Big O Tires Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$511,500 - $1,882,500
Min Cash Required
$100,000
Total US Locations
462
Business Summary
Big O Tires, LLC offers franchises for the operation of retail stores that sell and service tires and related automotive products and services, known as Big O Stores. Big O also provides its franchisees with Big O branded tires and automotive accessories, and its affiliates offer real estate, equipment, signs, and services. Additionally, Big O operates wholesale businesses, selling both Big O and non-Big O brand tires and automotive accessories to franchisees and other buyers.
Corporate History
Big O Tires, LLC traces its origins to Big O Tire Dealers, Inc., a predecessor company established in 1962 as a purchasers' cooperative for associated tire dealers. Big O Tires, LLC itself was originally incorporated as a Nevada corporation in 1982 and converted to a limited liability company in 2007. The company has offered franchises for retail tire and automotive product stores since approximately 1982. Its predecessor had been offering dealer agreements since 1962 and franchises since 1980. Before 2006, Big O primarily offered Product Distribution Franchises, with some Business Format Franchise test programs that concluded around April 2006. The Big O network is currently transitioning from the Product Distribution Franchise model to the Business Format Franchise model, and new franchisees are only offered Business Format Franchises.
Financial Overview
Investment Range
$511,500 - $1,882,500
Franchise Fee (High)
$17,500
Minimum Cash Required
$100,000
Minimum Net Worth
$300,000
Royalty %
5%
Marketing %
4.5%
Equipment Costs (Low)
$310,500
Equipment Costs (High)
$1,253,500
Working Capital
$100,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
TBC Holdings, LLC, the indirect parent of Big O Tires, LLC, is a major independent marketer of tires. The company has recently shifted its operational focus, having sold, closed, or disposed of all its company-owned retail locations, including a significant sale in June 2023 which generated a substantial pre-tax gain on disposal of $320,192. As of March 31, 2024, no company-owned retail locations remain. The company's financial statements reflect no impairment of goodwill or intangible assets. However, a valuation allowance of $8,844 as of March 31, 2024, and $16,537 as of March 31, 2023, was deemed necessary for deferred tax assets, indicating some uncertainty regarding their realization.
Financing Details
Big O Tires, LLC offers various financing options. It may sublease or lease store premises to franchisees, with variable rental payments, a security deposit, and personal guarantees required. For eligible franchisees participating in incentive programs (such as U.S. Military Veteran & First Responder, Additional Store Development, Multi-Store Conversion, New Franchisee, or Key Person New Store Incentive), Big O Tires offers financing up to $100,000 for initial tire inventory and up to $100,000 for initial store equipment. Inventory loans generally have a 'prime rate' plus 3% interest over 36 months, though some 12-month inventory loans may have no interest. Equipment loans typically have no interest over 12 months. These loans are secured by the store's assets and a personal guarantee. An alternative financing option of a $150,000 trade account credit is available for certain Additional Store Development and Multi-Store Conversion programs; this loan is forgiven if the store achieves $3,000,000 in Gross Sales within two years, otherwise, franchisees repay 5 cents for every dollar below that target. Big O Tires may also offer other discretionary financing for inventory or equipment at 'prime rate' plus 3% interest, typically for up to 36 months, also secured by store assets. Big O Tires does not guarantee obligations to third parties, nor does it receive payments for placing financing.
Performance Metrics
Total US Locations
462
Franchised Units
462
Corporate Units
0
Avg Square Footage
6,240
Franchising Since
1982
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
5
Litigation Summary
Big O Tires, LLC has been involved in several past legal disputes. The case of Fratilla, Brian Jeffrey v. Big O Tires, LLC, a class action filed in 2013, alleged that a former tire protection program was an unregistered insurance contract. This case was settled for $2.05 million in 2018. The TBC Retail Group Wage and Hour Cases, coordinated class actions from 2012, involved claims of unpaid overtime and other wage violations at Big O company-owned stores, settling for $1.84 million in 2019. In Black Donuts, Inc. et al. v. Sumitomo Corporation et al., filed in 2009 by current and former franchisees, allegations included false statements, breach of contract, and fraud. This case was settled with a nominal payment from Big O, which also received $42,500 from some plaintiffs, and was dismissed in 2016. Sonoma Tires, Inc. v. Big O Tires, LLC, a 2011 case by a former franchisee, alleged favoritism among franchisees, and was dismissed in 2015 to mitigate litigation expenses. Additionally, in 1993, Big O Tires, Inc. and certain San Diego franchisees entered into an administrative stipulation regarding advertising practices, agreeing to pay $35,000 in costs and civil penalties, with Big O's portion being $25,000. Big O Tires, LLC reports no litigation to recover royalties, trade account debts, or rental obligations, or to honor post-termination obligations, was filed against franchisees or former franchisees in the last fiscal year.
Bankruptcy History
Big O Tires, LLC has no bankruptcy information required to be disclosed.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew, Big O Tires franchisees must provide advance notice, demonstrate legal control of their store premises, and sign the then-current form of franchise agreement, which may have different terms and fees. Franchisees are also required to refurbish their store to meet current brand standards, pay a successor franchise administration fee, and sign a general release. They must also meet all compliance standards of the Franchise Agreement and the Big O System, as well as any other conditions required by Big O Tires.
Training & Support Program
Franchisor Assistance
Big O Tires provides comprehensive assistance to its franchisees, starting with pre-opening support including site selection criteria and inspection, prototype store plans, initial training for one person (online, facilitated, and field-based), and help with initial inventory selection, store layout, merchandising, and display. Ongoing support, some of which may incur a fee, includes providing a source for Big O private brand tires, offering marketing research to the Franchise Advisory Council, and recommending tire prices. Big O also makes available programs from approved parts vendors and provides e-mail accounts. Additional training for operators and personnel, regional training, field assistance, inspections, merchandising advice, point-of-sale advertising, and electronic copies of commercials are available, with fees potentially applying to additional training. Big O Tires manages national marketing and advertising programs, local advertising funds, and regional funding plans, with franchisee contributions. It also handles digital marketing, including search engine marketing and customer relationship management. All franchisees must use the mandated BOT POS System with TBC Hardware Model, including Navex licensing, installation, maintenance, and training, with optional QuickBooks integration. Big O Tires also maintains an online Business Center for franchisees and provides e-mail accounts for communications. For site selection, Big O provides criteria, inspects sites, and requires formal written approval, potentially involving a Lease Option or Lease Rider. Training is extensive, including initial programs for one person (built into the franchise fee), with fees for additional trainees and transferees, and mandatory participation in the AMRA Motorist Assurance Program test for employees.
Initial Training Hours
275
Training Location
Palm Beach Gardens, Florida
Ongoing Support
Big O Tires provides ongoing support for franchisees through several avenues. This includes offering a source for Big O private brand tires, conducting ongoing marketing research for the Franchise Advisory Council, and providing recommended prices for Big O brand tires. Franchisees also gain access to programs from approved parts vendors and are provided with e-mail accounts. For an additional fee, Big O Tires offers supplementary training for operators and other personnel, regional training sessions, field assistance, inspections, and merchandising advice. The franchisor also supplies point-of-sale advertising materials and electronic copies of radio and television commercials. Big O Tires requires participation in a customer relationship management (CRM) program and a digital marketing program, with costs covered in part by the National Marketing Program. Franchisees have access to the Big O Tires Website Business Center and must use provided e-mail accounts for communications. An optional online Learning Management System is available for ongoing training, which may incur a fee. Onsite training can also be provided by national training staff upon request or initiative by Big O. Franchisees must also ensure their employees complete and pass a Motorist Assurance Program test.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
non-exclusive
Territory Size Requirements
Big O Tires defines territories by agreeing not to operate or grant rights for more than one Big O Store per 50,000 persons residing in a franchisee's designated Trade Area. The Trade Area may be redefined based on population changes. Additionally, Big O Tires will not allow another Big O Store within a two-mile radius of an existing store without the franchisee's prior approval. For proposed new stores within a five-mile radius of an existing store, franchisees are given a first option to acquire the franchise for that additional location.