Costa Oil
Costa Oil offers quick lubrication, oil changes, and light automotive repairs under a franchise model with investments ranging from $155,750 to $1,874,900. Known for convenient, fast service, it operates in the quick-service automotive care industry.
Costa Oil franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment, including the Year One Rent Calculation, can vary based on the Total Project Cost funded by ELB or its investor. For example, if the Total Project Cost funded by ELB is $495,000 and the US Treasury 10-Year Note rate was 3%, the Year One Annual Base Rent would be calculated as $495,000 x (8% + 3%) = $54,450 per year or $4,538 per month. This cost does not include other initial fees which are deferred until after the franchisee is open for business in Washington [p.160].
What is the initial franchise fee?
The initial franchise fee is $54,900, which is a lump sum payment due upon signing the franchise agreement [p.11]. For developing multiple franchises, the fee is reduced to $45,000 for the second unit and $25,000 for each additional unit if you sign a MultiUnit Development Agreement [p.27].
What are the ongoing royalty and advertising fees?
The franchisee must pay a weekly royalty fee of either 6.5% of Gross Revenue or $200 per week, whichever is greater [p.79]. Additionally, there is a brand fund contribution of 1% of Gross Revenue and a monthly technology fee of $200 [p.59].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement runs for Eighteen (18) months from the commencement date [p.169]. Renewal or cancellation requires mutual agreement signed by both parties [p.169].
Can I sell or transfer my franchise, and what does that require?
According to the FDD, a franchisor can refuse to permit the transfer of ownership of a franchise except for good cause [p.5]. Good cause includes but is not limited to unspecified factors. This means you cannot freely sell or transfer your franchise without the franchisor's approval, which may be granted or denied based on their discretion and the reasons provided.
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement if there is a default by the franchisee under Section 13.1-564 of the Virginia Retail Franchising Act, provided that such default constitutes reasonable cause [p.159]. Additionally, the franchisor has the right to terminate due to the franchisee's default as stated in the franchise agreement [p.116].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The FDD does not provide specific details on minimum net worth or liquid capital required for qualification as a franchisee. However, it mentions that if the franchisor's most recent unaudited financial statements show a net worth of less than $100,000, the franchisee may request escrow of initial investment funds until obligations are fulfilled [p.6].
Do I get an exclusive or protected territory?
Yes, you receive an exclusive territory known as a Marketing Area where you are granted the right to operate without competition from company-owned or franchised outlets selling similar goods or services. This exclusivity is not contingent on sales volume or market penetration and will continue unless mutually agreed upon termination [p.40]. Additionally, your territorial rights are protected for 18 months initially, with potential extension by mutual agreement [p.169].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training classes for new franchisees once a month at their corporate headquarters in Hanover, PA, with occasional virtual sessions available. They also offer on-site opening assistance upon payment of a Grand Opening Onsite Support Fee. However, the specific ongoing support details are not specified in the excerpts provided. [p.34, p.81, p.38, p.39]
How many franchised outlets are there, and how many have closed or been terminated?
Based on the provided excerpts, there were 22 Costa Oil outlets in operation during the 12-month period from December 1, 2022, to December 1, 2023. Out of these, 4 locations owned by Costa Oils, Inc., and 9 other franchised outlets that did not operate for a full year were not included in the financial performance representations. Additionally, the FDD indicates that some franchises have been terminated, canceled, or otherwise ceased operations, but specific numbers are not provided [p.66].
Does the franchisor share any financial performance or earnings information?
Yes, the franchisor shares historical financial performance representations for 22 Costa Oil outlets over a 12-month period from December 1, 2022 to December 1, 2023. This includes gross revenue, gross revenue minus key expenses, and average ticket. However, this information does not reflect the costs of sales, operating expenses, or other costs that must be deducted to determine net income. [p.51, p.93, p.150]
What am I restricted to selling, and where must I buy supplies?
You are restricted from operating a similar business during the term of the franchise [p.3]. Unless approved by the franchisor, you must use their approved vendors for equipment, inventory, and supplies [p.28], which may be more expensive than other options [p.3]. This isn't specified in the excerpts regarding what specific products you are restricted to selling.