Valvoline Instant Oil Change Franchise

Financing Details

Valvoline Instant Oil Change Franchising, Inc. offers several financing options. Franchisees may lease required signage directly from the franchisor for a 10-year term with no interest, with payments based on the actual signage cost (up to $60,000 for new franchisees). Upon full payment, ownership of the signage is assigned to the franchisee for a nominal fee. The franchisor also collaborates with Bank of America for a financing program that allows qualified franchisees to finance expenses related to equipment, business value, real estate, and real estate construction. Loan terms vary, with business term loans up to 5 years (amortized over 10 years) and real estate loans up to 5 years (amortized over 15 years), bearing variable interest rates (Prime Rate plus a percentage, with a 0.25% reduction for Bank of America account holders). A 0.50% loan processing fee applies. The franchisor guarantees 'Growth Loans' to borrowers who don't meet standard credit requirements, receiving up to a 1% fee from Bank of America for these guarantees. Additionally, Valvoline Instant Oil Change Franchising, Inc. offers incentive programs, such as the 'Bounty Program,' which provides advances structured as 15-year, zero-interest promissory notes. These notes are repaid only if the franchisee defaults on their agreements. Incentive amounts are based on projected oil changes (e.g., $10 per oil change projection for ground-up or converted centers, or a flat $100,000 for converted centers without historical data), with a 'true-up' adjustment after 18-24 months based on actual performance. A 'Good Standing Bonus' may also be offered based on compliance.

Litigation Summary

Valvoline Instant Oil Change Franchising, Inc. has disclosed three concluded legal actions, with no pending or recent litigation identified within the last three years (since December 2021). The first case, Gary Stepp, et al. v. West Virginia Oil & Lube LLC, was a class action filed in 2002 against a Valvoline Instant Oil Change franchisee and its affiliates. It concerned deceptive advertising related to an environmental service fee charged by the franchisee. The matter was settled in 2014-2015, resulting in coupons for customers and attorney fees, with Valvoline Instant Oil Change Franchising, Inc. denying direct involvement in the fee's disclosure. The second case, Valvoline Instant Oil Change Franchising, Inc. v. RFG Oil, Inc., involved a lawsuit filed in 2012 by Valvoline Instant Oil Change Franchising, Inc. and its affiliates against a former franchisee for trademark infringement, unfair competition, and breach of contract following the termination of their franchise relationship. The former franchisee filed counterclaims. This case was settled confidentially in 2015, with Valvoline Instant Oil Change Franchising, Inc. paying $365,000 to the former franchisee. The third action, In Re: Franchise No Poaching Provisions, State of Washington, was brought by the Washington Attorney General in 2018 regarding clauses in Valvoline Instant Oil Change Franchising, Inc.'s license agreements that limited franchisee employees from being solicited or hired. Valvoline Instant Oil Change Franchising, Inc. entered an Assurance of Discontinuance in 2018, agreeing to remove these 'no-poach' provisions from future agreements and not enforce them in existing ones, with amendments to be made over time.

Renewal Conditions

To renew their franchise agreement, Valvoline Instant Oil Change franchisees must meet several conditions. These include conducting a pre-renewal review with the franchisor at least 18 months before the current term expires to discuss and agree upon any necessary image, maintenance, refurbishing, renovating, or remodeling work for their center and its equipment. Franchisees must provide written notice of their intent to renew 12 to 18 months before the term ends; otherwise, a five-year renewal term is assumed. Renewal requires the franchisee to be in good standing, meaning they have no outstanding uncured defaults under their License Agreement or any other agreements with Valvoline Instant Oil Change Franchising, Inc. or its affiliates, and have satisfied all monetary obligations. They must also sign the franchisor's then-current form of license agreement (which may have materially different terms except for royalty percentages and advertising contributions, which will be conformed), demonstrate the right to possess their approved location for the renewal term (or obtain approval for a new location within their territory), comply with current qualification and training requirements, and execute a general release of claims against the franchisor and its affiliates. A renewal fee of $2,500 for a 5-year term or $5,000 for a 10-year or 15-year term is also required upon election to renew.

Staffing Notes

Valvoline Instant Oil Change franchisees are responsible for ensuring that all managers and employees are adequately trained in the SuperPro® training materials for the system and that the SuperPro® System is consistently utilized at the center. The initial manager for each center must successfully complete the franchisor's manager training program, including the SuperPro® training. Franchisees are also required to ensure that all subsequent managers satisfactorily complete this program. The franchisor may conduct audits at any time to verify compliance with the SuperPro® System. Furthermore, franchisees must comply with prescribed dress codes and maintain a competent, conscientious, and trained staff to ensure good customer relations.