This review of the Valvoline Instant Oil Change revealed how much starting these franchises will cost investors and how much franchise owners can expect to make in profit/salary per year by owning this franchised business.
- Valvoline was established in 1866, and currently, this brand is one of the leading suppliers of premium car engine oils and other auto-moto lubricants.
- Starting the new Valvoline Instant Oil Change franchised car service garage costs between $204,750 and $3,270,550.
- Every new franchisee must pay an Initial License Fee of $30,000 before signing a franchise agreement with this company.
- Valvoline Instant Oil Change franchisees need to pay 9-11% of their gross business revenue for the costs associated with ongoing franchisor Royalty & National and Local Ad Fees.
- An average-earning Valvoline Instant Oil Change franchise makes approximately $1,500,000 yearly gross sales with a 15% profit margin.
- The average earning Valvoline Instant Oil Change franchise owner makes a $200,000 salary per year.
What is Valvoline Instant Oil Change
Valvoline Instant Oil Change are quick-service engine oil change garages that, in the offer, also have chassis lubrication, certain routine maintenance checks, and other automotive services.
This brand is one of the leading suppliers in the oil change industry, and currently, they have more than 1,500 locations across the U.S. However, these car maintenance centers offer their customers much more than just oil change services.
The full-service list of these automotive centers includes:
- Quick service engine oil change
- Chassis lubrication
- Oil, air, and fuel filter replacement
- A maintenance check of the differential, transmission, radiator, and windshield washer fluid levels
- Power steering, battery, and safety checks of tire pressure
- Windshield wipers change services.
- Manual and automatic transmission services
- Coolant system flushes
- Serpentine belt replacement
- Complete fuel system treatment service
- Air conditioning recharge
- Windshield repair
- Battery replacement
- Bulb replacement,
- Power steering flush
- Tire rotation and balancing
The oil change industry in 2022 has generated more than 10 billion U.S. dollars in revenue, and it is expected that this market will grow even more in the future.
So, now is the right time to get involved in this industry, and starting the Valvoline Instant Oil Change franchise is one of the better options!
How Much Does The Valvoline Instant Oil Change Franchise Cost
To launch a new Valvoline Instant Oil Change franchise, the investors need start-up capital between $204,750 and $3,270,550; this initial investment estimation includes the initial fee and all other preoperating costs.
The initial investment outlay will primarily depend on whether the new franchise owner will opt for leasing or buying a garage real estate and lube equipment!
If real property and lube equipment of the new Valvoline Instant Oil Change franchise is leased, the investors will need to bear an initial cost between $204,750 and $3,270,550; if not, the initial exspense is much higher and goes between $1,926,000 and $3,273,500!
These oil change & car maintenance centers usually operate in free-standing buildings, so real estate costs are high!
However, franchisor allows franchisees to establish their business in various locations, for example, in suburban shopping center “pads” or strip shopping center locations which can be a more affordable option.
Also, new franchisees must be aware that they will need to invest between $15,000 to $100,000 for buying certain operating equipment. New franchise owners will need to purchase radiator flush equipment, tire rotation and balance equipment, a fluid exchange system, and a point-of-sale system(POS).
Table of initial costs:
- Initial License Fee: $30,000
- Land and Building Improvements: $1,550,000 to $2,750,000(if purchased); $33,000 to $58,500 (if leased)
- Grand Opening Fee: $7,500 to $10,000
- Initial Training: $5,000 to $10,000
- Utilities, Landlord Security Deposits: $500 to $11,500
- Insurance: $12,000 to $17,000
- Start-up Supplies: $22,000 to $30,000
- Operating Equipment Package: $15,000 to $100,000
- Lube Equipment and Signage Leased for three months: $3,025 to $3,375
- Lube Equipment and Signage Purchased: $234,000 to $250,000
- Additional Funds: $50,000 to $65,000 – Working capital for first three months
ESTIMATED TOTAL INVESTMENT COST:
- $204,750 to $335,375 (If Real Property, Lube Equipment, and Signage is Leased)
- $1,926,000 to $3,273,500 (If Real Property, Lube Equipment, and Signage is Purchased)
Options To Fund Valvoline Instant Oil Change Franchise Initial Investment Cost
This franchisor doesn’t offer direct arrangements for financing the total initial investment of starting this franchise! However, these brand franchisees are eligible for expedited and streamlined SBA loan processing through the SBA’s Franchise Registry Program.
Valvoline, as a company, offers a no-interest leasing option regarding signs and equipment that must be displayed at the franchise.
If you sign a “Licensee Sign and Equipment Lease,” the payments will be based on the total value of the signs and equipment, and you will repay it during a 120-month term.
Also, this franchisor has close relationships with Bank of America. If you can be approved as a qualified borrower, Bank of America will give you a loan agreement to cover the finance of the starting new Valvoline Instant Oil Change franchise!
Valvoline Instant Oil Change Franchise Fees
Initial License Fee
- $30,000 per location
Every new Valvoline Instant Oil Change franchise owner must pay an Initial License Fee of $30,000 for the first franchised garage that is opened.
Half of the fee is paid upon signing the Franchise Agreement; the franchisor charges the remainder of this fee on the 20th day of the following month after opening.
Initial Fee Available Discount Programs
There are no available discount programs for the investors who opt to start only one franchised location; only investors who sign a multi-unit franchise agreement have certain discount programs available.
A multi-unit franchise agreement obligates investors to open at least three new franchised locations, and the initial fee discount is applicable only after the first location is opened!
Multi-unit franchisees pay the initial license fee as follows:
- First franchised location: $30,000 (full price)
- Second franchised location: $20,000 (-$10,000 discount)
- Third and each subsequent location: $5,000 (-$25,000 discount)
Currently, there is no Veterans discounts program, so U.S. Army forces former and current members will need to pay the total price of the Initial License Fee.
Ongoing Franchisor Royalty Fees
The Valvoline Instant Oil Change franchise owners need to spend 9% of their franchised location gross revenue for the costs associated with different royalties that this franchisor charges.
The franchisor royalties represent ongoing operating costs, and investors must know that fact!
We will now break down this franchisor royalties item by item.
Valvoline Instant Oil Change Royalty Fee
- 4-6% of the gross revenue
Every Valvoline franchisee must pay the franchisor a monthly royalty fee of 6% of Adjusted Gross Revenue.
The 6% royalty must pay all franchisees; the only exception are those investors eligible for the “Graduated Royalty Conversion Incentive Program”; this group of investors pays 4% of this fee.
Local Ad/Marketing Fee
- 3% of your Gross Revenue
The Valvoline franchise owners are obligated to contribute to the franchisor National Marketing Fund in an amount that is a min. 2% of all gross sales.
The money that franchisees will pay to the franchisor for this fee is spent on media, that is, on local advertising campaigns that the franchisor or franchisee will launch..
General System Fund Fee
- 2% of Adjusted Gross Revenue
The General System Fund fee is spent for the research, production, manufacture, and/or installation of programs and advertising materials intended to promote public recognition of the Valvoline brand.
For you, as a new franchise owner, it means that you will need to contribute to this fund with a sum that is equal to store 2% of Adjusted Gross Revenue. So be aware of this cost because all franchisees must pay it regularly.
How Much Is Valvoline Instant Oil Change Franchise Profit
To see how much Valvoline Instant Oil Change franchise profit potential is, we need first to reveal the gross revenue and profit margin these garages make to their owners.
Average Gross Revenue Per Year
An average-earning Valvoline Instant Oil Change franchised location delivers gross revenue of approximately $1,500,000 per year to its owner.
However, this is just average, which means we get these results if we add gross revenues of all franchises and that number of $$$ split with the number of locations!
Potential investors must be aware that in 2021 lowest earning franchise has made Net Sales of $175,397, and the highest-earning location has made a stunning $2,655,802 in net sales.
Valvoline Instant Oil Change Franchise Profit Margin
Valvoline Instant Oil Change Franchises deliver to their owners 15% of the profit margin from all gross revenue that is made per year from changing the oil and other car-related services.
The 15% margin is excellent if we consider that the franchisee will spend 9% of the gross revenue on the costs associated with different franchisor royalties!
For example, fast food franchises deliver 6 to 9% of the profit margin to their owner. So, starting this franchise can be much more profitable than starting a franchised restaurant, which tells a lot about how good this franchising opportunity can be!
How Much is Valvoline Instant Oil Change Franchise Owner Salary
The Valvoline Instant Oil Change franchise owner who is operating an average earning location can expect to make $200,000 in salary per year!
However, your salary as a franchise owner of this brand service facility will depend primarily on how much gross sales make your franchised business. The estimation above assumes that you will earn $1,500,000 in gross revenue annually, an average of this company’s franchised locations!
We have data that in 2021 lowest earning franchise has made $180,000, and the highest earning has made approximately $2,600,000 in gross revenue. So Valvoline Instant Oil Change franchisees can expect to make between $32,400 and $468,000 in annual profit/salary.
How We Estimate Valvoline Instant Oil Change Franchise Owner Salary Per Year
We have made an estimation of the Valvoline Instant Oil Change owner by implementing financial data that this brand has revealed in its Franchise Disclosure Document.
In their FDD, ITEM 19(2022), this franchisor has revealed that their franchise units in 2021 have made, on average, Gross Sales of $1,583,346 (Net Sales of $1,320,761)!
Also, this document has revealed that their garages in 2021, after operating costs are deducted(including royalties), have provided their franchise owners, on average, $270,727 of profit. So after tax is paid, it is a pretty real estimation that the owner can make approximately $200,000 in profit per year.
Is it Profitable to Own Valvoline Instant Oil Change Franchise?
With an estimated owner’s salary of $200,000 per year, Valvoline Instant Oil Change Franchises represents one of the most profitable franchising concepts currently available in the U.S.
Also, the cost of starting this franchise can be relatively low if the investors opt for leasing real estate(garage location) rather than buying land and building new real estate on it!
The ROI of these franchises is between 2 to 5 years, so investors can expect that the initial investment will pay off fast.
How Much Is Valvoline Instant Oil Change Franchise Agreement Duration
By paying an Initial Fee of $30,000, the Valvoline Instant Oil Change franchisee signs a franchise agreement for the 15 years term. After the initial term expires, franchises can sign a new contract by paying a renewal fee.
The renewal fee of the Valvoline is charged:
- $2,500 for a 5-year renewal
- $5,000 for a 10-year renewal
- $5,000 for a 15-year renewal
Are All Valvoline Instant Oil Change Franchises
Currently, 52% of Valvoline Instant Oil Change car service centers are franchised, and 48% are company-owned locations!
This company, at the beginning of 2022, had:
- Total Outlets = 1483
- Franchised Ones = 774
- Company-Owned = 709
Who Owns Valvoline Instant Oil Change
Valvoline Instant Oil Change’s owner and the parent company is Valvoline Inc, whose CEO ever since 2016 is Sam Mitchell.
Valvoline was established in 1866 and is currently one of the leading brands in the car oil industry. Since 1988 they have offered license and development agreements for establishing and operating a business under the Valvoline Instant Oil Change Trademarks.
We have revealed all initial costs and an ongoing profit that can expect new Valvoline Instant Oil Change investors. Currently, this brand offers one of the better franchising opportunities, so for those entrepreneurs who want to try their luck in the car industry, this can be one of the better options!