change, for brakes, or for something more

A typical Midas customer comes to us when their car is three years old and freshly out of warranty. Their vehicle is still like new, and they want to keep it that way. They want expert mechanics, and they also want excellent customer service. Ian Katz believes in setting the right expectations the moment a customer walks in the door. Ian is the

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serious, Midas technicians always perform a courtesy check on the vehicle. The free inspection helps customers stay on top of fluid levels and condition, the state of engine belts, air filters, hoses, lights, wipers, and other items that are important for safe driving and vehicle durability. By offering consistent courtesy checks, Midas technicians build trust with the customer. If all systems are in great shape, we let customers know. And if something looks like it will need service soon, we inform customers so they can budget accordingly the next time they come into the shop. When we catch something that should be fixed immediately, that trust pays big dividends. Nobody wants to learn that they need a $300 repair — but a $300 repair now can save a customer from a $4,000 repair later. By building relationships with our customers through courtesy checks, we earn their trust so that they are willing to pay for repairs that are needed. By taking the time to inform our customers and earn their trust, we save them money in the long run.

Former IT executive Sunil Trehan, who owns three Midas shops in the Chicago area, went undercover at different auto repair franchises before deciding to invest in Midas. “I noticed the customer experience was better at Midas, and I really wanted to go with the best,” he says. “Midas had more attention to detail and better processes. They explain what’s wrong and build trust with the customer.”

HOW ADVERTISING AND MARKETING DRIVE BUSINESS TO FRANCHISEES

Courtesy checks improve customer satisfaction scores, increase what the average customer spends, help the average customer avoid expensive repairs later on, and educate customers about the wide variety of repair and maintenance services Midas shops offer. We are Total Car Care experts. We can handle everything a dealer can handle, for nearly every vehicle on the road. We’ve earned our customers’ trust because Midas shops are convenient, value-priced shops with teams of automotive experts. Our franchise system has been around for nearly six decades and is backed by global company TBC.

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National advertising, warranties help keep the biggest auto repair brand strong The Midas brand has been attracting customers for nearly 60 years, thanks to a

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combination of expertise, great service, lifetime warranties, and savvy marketing. Midas has helped to build its brand by advertising on popular radio shows, on television, and more recently through social media. Advertising, coupled with our growth to more than 1,000 locations nationwide, has made us a household name.

At the same time, people who never visited a Midas or who haven’t visited a Midas in a few years might not realize how much we’ve grown. We repair a lot more than mufflers and brakes these days, and we have launched aggressive national advertising campaigns to make sure new customers know about everything we offer.

Midas is a legacy brand — one that everyone knows, and one that millions of Americans have used. We are part of the American car culture. People know our slogan, “Trust the Midas Touch,” and come to us for total car care — everything from engine and transmission repair to oil changes, suspension, tires, brakes, and exhaust systems.

Midas is here to stay with room to grow.

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We have launched national advertising campaigns to put the Midas name in the spotlight and bring in new generations of customers. Together, Midas franchisees spend millions each year to put the Midas name in front of customers, and you inherit the results of that advertising push the day you become

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a franchisee. At the same time, we have developed high quality branding that features strong messages and a consistent look and feel that carries across our TV advertising, mailers and fliers, in-store displays, website, and social media. By tying everything together into an integrated strategy, we have been able to amplify the power of our marketing.

Local marketing In addition to our national advertising and marketing efforts, we provide all franchisees with marketing templates for local efforts. Franchisees in many markets also have formed advertising co-ops to develop local ad strategies and drive traffic. Through the Midas system, those co-ops keep the branding consistent and powerful. Midas also uses in-store marketing to let customers know about additional services we have available. Our point-of-sale system tracks your customers’ information and the needs of their vehicles, which allows you to send targeted marketing mailers and coupons to prospects and customers who might need automotive work soon. Is a customer due for a tune-up in three months? The system makes it easy for you to send a coupon or a reminder ahead of time, so that they don’t have any reason to shop elsewhere for service.

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HOW DO I FIND A MIDAS LOCATION? What makes a good Midas location, and how do I find one? Midas looks for streets with high traffic counts, with 50,000 or more residents within three miles, and with speed limits no higher than 45 miles per hour. We look for areas that have several other major food, automotive, or retail brands, and we like to put new locations near car dealerships, since many customers transition their freshly out-of-warranty cars from dealer maintenance to Midas. There are three routes you can follow to open your Midas auto repair franchise. You can build a new location, buy an independent auto repair facility and convert it to Midas, or buy an existing Midas. The first option — building new — allows you to start with a building that is customized to provide Midas service. The main challenge to building new is the availability of real estate that is zoned for automotive use. Most city zoning laws restrict where automotive shops can operate. The zoning rules narrow the options, but we work with prospective franchisees to search for a good location. The zoning restrictions are also

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one of the reasons that it is valuable to be part of a national brand — many cities group automotive businesses in the same areas, and the Midas brand can help you stand out in the crowd. Typically you will lease the commercial land from the property owner and then build the facility. You can also buy the land outright, creating an additional asset.

ARE AUTO REPAIR FRANCHISES COMPLICATED? You don’t need to be a mechanic to run a successful Midas auto repair franchise

The second option, which has become more popular — is to buy an existing auto repair business and convert it to Midas. There are more than 400,000 automotive repair and maintenance businesses operating in the United States, and thousands are for sale at any given time. We can help you identify businesses that are for sale in good locations that would be suitable for conversion. A quick guideline: The business should have at least six bays, be at least 4,000 square feet and have at least 15 parking spaces. The third option is to buy an existing Midas location. We have more than 1,000 locations in North America and have been franchising since 1956. Handfuls are for sale at any given time, and we can let you know if one is available in your market. The site selection process and build out can take as little as three months for a conversion to 18 months for new construction. Sometimes franchise candidates think: “Eighteen months? I don’t want to wait that long!” Instead, think big-picture. Let’s say that, worst-case scenario, it takes you 12 to 18 months to open. Midas has several franchisee families who are in their third generation, with stores that opened in the 1950s. If a business is capable of providing for your family for three generations, isn’t it worth the wait?

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Who makes a successful Midas auto repair franchise owner? First and foremost, you need to be a “driver.” We need business owners who can drive their businesses forward and maximize the opportunities at hand. Secondly, you need to run a high-trust, customer-friendly business. Think about it. Customers don’t usually know what is wrong with their cars, so they don’t know which repairs are necessary. They are taking a leap of faith. Trust is paramount, and if you reward their trust, they will reward you with loyalty and dollars. Third, you can come from any background — you don’t need to be a mechanic or car person. Many of our most successful franchisees

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don’t have an automotive background — but they are trustworthy and skilled businessmen and businesswomen. Successful franchisees include IT executives, bartenders, customer service managers from other retail concepts, hoteliers, medical school students, insurers, and yes, car guys, too. For instance, Judd Shader was fresh out of college when he bought his first Midas shops in Denver. He was looking for a stable business with huge, sustainable demand, and the automotive sector appealed to him because he knew that excellent customer service could help his businesses stand out. “What attracted me to Midas was the opportunity to bring excellent customer service to an industry where good customer service isn’t always given,” he says. Midas has great systems and a strong brand, and he knew that if he was willing to work hard, train his employees to follow The Midas Way, and keep a close eye on cash flow and profitability, he could build an extremely strong business. Judd, who is not a mechanic, soon partnered with Jeff Genuario, a third-generation Midas owner in Denver, to expand throughout the United States. Jeff first ventured into sales and marketing for high-tech companies and pharmaceuticals, but he eventually returned to the family business. “We focus on really simple things to make sure our customers are served right,” Jeff says. “We are very training-focused and goal-oriented, and that has helped us boost performance. Our motto is: ‘Every customer, every time.’ If you follow Midas’ systems and do the right things for your customers, results will follow.”

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The most successful franchisees stay focused on satisfying existing customers while growing their customer base through smart local marketing that makes the most of the strong Midas brand.

MIDAS FRANCHISE REVIEWS What do Midas franchisees say about the brand? Jeff Genuario, COO of Denver-based The Leeds West Groups, which owns Midas locations in several markets nationwide “They have Franchise Business Managers and Shop Operations Managers that help us grow our business. We have the ability to work with store managers to help make sure the customer experience meets what we expect and what Midas expects. When we go into new markets, they send in regional resources to help us get them open and up to speed. They are an invaluable part of how we go to market. Now, they aren’t going to run the whole thing for the franchisee, but they are a great resource.” Ian Katz, third-generation Midas owner. His grandfather Cal was one of the original Midas franchisees in 1956 “If aftermarket automotive repair is your interest or passion, Midas is as good or better than anything out there. You have 60 years of experience and 60 years of brand recognition. There are a lot of locations, and customers know what Midas is and what Midas does. We also work well together. Everyone understands we are in it together.”

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Russ Gibson of the ASE Group, which owns 36 Midas shops, describing the relationship with the franchisor, Midas International Corp. “There have been numerous times when (VP of Marketing) Bob Crostarosa has picked up the phone and said: ‘I’m thinking about this. What are your thoughts?’ I’ll get a call from (COO) Mike Gould. I just got an email from someone who handles our template forms for estimates. That kind of communication goes back to franchisee-franchisor relationship. It provides real value when you have a franchise partner who is working with you, and that kind of communication has increased tenfold with TBC.” Dan Turner, 53, who bought his first Midas store in Denver, CO, in 2012 “I’ve been in automotive all my life. I spent 26 years helping build (a competing automotive brand) then helped to manage 13 Midas stores when they were corporate-owned. Buying one has been the best move I’ve ever made. I should have bought stores years ago.”

HOW AUTO REPAIR HAS CHANGED Americans are keeping their cars longer and racking up miles. Here’s what that means for Midas. One of the reasons Midas started as a muffler shop is that mufflers, and exhaust systems in general, used to fail on a regular basis. Moisture and salt would combine to rust metal mufflers. Misfiring engine cylinders would allow gasoline to seep into the exhaust system, and the “backfire” would cause the muffler to explode

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at the welding seams – causing tears and holes. Midas initially built its reputation by providing drivers a quick, convenient place to have their mufflers replaced, and then selling them a rust-resistant muffler that was engineered to be stronger and more resistant to a blowout. Our reputation for excellence was further enhanced by a nationwide warranty that covered the muffler “for as long as you own your car.” No other company was providing that.

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Thanks to improvements in auto manufacturing, “as long as you own your car” is now a lot longer than it used to be.

do-it-yourselfers are having a hard time making their own repairs. They need sophisticated, professional mechanics they can trust.

A few decades ago, driving a car with more than 100,000 miles on the odometer was a gamble. You knew something was going to go wrong — you just didn’t know when.

Maintenance moves to the forefront

Now, a car with 100,000 miles is normal. Drivers depend on cars lasting much longer. Cars have become more expensive, and Americans know they can stretch their dollars further by properly maintaining what they have. As drivers elect to make repairs and keep existing cars on the road, they need trusted mechanics. The Midas brand means you have the opportunity to impress customers with highly trained mechanics, quality products, and customer service that can’t be beat, turning them into loyal, regular visitors.

Midas still repairs exhaust systems, and we can also fix engines, transmissions, shocks and struts, and everything else in a car. But, unlike in the past when we would fix a problem, today our focus is on helping customers maintain their vehicles so they last as long as possible. People take better care of their cars because they understand that with the right upkeep, their cars can stay in great shape for a very long time. Customers come to Midas because we help them stay on top of routine maintenance like oil changes, fluid exchanges, and tire rotation and balancing. While they’re here, we also perform a courtesy check to ensure every vehicle is safe and in good condition. With that kind of service, Midas helps customers keep their cars in great running condition.

MIDAS TRAINING AND SUPPORT American cars are now 11.3 years old on average, according to the Automobile Aftermarket Industry Association, and nearly 250 million are on the road. Those two facts are a big reason why auto repair is expected to become a nearly $40-billion-a-year industry by 2016. Newer cars also increasingly rely on electronics to control key vehicle systems, and

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Midas training and operational support is a model for the entire franchise industry Sunil Trehan says the exceptional training and support Midas offers are some of the biggest reasons he chose the brand when he decided to start a business.

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The former IT executive calls the initial classroom training “a very good experience.” Once you sign a franchise agreement, you will be asked to spend at least five days observing operations at an existing Midas shop. We will then work with you to develop a business plan, as well as a competitive analysis of your market. Next, you will be invited to TBC Corporation headquarters in Palm Beach Gardens, Florida, for two weeks of classroom training. The training provides an in-depth look at business operations, marketing, the Midas pointof-sale system, inventory management, shop operations, and customer service. Once you open your Midas, much more support kicks in. We have developed a field support team of more than 40 people who work with Midas owners to find ways to improve their operations — boosting customer satisfaction and profits. Each franchisee will work with and have regular access to a Franchise Business Manager and a Shop Operations Manager. The Franchise Business Managers work with Midas owners to develop business plans, set goals, track progress toward goals, grow revenue and increase profitability. They are like

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personal trainers for your business, working to help you keep your business strong. The Shop Operations Managers provide training to help your sales team and mechanics provide thorough, friendly customer service. They help you boost your customer satisfaction so that you get more repeat business and great word-of-mouth referrals. Simply put, you receive training and support to help you excel as a Midas owner, positioning you for greater expansion. In addition, your team receives training and support to increase their skills and earning potential, which boosts labor retention and makes your business more scalable. We offer an enormous library of business information and mechanic-level training through TBC University, which you have access to through our intranet. More than 300 courses are available to help sharpen the skills of the mechanics in your shop. Midas technicians are the best, and TBC University helps them maintain their edge and keep current with changes in the automotive industry. Want to know how to solve a problem with an electric car? TBC University has instructions to help. Whether it’s business training, customer service training, or mechanical know-how, we help you stay ahead of the curve.

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MEET THE MANAGEMENT TEAM Midas leadership team has a wealth of experience supporting franchisees and helping them succeed Brant Wilson Director and Senior Vice President, Franchise Group Brant Wilson was appointed to the position of Director of the Franchisor on Jan. 1, 2014. He was appointed to the position of Senior Vice President, Franchise Group of TBC effective Nov. 1, 2013. From 2007 to Oct. 31, 2013, he was employed by H&R Block and held various positions within that organization including Vice President of Franchise Development and Territory Vice President for the West.

Mike Gould Executive Vice President and Chief Operating Officer Mike has been a part of the Midas family for 34 years. He started as a technician at a Midas shop in Royal Oak, Michigan, before being promoted to store manager. Then Mike was asked to oversee a group of company-owned locations. After helping those stores succeed, he was named Vice President of Franchise Operations for the United States and Canada and worked with franchisees to help them boost performance. He was promoted to Chief Operating Officer after Midas was purchased by TBC, which has sold nearly all companyowned stores to franchisees. Mike’s extensive experience working in Midas stores and with franchisees means that he understands the business from the ground level.

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Gerry Schwall Vice President, Franchise Operations, East Gerry oversees the franchise support teams in the eastern half of the U.S., leading the franchise business managers and shop operations managers who advise franchisees about ways they can increase revenue and profitability, and who provide training and assistance to ensure Midas customers enjoy consistent experiences everywhere they go.

Phil Hultquist Vice President, Franchise Operations, West Phil oversees operation support in the western U.S. He has more than 24 years of experience supporting franchisees and store managers as they worked to win customers and earn high customer satisfaction.

Bill Ketchem Vice President, Franchise Development Bill Ketchem served as a financial and operations consultant for Big O Tires, another brand in the TBC network, before being appointed to lead Midas’ franchising team in 2012.

Darrell Fisher Vice President, Business Management As Vice President of Business Management, Darrell works with the Midas franchisee organization to share ideas and best practices throughout the franchise system.

Glenn Root Director and Vice President, Canadian Operations Glenn Root has held the position of Vice President, Canadian Operations since Sept.

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2004. He was elected as Director in April, 2008. From March 2001 to Sept. 2004 he served as Vice President and General Manager, Consumer Division of Beverly Tire.

FAQs Q. How do I qualify to own a Midas shop? A. Solid business or retail experience, proven management skills and a strong financial position would be your best preparation. You will need at least $75,000 cash available for investment into the business and a net worth of at least $250,000 to begin discussions with Midas. Development of new or multiple locations would require greater cash and net worth amounts to qualify. If you are close, let’s have a conversation. Many people overlook assets that would help them qualify.

Q. What special qualities or skills are required? A. You must have some proven management experience or aptitude, strong business ethics (as this is a high-trust business) and abilities, a customer service mentality and willingness to be involved in the management of the shop. We look for owners who are success-driven and growth-minded.

Q. What are the franchise fees, royalty fees and franchise terms? A. Franchise fee* — $10,000 to $30,000 Royalty fee* — Up to 10%, with at least half of the royalties devoted to advertising. Franchise term —The Franchise term is for 20 years and is renewable at the end of

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the term subject to approval, conditions and payment of renewal fee. *See the current Franchise Disclosure Document for a description of the range of initial franchise fees.

Q. Will Midas help with financing? A. Midas works with qualified lenders who have either financed other Midas operations or expressed an interest in working with Midas franchise candidates. These lenders can usually meet a variety of business funding needs to help you pursue the Midas franchise opportunity of your choice. Midas might offer special financial incentives for opening a new shop. In addition Midas can help franchisees use other financing vehicles such as selfdirected IRAs and home equity lines to finance their businesses. Many Midas franchisees finance their business through SBA loans. Midas is part of the U.S. Small Business Administration’s Franchise Registry. The SBA created the Franchise Registry in 1998 to streamline the process banks use to determine franchisees’ eligibility for SBA loans. When the agency approves a franchise system for inclusion, it agrees to guarantee 75 to 85 percent of any loan to franchise candidates, reducing the risk to banks and increasing the likelihood of approval.

Q. What are the benefits of converting my business to a Midas? A. The high awareness level of our brand name increases your visibility and chances for success. By putting our logo on your building, you become a part of something bigger — Midas. You will benefit from the tools we

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have perfected over the years to grow our franchise network. You reap reap the rewards of our multimedia advertising campaigns that generate brand awareness. You will get to take advantage of the skills-enhancing training programs that we have designed around today’s retail environment. We know that as an established business owner, you already are knowledgeable about your market and your customers. We expect that you might be ready to grow your business even more by expanding your customer base through an affiliation with Midas. Also, under our brand name, you might find it easier to expand your business into new markets through multiple unit ownership.

Q. How does Midas evaluate a new store location? A. Midas analyzes information from various sources for traffic count, registered vehicles, replacement rates, population, growth trends, competitive factors, zoning, retail shopping patterns, and other appropriate factors.

Q. What is the standard shop size? A. A Midas shop can be found in almost every type of market throughout the United States and Canada. The range of shop sizes varies throughout our network, from 4-bay shops to 12-bay shops. These shops also vary in building design, depending on when they were built. With today’s business model, our recommendation for new development is 6 bays or larger. However, we will evaluate each market opportunity on a case-by-case basis to determine the right fit for expected service demands. If you are a conversion candidate and are concerned about whether your facility

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will accommodate the Midas service offering, we will be glad to evaluate it.

Q. What automotive services does Midas provide? A. Midas has evolved from a specialist in under-the-car services to the provider of an extensive and growing list of maintenance and repair services: brakes, steering, suspension, exhaust, catalytic converters, batteries, tires and more. Midas serves individual vehicle owners as well as nationwide vehicle fleets.

Q. What about inventory? A. The Midas franchisee is required to maintain an inventory that is adequate both in terms of range and quantity of items to fulfill public demand. Midas maintains strategic alliances for parts distribution to support the franchisee network. Additionally, these suppliers can provide “Just in Time” delivery to your store. By systematically building relationships on the supply side and within the retail network, Midas continues to bring an expanding line of products your way.

Q. What advertising support can I expect? A. As stated in the franchise agreement, Midas currently commits to spend not less than one-half of all royalties actually collected on certain advertising expenditures each year. These expenditures promote the Midas name, image and services in a national advertising campaign that focuses on television, radio, billboards, local newspaper announcements and special events. On the local level, Midas works with franchisees to develop plans to help generate traffic and sales. Those plans might

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include local media, direct mail and Yellow Pages. In addition, Midas franchisees invest $10,000 in Grand Opening marketing for a new store, and Midas matches that investment with an extra $5,000.

NEXT STEPS Midas works with franchise candidates to ensure we’ll be a good match. Here’s a look at the process

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Once you download our free franchise report, we’ll be in touch to start or set up a conversation. We’ll learn more about you and give you a chance to learn more about the Midas automotive franchise and why we’re “Entrepreneur” magazine’s top-rated automotive franchise. Once we have established mutual interest in a franchise partnership, you will be asked to submit a formal application and to pay a $5,000 deposit toward the payment of your initial franchise fee. This payment does not constitute a franchise agreement, and it is fully

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refundable if you decide within 30 days not to pursue the opportunity. It does, however, set in motion a series of efforts on your behalf. Midas will assist in site selection. Once your site is approved, the process of build-out typically takes 3 to 12 months depending on whether you are acquiring an existing automotive business to convert to the Midas brand or are building from scratch. Once you sign a franchise agreement, you will be asked to complete our initial Operations Training Program, which is designed to teach you the core skills, techniques and tools that you will use as a Midas franchise owner. The program consists of two parts. Part 1 includes five days of in-store observation at an operating Midas shop, completion of an initial business plan and an analysis of local competition. Part 2 is an instructional program held at our training center in Palm Beach Gardens, FL, which lasts a minimum of 10 business days. The training program covers the tools, business systems and

Ready to learn more? Email us at [email protected] and we’ll be in touch!

This report is not a franchise offering or an offer to sell a franchise. A franchise offering can be made by us only in a state if we are first registered, excluded, exempted or otherwise qualified to offer franchises in that state, and only if we provide you with an appropriate franchise disclosure document. Follow-up or individualized responses to you that involve either effecting or attempting to effect the sale of a franchise will be made only if we are first in compliance with state registration requirements, or are covered by an applicable state exclusion or exemption. The following states regulate the offer and sale of franchises: California, Connecticut, Florida, Hawaii, Illinois, Indiana, Kentucky, Maryland, Michigan, Minnesota, Nebraska, New York, North Dakota, Rhode Island, South Dakota, Texas, Utah, Virginia, Washington and Wisconsin. If you reside in one of these states, or even if you reside elsewhere, you may have certain rights under applicable franchise laws or regulations. MN Reg. File No. F-3.

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Updated: 02.12 - Midas Franchise

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