Midas Franchise

Financing Details

Midas International, LLC offers direct financing for renewal fees, allowing franchisees to pay in two or twelve interest-free installments over one year. For qualifying existing, transfer, and area developer franchisees, Midas may also permit payment for an initial tire order of at least 160 units in 12 equal monthly installments over 12 months, with no interest. This tire order financing is secured by the franchisee's accounts receivable, inventory, equipment, fixtures, intangibles, and other assets of the Midas Shop, as well as a personal guaranty from the owners. In case of default, payments can be accelerated, and an 18% annual interest rate may apply. For real estate, if a Midas affiliate owns or leases the property, the franchisee will lease or sublease it from the affiliate. The rent payments will include the financed costs associated with acquiring the site and constructing the building. Other than these specific programs, Midas International, LLC does not offer direct or indirect financing and does not guarantee franchisee notes, leases, or other obligations with third parties.

Litigation Summary

Midas International, LLC and its affiliates have been involved in six legal cases. In 2020, Midas was involved in an arbitration with a former franchisee, VieRican, LLC, in Hawaii. The franchisee claimed wrongful termination and other breaches; the arbitrator found Midas's termination justified but that Midas improperly assumed a lease, leading to a settlement where Midas paid $203,362.67. Another set of class actions, TBC Retail Group Wage and Hour Cases, related to company-owned Big O Stores in California, settled in 2018 for $1.84 million. In 2018, Midas entered into a stipulated judgment with the People of the State of California concerning a Midas franchisee's alleged violations of automotive repair and hazardous waste laws and fraudulent behavior. Midas agreed to franchisee oversight and paid $210,000 in penalties and customer assistance; this matter was concluded with a full satisfaction of judgment in June 2024. In Canada, a Midas Canada franchisee filed a lawsuit in 2015 claiming rescission of the franchise agreement, which was resolved in 2016 for Cdn $414,359. Midas International Corporation was also sued in Italy in 2011 by MESA S.p.A. for alleged breach of a license agreement; this dispute was resolved in 2014 with a new trademark license agreement for Europe and Africa for $35 million over time. Most recently, Midas International, LLC filed a lawsuit on May 16, 2023, in Louisiana against K & H Automotive Services, LLC and individuals to recover royalties, trade account debts, or rental obligations. The status of this ongoing case is not disclosed.

Renewal Conditions

To renew their franchise relationship, Midas franchisees must be in good standing, including credit, building maintenance, and system participation. They are required to sign Midas's then-current Franchise Agreement, a Renewal Agreement, applicable Real Estate Documents, and a general release (if state law permits). These new documents may contain terms and conditions that are materially different from their original agreements, potentially including new fee requirements. Midas may also impose additional conditions for renewal, such as requiring shop renovation or relocation.

Staffing Notes

Midas Shops require the franchisee or a designated owner to actively manage and operate the Franchised Unit full-time on-premises. If the franchisee is a business entity, a Designated Owner, who must hold an equity interest unless Midas agrees otherwise, is appointed to manage the shop and act as the primary contact with Midas. This Designated Owner must dedicate full time and effort to the shop's management and operation, and hold ultimate authority and responsibility. Franchisees and their Designated Owners, along with any other designated management or supervisory personnel, must successfully complete Midas's Operations Training Program before the shop opens. If a Designated Owner is replaced, the new individual must also complete this training to Midas's satisfaction. Midas emphasizes that its system is built on direct, personal, and active ownership and management. Franchisees are solely responsible for all aspects of employee recruitment, hiring, firing, and supervision. Employees of a Midas Shop are the franchisee's responsibility, not Midas's, and the franchisee retains sole authority and control over daily operations and employee management. While Midas may offer advice and training programs, these are intended to protect the Midas brand and trademarks, not to control the day-to-day management of the Midas Shop.