Recall that, per our March description of the operations within Driven Brands (DRVN), we consider that their Take 5 Oil Change is their “golden goose”. The “Maintenance” segment of DRVN contains (as of 12/31/23) 652 company operated and 355 franchised units. The store level economics are excellent, and the uniquely progressive royalty structure (royalty rebates in first two years, depending on performance) is especially appealing. This is why about 98 franchised locations (a 40% growth rate) and 59 company operated units were opened in calendar ’23, and that pace is expected to continue.
Driven Brands’ management presented at a conference last Wednesday morning (6-5-24), and (to our knowledge) for the first time, disclosed the following information relative to the franchising effort at Take 5.
There are 59 total franchisees, 30+ of which have signed 2nd and/or 3rd Area Development Agreements.
There are 800+ total franchisee store commitments, less the (roughly 400 current locations) or 400+ current new store commitments, which would obviously be more than a double over the current franchised base.
There are 225+ franchisee real estate deals approved, representing something like the next two years of development.
There are 110+ total active area development agreements in place.
For our readers with more interest, below is a link to the entire transcript from last week.
Subscribers can also review our report from March. DRVN is down about 20% since our recommendation. If we liked it at $13.80, we are even more enthusiastic at this level.
Roger Lipton