Risk Score
Pending analysis
Investment Range
$23,500 - $804,300
Total US Locations
455
Business Summary
CARSTAR offers franchises to operate full-service automobile collision repair facilities. These facilities are identified by the CARSTAR brand name and utilize a system that includes regional marketing, preferred vendor relationships, business analysis, and financial support. CARSTAR provides services primarily to the insurance industry, but also to commercial accounts and individual automobile owners. The business model strongly emphasizes insurance-related collision repair work.
Corporate History
CARSTAR Franchisor SPV LLC was established in Delaware on October 7, 2015. However, the CARSTAR brand, through its predecessors, began offering conversion franchises for existing automobile collision repair facilities in August 1989. The company expanded its franchising efforts to include new automobile repair facilities in October 1995. In May 2016, CARSTAR Franchisor SPV LLC officially took over as the franchisor for all CARSTAR franchise agreements and acquired the associated U.S. trademarks. CARSTAR is a wholly-owned subsidiary of Driven Systems LLC, which itself is part of the larger Driven Brands, Inc. family, a publicly traded company. Driven Brands, Inc. provides necessary support and services to CARSTAR franchisees through a management agreement. The CARSTAR brand has consistently focused solely on the automobile collision repair business since its inception.
Financial Overview
Investment Range
$23,500 - $804,300
Franchise Fee (High)
$10,000
Minimum Net Worth
$1,000,000
Royalty %
4%
Marketing %
1%
Equipment Costs (High)
$400,000
Working Capital
$47,000
Audited Financials
No
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
CARSTAR Franchisor SPV LLC's financial statements are unaudited. However, audited financial statements are provided for its parent company, Driven Systems LLC, and its indirect parent, Driven Brands Inc. Both Driven Systems LLC and Driven Brands Inc. have received unqualified audit opinions, indicating their financial statements are presented fairly in all material respects, and no going concern issues are noted for either. Driven Systems LLC guarantees CARSTAR's performance. CARSTAR is an indirect subsidiary that has guaranteed indebtedness incurred in connection with various secured financing transactions of Driven Brands, Inc. CARSTAR Franchisor SPV LLC's own unaudited balance sheet shows total assets of $11,858,000, total liabilities of $2,657,000, and members' equity of $9,201,000, reflecting a positive equity position.
Financing Details
CARSTAR does not offer direct or indirect financing to its franchisees. The franchisor also does not guarantee any franchisee notes, leases, or other obligations. Franchisees are responsible for securing their own financing through external sources.
Performance Metrics
Total US Locations
455
Franchised Units
455
Corporate Units
0
Avg Square Footage
16,000
Franchising Since
1989
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
10
Litigation Summary
CARSTAR has disclosed ten litigation cases. Four of these were franchisor-initiated lawsuits filed in 2023 against former franchisees and their guarantors for issues such as unpaid amounts and unauthorized facility transfers; all these cases have been settled. One pending securities class action lawsuit was filed in December 2023 against CARSTAR's indirect parent company, Driven Brands Holdings Inc., and its CEO (who also serves as CARSTAR's Manager, CEO, and President), alleging misrepresentations regarding acquisitions. Another concluded case from 2021-2022 involved a former franchisee alleging wrongful termination, which CARSTAR countered with claims of trademark infringement and breach of contract; this was settled in February 2022, with CARSTAR paying $10,000 for de-identification and waiving a non-compete clause. There is also a pending lawsuit from December 2022 involving a former franchisee of Take 5 Oil Change (a Driven Brands affiliate) in Canada, alleging breach of disclosure and fair dealing provisions against Take 5 Canada and CARSTAR's CEO. Additionally, an older case from 2011 involved a CARSTAR affiliate, Econo Lube N' Tune, settling with the State of Arizona for alleged unfair trade practices, resulting in a consent judgment that remains in effect. Three other older cases from 2019 involved Arby's and Dunkin' Brands (also Driven Brands affiliates) settling with state Attorneys General over "no-poaching" provisions in their franchise agreements, and Dunkin' Brands settling a lawsuit related to cyberattacks.
Bankruptcy History
CARSTAR has no bankruptcy history to report. No bankruptcy is required to be disclosed in this Item.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, CARSTAR franchisees must provide written notice of their intent to renew at least 180 days before the Initial Term expires. Franchisees and all Owners must sign the then-current form of franchise agreement, which may include terms that are materially different from their existing agreement, and a general release of any claims against CARSTAR and its affiliates. Franchisees must be in good standing, meaning they must not be in default of any existing agreements with CARSTAR or its affiliates and must have substantially and timely complied with all terms. All monetary obligations to CARSTAR and its affiliates must be satisfied. A renewal processing fee of $1,000 is required. Franchisees must also prove they have the right to continue occupying their facility premises or secure approval for a new site, and they must meet CARSTAR's current qualification and training requirements.
Training & Support Program
Franchisor Assistance
CARSTAR provides comprehensive assistance to its franchisees, starting with a pre-opening EDGE Integration Program. This program includes site selection approval (for new facilities), lease approval, and extensive onboarding and coaching from various departments like franchise services, operations, training, marketing, technology, and procurement. Initial orientation training is provided, consisting of 2.5 days of classroom instruction and one day of on-the-job training. Franchisees also receive a $1,000 credit for interior and exterior branding kits, access to the web-based training platform 'Collision University', and support for setting up insurance certificates, phone greetings, financial report submissions, and implementing the CARSTAR Solution® software. Ongoing support includes continuous consultation and advisory assistance. CARSTAR organizes 'EDGE Performance Group' (EPG) Meetings to help franchisees review operations, management practices, and cost efficiencies. The franchisor establishes ongoing training requirements, with courses available through Collision University for an annual fee. Periodic facility inspections are conducted, and CARSTAR maintains its brand website, assisting franchisees in developing approved webpages for their facilities. The franchisor also administers a Limited Lifetime Nationwide Warranty program and provides a telephone number for customer referrals, questions, and complaints. Franchisees receive assistance with applications for Corporately Managed Insurance Programs (CMIPs) and direct repair programs (DRPs), and support for developing and implementing annual local marketing plans.
Initial Training Hours
22
Training Location
Charlotte, North Carolina
Ongoing Support
CARSTAR provides a range of ongoing support services to its franchisees after opening. This includes continuous consultation and advisory assistance from CARSTAR personnel. Franchisees can participate in 'EDGE Performance Group' (EPG) Meetings, designed to help them review operations, management practices, and cost efficiencies (though franchisees are responsible for their own travel and lodging costs, and there is currently no participation fee). CARSTAR also sets ongoing training requirements, offering pre-approved courses and educational resources, including required online courses through 'Collision University' for an annual fee. The franchisor conducts periodic inspections of facilities to ensure compliance with brand standards. CARSTAR maintains a central website and assists franchisees in developing approved webpages for their individual facilities, while retaining control over online listings and requiring cooperation for competitive search engine rankings. A Limited Lifetime Nationwide Warranty program is administered by CARSTAR, which also maintains a central telephone number for customer referrals, questions, and complaints. Additionally, CARSTAR assists franchisees with submitting applications for participation in Corporately Managed Insurance Programs (CMIPs), including direct repair programs (DRPs) and performance-based agreements (PBAs). Franchisees can also receive assistance in developing and implementing an annual local marketing plan.
Franchise Requirements
Ideal Candidate Profile
CARSTAR does not provide a detailed ideal candidate profile describing specific backgrounds, experiences, or personal characteristics in its Item 1. However, the FDD indicates that success depends heavily on the franchisee's business abilities and active participation in the daily operations of the business. Franchisees are expected to have sufficient knowledge and experience in financial and business matters to make informed decisions. The franchisee, or a designated general manager, must devote full-time efforts to the management and operation of the facility, ensuring competent, conscientious, and trained staff are maintained. For multi-unit developers, a full-time managing director is required.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Supervisory
Territory Type
Protected
Territory Size Requirements
For an individual CARSTAR facility, the territory includes a protected area defined as a one-mile radius around the facility, meaning CARSTAR will not establish another CARSTAR facility within this radius. For franchisees who sign an Area Development Agreement, development areas are defined using county boundaries. The size and boundaries of these development areas vary based on market economic conditions, the number of CARSTAR facilities the developer agrees to open, demographics, and site availability. There is no minimum size for these development areas.
Staffing Notes
CARSTAR franchisees are solely responsible for hiring, training, and managing all employees at their facility, including determining their compensation, promotions, and work schedules. Franchisees must maintain a staff of trained employees sufficient to operate the facility according to CARSTAR's standards. They are required to comply with all federal, state, and local labor laws, including minimum wage and overtime requirements, and to conduct criminal background checks on all employees. The general manager, who may be the franchisee, or other managerial personnel, must dedicate full-time effort to managing and operating the facility. For those with an Area Development Agreement, a Managing Director must be hired and devote full-time efforts to the management and/or supervision of CARSTAR facilities within their designated area. CARSTAR explicitly states it does not assume responsibility or liability for franchisee employee matters.