MIDAS ITEM 19

The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the Disclosure Document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances. The following information is provided for the purpose of helping you evaluate the potential earnings capability of a Midas Shop. Please carefully read all information in this Item 19, including the statements following the tables, which explain the information provided in the tables below and the limitations on this and the other information contained in this Item 19. Below are charts showing the actual gross sales figures of U.S. Midas Shops during calendar year 2019, and during the period from January 1, 2020 through May 31, 2020.

AVERAGE AND MEDIAN SALES

The accompanying footnotes are an integral part of these charts and should be read in their entirety for a full understanding of the information contained in them.

FOOTNOTES:

 

(1) The first chart above (the “Calendar Year 2019 Chart”) is an historic financial performance representation reflecting the average and median of franchisee sales on an annual basis for the most recent calendar year of January 1, 2019 through December 31, 2019. The second chart above (the “January/May 2020 Chart”) is an historic financial performance representation reflecting the average and median of franchise revenues for the period from January 1, 2020 through May 31, 2020. For purposes of the above information, gross sales means the total revenue of a Midas Shop, less taxes, discounts, rebates, and returns. In computing these figures, we took the average and median of the total sales of those outlets that fell into the top 10 percent, the top 1/3, the middle 1/3, the bottom 1/3, and the bottom 10 percent in total sales of the Included Shops (as defined below), as well as the combined average and median. Additionally, the charts each disclose the high and the low total revenue figure for every category of Included Shops.

 

(2) Only U.S. Midas Shop outlets that were open for business for at least 12 months as of December 31, 2019, that were open for the full period of January 1, 2019 through December 31, 2019, and who reported sales for each month from January 1, 2019 through December 31, 2019 have their total sales included in the computations used in the Calendar Year 2019 Chart (the “Included Shops” for purposes of the Calendar Year 2019 Chart). The 63 Shops operating as Midas/SpeeDee Co-Branding Shops as of December 31, 2019 are excluded from the Included Shops. There were 16 outlets that closed for various reasons during 2019, of which 0 had been open less than 12 months. As of December 31, 2019, the 939 Included Shops in the Calendar Year 2019 Chart were about 95% of the 992 franchised Shops.

(3) Only U.S. Midas Shop outlets that were open for business for at least 12 months as of May 31, 2020, that were open for the full period of January 1, 2020 through May 31, 2020, and who reported sales for each month from January 1, 2020 through May 31, 2020, have their total revenues included in the computations used in the January/May 2020 Chart (the “Included Shops” for purposes of the January/May 2020 Chart). The 63 Shops operating as Midas/SpeeDee Co-Branding Shops as of May 31, 2020 are excluded from the Included Shops. There were 7 Shops that closed for various reasons during the period from January to May 2020, none of which had been open less than 12 months. As of May 31, 2020, the 922 Included Shops in the January/May 2020 Chart were about 94% of the 985 franchised Shops.

(4) We offered substantially the same services to all of these Included Shops in each chart, which offered substantially the same products and services to the public. There is no assurance that the average sales in the charts in any of these categories will reflect or indicate the sales that you or any other franchisee may achieve or will achieve.

(5) The Calendar Year 2019 Chart shows results over a 12-month period, while the January/May 2020 Chart shows results for only a five month period. We have included the January/May 2020 Chart to show the effects of the COVID-19 pandemic on the operations of Midas Shops.

(6) The sales numbers in the charts do not reflect the actual potential net income of a Midas Shop and should not be relied upon in calculating profitability. There are a number of fixed and variable costs associated with a Midas Shop that are not reflected in the table above and that vary among individual Midas Shops. These costs, which are significant, include costs described in Items 6 and 7 of this Disclosure Document, inventory costs, 84 labor costs, rent and other occupancy costs, taxes, utilities, insurance, royalty fees, advertising, supplies, bad debt, warranty expenses, charge card expenses, equipment rental, taxes, debt service, depreciation on equipment and property, legal and accounting fees, regulatory compliance, management costs, general administrative expenses, preopening organization costs, employee benefits and repairs and maintenance. You should conduct an independent investigation of the costs and expenses you will incur in operating your franchise business. Franchisees or former franchisees, listed in the disclosure document, may be one source of this information.

(7) For the Included Shops in the Calendar Year 2019 Chart, there are 313 outlets included in the top 1/3, of which 112 (or 36 percent) exceed the average total sales of that group, 313 outlets in the middle 1/3, of which 140 (or 45 percent) exceed the average total sales of that group, and 313 outlets in the bottom 1/3, of which 163 (or 52 percent) exceed the average total sales of that group. For the Included Shops in the top and bottom 10 percent in the Calendar Year 2019 Chart, there are 94 outlets included in the top 10 percent, of which 31 (or 33 percent) exceed the average total sales of that group, and 93 outlets in the bottom 10%, of which 52 (or 56 percent) exceed the average total sales of that group. Out of the 939 total Included Shops included in the Calendar Year 2019 Chart, 393 outlets(or 42 percent) exceed the combined average of total sales stated.

(8) For the Included Shops in the January/May 2020 Chart, there are 308 outlets included in the top 1/3, of which 108 (or 35 percent) exceed the average total sales of that group, 307 outlets in the middle 1/3, of which 159 (or 52 percent) exceed the average total sales of that group, and 307 outlets in the bottom 1/3, or which 177 (or 58 percent) exceed the average total sales of that group. For the Included Shops in the top and bottom 10 percent in the January/May 2020 Chart, there are 93 outlets included in the top 10 percent, of which 28 (or 30 percent) exceed the average total sales of that group, and 92 outlets in the bottom 10%, of which 51 (or 55 percent) exceed the average total sales of that group. Out of the 922 total Included Shops included in the January/May 2020 Chart, 386 outlets (or 42 percent) exceed the combined average of total revenues stated.

(9) The information in the charts was compiled based on actual reported sales by our existing U.S. Midas Shop outlets during the year 2019 and during the January 1, 2020 through May 31, 2020 period based on monthly sales reports submitted to us by Midas franchisees for the purpose of computing royalty fees. We do not know if the figures reported to us by franchisees were audited. We have not independently audited or verified the accuracy of these numbers, and we do not know if these numbers have been verified or audited on behalf of the franchisees.

(10) The foregoing charts cover only standard Midas Shop franchises and not any CoBranding Shop franchises. If you acquire a Co-Branding Shop, your results may differ. In particular, you will be offering additional service and products but will have additional expenses and fees as described in Items 6 and 7. We do not provide any financial performance representation related to the performance of Co-Branding Shop franchises.

(11) A particular Midas Shop’s financial performance may be affected by numerous factors that may vary due to the individual characteristics of the Midas Shop. These factors include: competition from car dealers and other auto service centers, appreciation and acceptance of the services and products 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 85 Midas Shop’s area, business cycles and performance of the economy locally, nationally and world-wide.

Written substantiation for the financial performance representations made in this Item 19 will be made available to the prospective franchisee upon reasonable request.

 

We encourage you to consult with your financial advisors in reviewing the information in this Item 19, in particular, in estimating the categories and amount of additional expenses that may be incurred in establishing and operating a Midas Shop.

Some Midas Shops have sold these amounts. Your individual results may differ. There is no assurance you’ll sell as much.

 

Other than the preceding financial performance representation, we do not make any financial performance representations. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting our General Counsel, Brian Maciak, either at 4300 TBC Way, Palm Beach Gardens, Florida 33410 or (561) 383-3000, the Federal Trade Commission, and the appropriate state regulatory agencies.

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 Please note that the information contained on this website does not constitute the offer of a franchise and that such offers will be made only in conjunction with the presentation of the Midas Disclosure Document in states where we are first registered, excluded, exempted or otherwise qualified to offer franchises in that state.