Orozco's Auto Service Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$24,950 - $267,500
Total US Locations
5
Business Summary
Orozco's Auto Service franchises operate auto repair shop businesses. The franchise offers two models: converting an existing auto service establishment into an Orozco's Auto Service franchise, or purchasing an already operating Orozco's Auto Service business. Orozco's Auto Service aims to provide services for a wide range of vehicles, primarily targeting middle to upper-income customers.
Corporate History
Orozco's Franchise, LLC was organized on May 1, 2018, as a California limited liability company. It began offering Orozco's Auto Service franchises for sale in 2018. The franchisor itself does not operate the franchised auto repair businesses, but its affiliate, Orozco's Auto Service, Inc., operates five Orozco's Auto Service businesses in Southern California, with the first one opening in 1999.
Financial Overview
Investment Range
$24,950 - $267,500
Royalty %
6%
Marketing %
2%
Equipment Costs (Low)
$17,000
Equipment Costs (High)
$225,000
Working Capital
$1,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Orozco's Auto Service is currently undercapitalized, according to the FDD's special risks section. The auditors also note in Item 21 that as of December 31, 2023, Orozco's Franchise, LLC had no franchisees, had not yet commenced principal operations, and had no operations other than raising member capital. This means there is no assurance that operations will commence as planned. This indicates a significant financial risk for potential franchisees, as the franchisor may not be able to meet its pre-opening obligations to all franchisees.
Financing Details
Orozco's Auto Service does not offer any direct or indirect financing to its franchisees. The franchisor also does not guarantee any franchisee's notes, leases, or other obligations.
Performance Metrics
Total US Locations
5
Franchised Units
0
Corporate Units
5
Avg Square Footage
6,100
Franchising Since
2018
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
Orozco's Auto Service's affiliate and its owners, Servando Orozco and Cindy Orozco, have been involved in two lawsuits with a former employee, Frank Chavez Hidalgo. The first case, filed in April 2021, alleged various California Labor Code violations, including wage and hour issues and wrongful termination. This case was settled out of court in March 2023 for $20,000, with no admission of liability, and received final court approval in January 2024. The second case, a Class Action lawsuit filed in June 2022, also by Mr. Hidalgo, alleged violations of the Private Attorney General Act and other California Labor Code issues. This class action was settled out of court in March 2023 for a Gross Settlement Amount of $130,000, with no admission of liability, and received final court approval in January 2024. Both cases were resolved within the last three years from the FDD issuance date.
Bankruptcy History
Orozco's Auto Service has no bankruptcy information required to be disclosed in Item 4 of its Franchise Disclosure Document. Therefore, Orozco's Auto Service and its key personnel have no reported bankruptcy history.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their Orozco's Auto Service franchise agreement, franchisees must notify the franchisor between 90 and 180 days before the current term ends. They must be in full compliance with their franchise agreement and any other agreements with the franchisor or its affiliates. Franchisees are also required to make any necessary renovations or changes to their business to meet the then-current brand standards. Additionally, they must sign the franchisor's current standard franchise agreement, which may have different terms, and execute a general release of any claims against the franchisor and its related entities.
Training & Support Program
Franchisor Assistance
Before opening, Orozco's Auto Service assists franchisees by providing a thorough inspection of their existing auto service business and a detailed report of necessary conversions, or providing specifications for a newly purchased location. This includes suggested staffing levels, operational instructions in the manual, and lists of approved products, services, and suppliers. The franchisor also conducts an initial training program for the Principal Executive and up to two other employees, and provides at least five days of on-site support for the business opening. After opening, Orozco's Auto Service will designate required products, services, and suppliers. The franchisor responds to requests for operational input via telephone or electronic communication, provides recommended prices and administrative procedures, manages the Marketing Fund, and maintains a website with a page for each franchisee's location. If in-person support is requested, a daily fee plus expenses may apply.
Initial Training Hours
86
Training Location
Our Affiliate's CA Location, Franchisee's Location or another designated location
Ongoing Support
After opening, Orozco's Auto Service designates products, services, and suppliers for franchisees to use. The franchisor provides advice and consulting by telephone or electronic communication for business improvement and operational problem-solving. It offers recommended prices for products and services and provides recommended administrative, bookkeeping, accounting, and inventory control procedures. Orozco's Auto Service also manages the Marketing Fund and maintains the brand website, including a page for each franchisee's location. Additionally, the franchisor provides videos online for training every job, scripts and job descriptions, and conducts update training for owners, managers, and service advisors every six months.
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
Protected
Territory Size Requirements
Orozco's Auto Service franchisees receive a protected territory defined as a 2-mile radius from the public entrance of their franchised business. Within this 2-mile radius, the franchisor will not open another Orozco's Auto Service outlet or license another party to do so.
Staffing Notes
Orozco's Auto Service provides suggested staffing levels, though hiring decisions and employment terms are the franchisee's sole responsibility. Franchisees must designate a "Principal Executive" who is primarily responsible for the business and has decision-making authority. This individual must dedicate substantial time to the business, complete all initial and post-opening training programs, and attend required meetings. The franchised business must at all times be under the on-site supervision of the franchisee or a general manager who has completed the franchisor's training program. If the business is owned by an entity, the franchisor does not require the general manager to own equity. If requested, the general manager and other key employees must sign confidentiality and non-compete agreements. Initial training is provided for up to 3 attendees, including the Principal Executive.