Big O Tires Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$376,000

-

$1,573,000

LOCATIONS

477

Adam

Updated

April 11, 2024

Is

Big O Tires

a franchise?

Yes,
Big O Tires
currently
accepts
franchise
applications

Big O Tires is a prominent American retail tire franchise with its headquarters located in Palm Beach Gardens, Florida.

The roots of this franchise date back to 1962 when it was established by Harold V. James. Big O Tires originated as a separation from OK Tires.

The franchise specializes in operating retail stores that offer a comprehensive range of tire-related products and services. This includes the sale and servicing of tires, along with various automotive products. Additionally, Big O Tires provides maintenance and replacement services such as lube, oil, and filter changes, engine services, cabin air filter replacements, and brake services.

Big O Tires embarked on its franchising journey in 1982, setting itself as one of the leading tire and auto services franchises in the country. Today, it boasts a network of over 465 locations across the United States. Notably, it operates as a subsidiary of TBC Corp., alongside Midas, further solidifying its position in the automotive industry.

How many

Big O Tires

franchises

are there?

In 2022, there were
477
outlets in
the United
States, of which
460
are franchises, and
17
are corporate-owned.

What are the

Big O Tires

franchise

fees?

Royalty fee

2% to 5%

Advertising fee

4.90%

Initial Franchise Fee ($30,000 to $35,000)

The initial franchise fee for a Big O Tires franchise ranges from $30,000 to $35,000. This fee compensates Big O Tires for granting the franchise and for various pre-opening services and assistance. The specific amount within this range depends on the type of franchise agreement and other factors.

Royalty Fee (3.5% to 5%)

The royalty rate that franchisees pay for Big O Tires generally starts at 5.0% of Adjusted Gross Sales. However, based on the Royalty Matrix, this rate can vary. For new stores, under the current Royalty Matrix, the maximum Royalty Rate generally does not exceed 5.0%, and the lowest royalty rate is not less than 3.5%. The exact rate is determined based on the store's Adjusted Gross Sales for the year and can be influenced by factors such as sales performance.

Advertising Fee (4.9%)

Franchisees are required to contribute to two main advertising programs:

  1. Local Fund: Each month, franchisees must contribute a minimum of 4% of the store's Gross Sales to the Local Fund for advertising and related expenditures. This rate is currently reduced to 3.6% based on certain marketing programs.
  2. National Marketing Program: Franchisees must contribute up to 1% of their previous month's Gross Sales to the National Marketing Program. The current contribution rate is set at 0.9% of Gross Sales.

Combining the contributions to the Local Fund and the National Marketing Program, the total advertising fee is approximately 4.5% of Gross Sales.

Note: The fees presented here can be found in the Item 5 of the Franchise Disclosure Document. For a complete list of all the fees borne by the franchisee, please consult the Franchise Disclosure Document.

How much does

it cost

to start a

Big O Tires

franchise?

It costs between
$376,000
and
$1,573,000
to start a
Big O Tires
franchise.
Expenditure Type Cost Range Paid To
Initial Franchise Fee/Minimum Deposit $10,000 - $17,500 Big O
Initial Training Fees, Travel & Lodging Expenses $1,000 - $9,000 Third Parties, Big O or Third Parties
Real Estate Leases (Three Months’ Rent Plus Security Deposit) $24,000 - $100,000 As Specified in Lease
Computer Hardware and Software $20,500 - $33,500 Big O or Third Parties
Non-recurring Pre-opening Costs $5,000 - $35,000 Third Parties
Additional Funds (up to 12 months) $50,000 - $150,000 Third Parties
TOTAL ESTIMATED INITIAL INVESTMENT $375,500 - $1,572,500

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Does

Big O Tires

provide

training

to its

franchisees?

Yes,
Big O Tires
provides
training
  • Initial Training: Before opening a Big O Tires service center, franchisees are required to attend the brand's "New Franchisee Orientation" which includes both classroom instruction and hands-on experience. This training is comprehensive, covering various aspects of running a service center. The duration and content are tailored to ensure franchisees grasp the nuances of their operations. The training takes place at designated locations, and while some sessions are conducted in Palm Beach Gardens, Florida, others might be offered through an online virtual classroom.
  • Field Training: Beyond the classroom, Big O Tires offers "New Franchisee Orientation (Field Training)" which is store-moderated. This training is divided into pre-classroom and post-classroom sessions, with the former spanning 40 hours and the latter taking up 160 hours. This hands-on training ensures that franchisees get a real-world feel of the operations.
  • Fast Track Training: For those who come with experience, either as franchisees or managers, Big O Tires offers a "Fast Track" program. This program is designed to cater to the needs of experienced individuals, ensuring they get the specific training they require.
  • Costs and Expenses: While Big O Tires provides the training, franchisees are responsible for all related expenses. For certain specialized training sessions, like the multi-unit franchise management training, there's a fee involved, currently set at $550.

Does

Big O Tires

provides

territory

protection?

Franchisees of Big O Tires are granted the right to operate a Big O Tires business at a specific location. The rights provided to the franchisees are limited to the designated location and do not encompass a broader exclusive territory.

This means that while franchisees have a specific location to operate, they do not have a wider exclusive territory, and their operations are confined to the designated location.

Can a

Big O Tires

franchise

be run as

a passive

investment?

Big O Tires requires that the franchisee's store be operated either by the franchisee themselves, termed the "Operator," or by a "Manager" employed by the franchisee. This Manager, who is responsible for the day-to-day operation of the store, is subject to approval by Big O Tires.

If the franchisee is an individual, they can act as the Operator. Both the initial and any subsequent Operators and Managers are subject to approval by the franchisor. This approval is based on the successful completion of any required training by Big O Tires.

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