Risk Score
Pending analysis
Investment Range
$315,200 - $512,000
Franchise Fee
$7,500
Total US Locations
124
Business Summary
Car-X operates retail automotive centers that specialize in the repair and replacement of various automotive products and services. These services include air conditioning, brake systems, general maintenance, muffler and exhaust systems, ride control products, and tires. Car-X Auto Service centers operate under brand names like "Car-X Auto Service" and "Car-X Tire & Auto."
Corporate History
Car-X, LLC was initially organized as C-X Acquisition, LLC on April 23, 2015, in Delaware, and later changed its name to Car-X, LLC on May 12, 2015. Car-X, LLC operates under various brand names including Car-X Auto Service and Car-X Tire and Auto. The company's parent is Monro, Inc., which has operated similar auto service facilities since 1966. Car-X, LLC's predecessor, CXAC, Inc., offered Car-X franchises from March 2002 until May 2015. On April 24, 2015, Car-X, LLC acquired most of CXAC, Inc.'s assets, including its trademarks and existing franchise agreements, thereby becoming the franchisor of the Car-X brand. Since May 2015, Car-X, LLC has been operating company-owned units and offering Car-X franchises.
Financial Overview
Investment Range
$315,200 - $512,000
Franchise Fee (Low)
$7,500
Franchise Fee (High)
$25,000
Royalty %
5%
Marketing %
10%
Equipment Costs (Low)
$237,000
Equipment Costs (High)
$325,000
Working Capital
$36,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Car-X, LLC's financial stability is primarily linked to its parent company, Monro, Inc., which provides an absolute and unconditional guarantee for Car-X, LLC's duties and obligations. As of March 30, 2024, Monro, Inc. reported a negative working capital of approximately $201.8 million, indicating that its short-term liabilities exceed its current assets. However, Monro, Inc. demonstrated strong operational cash flow, generating $125.1 million in fiscal year 2024. The company maintains a long-term debt of $102 million but has substantial available borrowing capacity of $467.9 million under its $600 million revolving credit facility. While Monro, Inc. was compliant with all debt covenants as of March 30, 2024, a recent amendment to its credit facility was made in May 2024. This amendment established a "Covenant Relief Period" through fiscal 2026, which includes relaxed financial covenants such as a reduced interest coverage ratio and minimum liquidity requirements for certain activities like dividends and acquisitions, and also prohibits stock repurchases if the credit facility has outstanding amounts. This suggests that Monro, Inc. is taking proactive steps to ensure financial flexibility and manage potential pressures in the coming years. Independent auditors have issued an unqualified opinion on Monro, Inc.'s consolidated financial statements and internal controls over financial reporting.
Financing Details
Car-X, LLC does not generally offer direct financing to its franchisees, nor does it typically guarantee a franchisee's obligations to third-party lenders. However, Car-X, LLC may sometimes sell existing company-operated units to franchisees on an installment basis, and in such cases, it might finance all or a portion of that sale. When Car-X, LLC provides this type of financing, the Annual Percentage Rate (APR) ranges from 6% to 10%, depending on the franchisee's creditworthiness. The repayment period for these loans can be quite long, ranging from 5 to 15 years. To secure this financing, franchisees are required to grant Car-X, LLC a security interest in all assets of their franchise, and the principals of the franchisee, along with their spouses, must personally guarantee the loan. Franchisees have the flexibility to prepay the loan at any time without incurring a penalty. Should a franchisee default on the loan, the entire outstanding balance becomes immediately due, and Car-X, LLC may take action to foreclose on the collateral. Franchisees should also be aware that Car-X, LLC may assign or sell these promissory notes to third parties, which could impact any legal defenses the franchisee might have. Additionally, if a franchisee asks Car-X, LLC to participate in their financing (e.g., by providing a guarantee), and Car-X, LLC agrees, the franchisee must then purchase the items being financed from a supplier designated by Car-X, LLC.
Performance Metrics
Total US Locations
124
Franchised Units
50
Corporate Units
74
Avg Square Footage
4,840
Franchising Since
2015
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Car-X has a clean legal record and states that no litigation is required to be disclosed in Item 3 of its Franchise Disclosure Document. This means Car-X and its management have not been involved in any material litigation or bankruptcy proceedings that would need to be reported to prospective franchisees.
Bankruptcy History
Car-X, LLC has no bankruptcy history to disclose, as no bankruptcy proceedings are required to be disclosed in Item 4 of this FDD document.
Agreement Terms
Initial Term
15 years
Renewal Term
5 years
Renewal Conditions
To renew their Car-X franchise, Car-X franchisees must provide written notice to Car-X at least 180 days before their current agreement term expires. Car-X will not unreasonably withhold consent to renewal, but valid reasons for denial include the franchisee being in default under their agreement, having repeated failures to timely pay obligations, not operating according to Car-X standards, having excessive customer complaints, or if Car-X has reasonable concerns about the franchisee's financial condition or creditworthiness. Additionally, Car-X may require Car-X franchisees to sign a general release of any claims against Car-X, its affiliates, and their personnel. They may also be required to execute the then-current standard Car-X Franchise Agreement (which may have materially different terms and conditions) and to refurbish their Car-X location to meet Car-X's current standards for decor, premises renovation, and equipment modernization.
Training & Support Program
Franchisor Assistance
Car-X provides extensive support to its franchisees before and during operation. Before opening, Car-X assists Car-X franchisees in obtaining and approving a suitable location, provides specifications and standard blueprints for construction or improvement, and furnishes lists of approved equipment and signage. Car-X also helps with recruiting, interviewing, hiring, and initial training of employees, and offers approximately one week of on-site setup assistance. Car-X loans franchisees a copy of the operations manual and assists with grand opening advertising programs. During operation, Car-X indemnifies Car-X franchisees against trademark infringement claims (if trademarks are used according to specifications), reviews alternate locations if a franchise site becomes unusable, and updates operational specifications for the Car-X system. Car-X provides one week of on-site setup and operational assistance immediately after opening (for new franchises). Operations managers periodically visit Car-X locations to evaluate operations and offer advice. Car-X provides guidance on product and service pricing, offers reasonable operational assistance by telephone, and may require a one-day performance assessment at its office about three months after opening (covering travel costs). Car-X designates authorized products and services, reviews potential new products and suppliers, and administers advertising and promotional programs, including reviewing franchisee-proposed advertising materials. Additionally, Car-X reviews prospective transferees if a franchisee decides to sell their business.
Initial Training Hours
135
Training Location
Car-X office in Schaumburg, Illinois, and at a Car-X Center
Ongoing Support
Car-X provides ongoing support to its franchisees through various channels. An operations manager periodically visits Car-X locations throughout the term of the agreement to evaluate operations and offer operational advice. Car-X also offers reasonable operational assistance by telephone, including advice on specific services or products, upon request. Car-X may require Car-X franchisees to attend a one-day performance assessment at the Car-X office approximately three months after their Car-X location has been in operation, with Car-X covering travel costs. Car-X designates the products and services that Car-X franchisees must or may offer and reviews requests for new products or suppliers. Car-X administers national, regional, and local advertising and promotional programs, consulting with Car-X franchisees in each market area on advertising decisions and generally following the majority's decisions. Car-X also reviews and approves all additional advertising materials proposed by Car-X franchisees. Car-X maintains Car-X system websites and social media accounts, allowing franchisees to participate under specified guidelines. Car-X may also require additional or refresher training courses for new products or services, currently without charge to Car-X franchisees. The Car-X Franchisee Dealer Council and an Advertising Committee serve in an advisory capacity for the system.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
full-time
Territory Type
protected
Territory Size Requirements
Car-X Auto Service franchisees generally receive a protected geographic area around their location, typically defined as a three-mile radius from the Car-X Center. This protected area excludes any existing Car-X Centers or those already under development when the franchise agreement is signed. The specific boundaries of a protected area may be adjusted based on factors like population density, car registrations, local competition, income levels, traffic visibility, or natural borders. For area development franchisees, Car-X grants a larger protected area, which might be defined by Designated Market Areas (DMAs), Metropolitan Statistical Areas (MSAs), political subdivisions (like cities, townships, or counties), or by streets and natural borders. The size of an area developer's territory is determined by population density and car registrations, as well as the number of franchises slated for development.
Staffing Notes
Car-X Auto Service requires the individual franchisee, or one or more principals if the franchisee is an entity, to dedicate their full time and effort to the actual management and operation of the Car-X Center. If the franchisee opts to have a manager handle on-site responsibilities instead of a principal, that manager must be approved by Car-X and may be required to successfully complete the initial training program. Car-X assists franchisees in recruiting, interviewing, hiring, and training their initial employees, and also provides one or more of its employees to help with shop setup for approximately one week before the grand opening. The franchisee is solely responsible for hiring all employees, determining their terms of employment and compensation, and providing proper training for them.