Jiffy Lube Franchise

Financing Details

Jiffy Lube International's parent company, SOPUS Products, offers several financing programs to franchisees. These include Advanced Funding, Growth Funding, Jiffy Lube Multicare Advanced Funding, and Jiffy Lube Multicare Growth Funding, as well as Significant Growth Funding and Significant Growth Advanced Funding for those meeting specific criteria under the Significant Growth Amendment. All of these programs provide funds that are repaid through the purchase of qualifying products from SOPUS Products over a period, typically up to five years, but up to ten years for Significant Growth Funding programs. The amount of funding is determined based on factors like the franchisee's creditworthiness and the service center's car count, multiplied by specific rates (e.g., Advanced Funding Rate is 35¢ per gallon, Jiffy Lube Multicare Advanced Funding Rate is 50¢ per gallon, Growth Funding Rate is 70¢ per gallon, and Jiffy Lube Multicare Growth Funding Rate is $1.00 per gallon). A key feature is that these financing options have a stated interest rate and APR of 0%. However, franchisees receiving funds must agree to purchase at least 85% of their featured motor oil (Pennzoil or Quaker State) and filter requirements from SOPUS Products for an agreed-upon term. Security for these funds typically involves a first lien on the service center's equipment, furnishings, and inventory, along with a personal guarantee, which may sometimes be waived.

Litigation Summary

Jiffy Lube International has been involved in 15 disclosed legal actions, including ongoing cases and resolved disputes. Currently, Jiffy Lube International has four pending cases. Two involve customers alleging negligent oil changes and consumer fraud; Jiffy Lube refers these to the respective franchisees for handling. A third pending case is a petition to confirm an arbitration award involving a franchisee's claims against Jiffy Lube and SOPUS related to performance metrics and rebate calculations, which was settled. The fourth case is a trademark infringement lawsuit against an unapproved operator for using Jiffy Lube branding. There are also two recent arbitrations where franchisees contested being required to sign the current Pacesetter Franchise Agreement upon renewal; one settled, and the other is awaiting a decision on a counterclaim. In its past legal history, Jiffy Lube International resolved several matters. These included a $50,000 settlement for a class action alleging deceptive practices regarding oil change schedules and a $97,000 settlement for an ADA compliance class action. Jiffy Lube also settled a class action for $2 million regarding "no-poaching" provisions in its franchise agreements, which allegedly stifled competition for workers. Other resolved cases include a wrongful termination lawsuit from a former franchisee, which was arbitrated in Jiffy Lube's favor, and a civil investigative demand from the Washington Attorney General concerning no-poaching clauses, leading to an agreement to formally amend existing franchise agreements. There was also a significant arbitration with a franchisee concerning contract breaches, rebates, and store closures, where the arbitrator found Jiffy Lube had improperly withheld rebates (ordering payment of over $8 million) but also found the franchisee had unauthorized closures (ordering payment of over $2 million in damages to Jiffy Lube).

Renewal Conditions

Jiffy Lube International franchisees must meet several conditions to renew their agreement. They are required to give written notice of their intent to renew between 6 to 12 months before the end of the initial term. At the time of giving notice and at the time of renewal, franchisees must not be in default of their agreement or any related agreements, and they should not have received more than two default notices (even if cured) within the prior five years. All financial obligations to Jiffy Lube International and its affiliates must be paid, and any indebtedness guaranteed by Jiffy Lube International or its affiliates must be settled. Franchisees are also required to complete all necessary maintenance, refurnishing, renovating, and remodeling of the service center, its equipment, and furnishings to meet Jiffy Lube International's current standards. They must execute a general release of claims against Jiffy Lube International and its related parties. The franchisee, along with their managers and employees, must meet Jiffy Lube International's current training requirements. The service center premises should not be subject to any pending environmental law violation notices, or the franchisee must show diligent efforts to comply. A renewal fee of $10,000, adjusted for inflation, is also required. The new franchise agreement for the renewal term will be Jiffy Lube International's then-current standard form, which may contain terms materially different from the original, including potentially higher fees or new service offerings.

Staffing Notes

Jiffy Lube International requires that each service center be under the personal supervision of the franchisee or a manager who has successfully completed the franchisor's operations training. This supervisor must be present or immediately available during opening, closing, and peak business hours, regularly inspect the center, and assist in employee training. For franchisees offering the Jiffy Lube Multicare Program, a specific staffing requirement is to have at least one technician with an ASE A5 certification for every one to five stores in their group. Furthermore, Jiffy Lube International outlines detailed training and certification levels for all employees, including Orientation & Safety, various J-Team Service Standards (JTSS) positions, Team Lead/Service Technician, Service Specialist, Advanced Specialist, Management Training, and Leadership Training, each with specific completion timelines and required percentages of staff for certification. Recertification is also required periodically depending on the certification level.