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Big O Tires Franchise Cost & Fees

Date of Incorporation: 1962
Franchising Since: 1982
Headquarters: Palm Beach Gardens, Florida

Business Description: Big O Tires, LLC is the franchisor. The franchisor offers franchises for the operation of retail stores selling and servicing tires and related automotive products.

Franchise Offer: Big O offers two franchise models: Product Distribution Franchises and Business Format Franchises.

Financial Assistance: Big O offers four financing programs to franchisees. The franchisor reserves the right in its sole discretion to deny participation in any of these programs to any franchisee.

Training and Assistance: Big O will provide training for one person in the operation of the Big O store online and at one or more locations designated by the franchisor, and the franchisor will provide field training and certification for that one person at a Big O Store. In certain cases, the franchisee must take part in additional training. Big O may periodically offer online training classes and host webinars for franchisees. Big O also holds national conventions, which are currently held annually.

Territory: The Franchise Agreement grants to the franchisee the right to operate one Big O store at a single location. The franchisor agrees not to operate for itself or grant to any other person the right to operate any more than one Big O Store for every 50,000 persons residing in the franchisee’s Trade Area.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years. The term can be renewed for an additional 10 years, if requirements are met. The franchisor may agree to a shorter term, in its sole discretion, if the franchisee’s sublease or lease term does not equal the full term of the Successor Franchise Agreement.

Obligations and Restrictions: The Big O Store will only be operated by the operator or a manager employed by the franchisee who is subject to approval by the franchisor, in its discretion, may exercise the right to approve or disapprove the original and later operators and mangers. The operator or manager and those managerial personnel of the franchisee as selected, shall complete, to the Big O’s reasonable satisfaction, all training programs, which it requires or provides. The franchisee must comply with all published rules, regulations, policies and standards established by the franchisor, including those contained in the Manual.

Estimated Number of Units: 395

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $0 $30,000
Initial Training - Fees, Travel & Lodging Expenses $1,000 $7,800/span>
Real Estate Leases (One to Three Months' Rent Plus Security Deposit)< $4,000 $64,000
Equipment, fixtures and other fixed assets $100,000 $325,000
Construction, Remodelling, Leasehold improvements and Decorating Costs $5,000 $350,000
Signs $10,000 $35,000<
Grand Opening Advertising $10,000 $50,000
Initial Inventory $55,000 $125,000
Insurance and Other Security (3 months) $2,000 $5,000
Computer Hardware and Software $16,200 $18,900
Non-recurring Pre-opening Costs $5,000 $35,000
Additional Funds (up to 12 months) $50,000 $150,000
Total Estimated Initial Investment $258,200 $1,195,700
Other Fees
Type of Fee Amount
Royalty (Product Distribution Franchises) 2% of each month's Gross Sales.
"Local Fund" for advertising and related expenditures A minimum of 4% of each month's Gross Sales, subject to increases or reductions in certain cases (currently reduced to a minimum of 3.6% based on certain marketing programs).
National Marketing Fee Currently set 0.85% of each month's Gross Sales (raised from the amount of 0.25% while certain marketing programs are in effect).
National Auto Service Warranty and Roadside Assistance Plan Currently $50 per store, per month, but can be changed by vendor.
Point of Purchase Packages Not more than $1,500 per year, as adjusted each year in accordance with Big O policies.
Market Reservation Fee Will vary by circumstances, but generally will be in the range of $2,500 to $6,000
Retail Accounting Centres (RAC) Varies based on services provided, but not less than $200 per month.
National Fleet Accounts Administrative Fees Varies, currently up to 11% of Gross Sales to certain National Account Customers.
AMRA Motorist Assurance Program Fees and Dues Currently $1.00 per year, but subject to change.
Transfer Fees $1,500 upon a transfer involving an assignment of the Franchise Agreement or a change in control. If the transfer does not involve an assignment of the Franchise Agreement or a change in control, the transfer fee is equal to Big O's expenses relating to the transfer up to $1,500
Insurance Administrative Surcharge 10% of cost of insurance.
Interest on Late Payments Lesser of 18% per annum or maximum rate of interest allowed by law.
Renewal Administrative Fee Varies.
Store Management Fee As set by Big O periodically; no amount is currently set.
Hiring of Big O employees Will vary, depending on the type of employee hired.
Real Estate Rental and Fees Varies.
Training Fees Will vary.
Training Fees (TBCUniversity.com) No charge during the first partial year until the next March 31; charges may apply in future years.
National Convention Registration Fee Varies depending on location and cost of the national convention. The most recent national convention fee was $295 per adult. Occasionally such fees have been waived for early registration or in conjunction with meeting certain sales targets.
Resale Fee $5,000
Products and Services Will vary.
DST End User Software License Agreement Fees Amount per Store:
One-time Fees:
a. License Fee: $1,000
b. Installation fee: $999
c. Conversion fee: $500
d. On-Site Training and Go-Live Support Fee: $4,200-$5,000 ($4,200 for 5 days of On-Site Go-Live Support Fees plus travel, lodging and meals expenses).

Monthly Maintenance and support: $219 per month, which may be raised in accordance with the DST End User Software License Agreement.
Fees for Miscellaneous Assistance Will vary.
Indemnification Will vary under circumstances.
Costs and Attorneys' Fees Will vary under circumstances.
Audit fees Will vary under circumstances.
Bond Varies; actual amount determined by the franchisee’s Local Group.
Rebill Charge Currently 0.69% to 19.9% of the price of the tires purchased (or up to 36.64% for trailer tires), subject to change.
Interest Big O may charge the franchisee interest on various loans or other advances.
Product Transfer Payment and Administrative Fee Product Transfer Payment: The difference between the price paid by a BFF Store and the price that would have been paid by a PDF Store.
Administrative Fee: $500 per occurrence of incorrect reporting of a product transfer.
Regional Funding Plan Fee Varies.
Manual Processing Fees Varies, not to exceed $75 per occurrence.

The above information has been taken from the FDD of Big O Tires. Year of FDD: 2015

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