Costa Oil Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$156,000

-

$1,875,000

LOCATIONS

24

Adam

Updated

April 11, 2024

Is

Costa Oil

a franchise?

Yes,
Costa Oil
currently
accepts
franchise
applications

Costa Oil, headquartered in Hanover, Pennsylvania, is an automotive service chain specializing in rapid, no-appointment-needed, drive-through 10-minute oil changes, and a range of additional car maintenance services.

Established in 2014, Costa Oil ventured into franchising in 2020. By 2022, the company had successfully launched 18 locations in the US, with 15 of them being franchise-owned.

Driven by a strong commitment to customer service and an innovative business model, Costa Oil has emerged as an excellent choice for motorists seeking quick and hassle-free oil changes. The company is experiencing rapid expansion nationwide, with a presence in over 30 stores, as indicated on its website.

Costa Oil offers aspiring entrepreneurs and franchise owners a compelling business model with significant potential and opportunities. It provides a low-cost entry point and access to a recurring revenue stream.

How many

Costa Oil

franchises

are there?

In 2022, there were
24
outlets in
the United
States, of which
9
are franchises, and
15
are corporate-owned.

What are the

Costa Oil

franchise

fees?

Advertising fee

4.50%

Initial Franchise Fee

The Initial Franchise Fee for a Costa Oil franchise is a significant one-time payment of $54,900. This fee is an upfront investment by the franchisee, typically paid via cashier's check or wire transfer. It's a standard fee in franchising, granting the franchisee the right to use the Costa Oil brand and access initial franchisor support. This fee is crucial for entering into the franchise agreement, and facilitating the startup of the franchise under the established Costa Oil brand.

Royalty Fee

The Royalty Fee is a recurring obligation in the Costa Oil franchise model, set at 6.5% of Gross Revenue with a minimum weekly royalty of $150. This ongoing fee is a percentage of the franchise's gross income paid to the franchisor. Royalty fees are common in franchise agreements, reflecting the continuous use of the brand and franchisor support. The structure of this fee aligns the interests of the franchisor with the franchisee's success, as it is directly tied to the franchise's revenue.

Advertising Fee

In addition to the Royalty Fee, Costa Oil franchisees are required to contribute 2% of their Gross Revenue to a Brand Fund for advertising, paid every week. This fee is pooled for collective marketing and promotional activities that benefit the entire franchise network. Such a system ensures consistent and effective brand promotion, enhancing visibility and competitive advantage in the market.

The collective marketing approach allows for more impactful advertising than what individual franchisees might achieve on their own.

Lease or Rent Fee

For franchisees who opt to lease their business premises from Costa Oil, the Lease or Rent Fee applies. This fee pertains to leasing a prefabricated structure, known as a Kiosk.

The estimated initial costs for leasing a Kiosk range from $6,000 to $10,000, depending on factors like construction, delivery, and installation. This fee represents a significant part of the initial investment for franchisees who choose this leasing option, offering a streamlined start to their franchise operation with a ready-to-use business location.

Supplier Review Fee

Costs vary depending on several factors like the availability of product samples, shipping, travel costs, and the type of product under review. Estimated between $500 to $5,000, payable upon demand.

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

Costa Oil

franchise?

It costs between
$156,000
and
$1,875,000
to start a
Costa Oil
franchise.
Type of Expenditure Amount
Franchise Fee $54,900
Grand Opening Onsite Support Fee $10,000
Real Estate Commission Fee $8,000
Kiosk Lease $6,000 to $8,500
Ground Lease $1,500 to $5,500
Training expenses for travel, food, and lodging $2,500 to $5,000
Leasehold Improvements $5,000 to $8,500
Computer Hardware and Software $1,000 to $2,500
Legal and Accounting $1,500 to $3,000
Real Estate Due Diligence $100 to $30,000
Additional Funds – First 3 Months $23,000 to $28,000
Total $131,750 to $212,900

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

Costa Oil

provide

training

to its

franchisees?

Yes,
Costa Oil
provides
training

Costa Oil provides new franchisees with a comprehensive program covering various aspects essential to operating a franchise. Here are the key components of the training program:

  1. New Franchisee Training: This training is mandatory for the franchisee, their principal Operator, and any general manager. Up to three individuals per franchise are allowed to attend. The training ensures that the key personnel are well-equipped with the necessary skills and knowledge for managing the franchise efficiently.
  2. Training Program Structure: The program is comprehensive, including both classroom and on-the-job training. Conducted at the corporate headquarters and potentially via virtual sessions, it covers a wide range of topics crucial for running the franchise. These topics include an introduction to Costa Oil, software/POS training, management strategies, marketing, customer satisfaction, bookkeeping, key performance indicators, hiring and recruiting, employee scheduling, labor management, and risk management and compliance.
  3. On-Site Opening Assistance: Costa Oil offers additional on-site opening training and assistance, contingent upon the payment of a Grand Opening Onsite Support Fee. This service provides hands-on support during the initial stages of the franchise's operation, aiding in a smooth start.

Does

Costa Oil

provides

territory

protection?

Costa Oil offers territory protection for its franchisees. Each franchisee is granted an exclusive Marketing Area, where the franchisor agrees not to establish any other company-owned or franchised outlets that sell similar goods or services. 

This exclusive territory is typically defined by a population of about 50,000 people or spans a three-mile radius, with specific boundaries based on geographical or political markers. The exclusivity of a franchisee's territory is not contingent on sales volume or market penetration, ensuring secure operational space without direct competition from other Costa Oil outlets.

Can a

Costa Oil

franchise

be run as

a passive

investment?

Costa Oil's franchise system does not support a purely passive investment model. Franchisees are expected to actively participate in their business's operation.

While day-to-day management can be delegated to a designated and trained Principal Operator, the franchisee must maintain significant involvement in the business, precluding a completely passive investment approach.

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