Big O Tires Logo

Big O Tires

Big O Tires, LLC
https://bigotires.com
1-561-383-3000
4260 Design Center Dr, Palm Beach Gardens, FL 33410

Initial Investment Range

Franchise Fee

On behalf of Big O Tires, LLC ("Big O"), we submit the following attached application documents for the 2024 renewal of the franchise registration of its Business Format Franchise program.

Enjoy our complimentary free risk analysis below

Unlock the full risk analysis to access 9 more categories covering 100+ risks.

Big O Tires June 28, 2024 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
3
2
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor’s parent and guarantor, TBC Holdings, LLC, shows a net loss from continuing operations of $35.4 million for the fiscal year ended March 31, 2024. The overall net income reported was due to the sale of discontinued operations. This financial performance could suggest a potential weakness in the core ongoing business, which may affect the resources available for franchisee support, brand development, and system growth. A financially strained franchisor might struggle to fulfill its obligations.

Potential Mitigations

  • A thorough review of the parent company's audited financial statements, including all notes, with your franchise accountant is essential.
  • Discuss the franchisor's operational profitability and its reliance on asset sales with your financial advisor to gauge long-term stability.
  • Your attorney should clarify the strength and enforceability of the parent company's guarantee in light of the financial data.
Citations: Item 21, FDD Exhibit N

High Franchisee Turnover

Medium Risk

Explanation

In the fiscal year ending March 31, 2024, the franchise system experienced six terminations and two non-renewals. While the system shows modest net growth, this consistent pattern of franchisee departures (8 in 2024, 3 in 2023, 6 in 2022) may indicate underlying issues. Potential causes could include franchisee unprofitability, dissatisfaction with franchisor support, or other systemic challenges. This turnover rate warrants careful investigation into the reasons why franchisees are leaving the system.

Potential Mitigations

  • It is critical to contact a significant number of former franchisees listed in Exhibit K-2 to understand their reasons for leaving the system.
  • A franchise attorney can help you formulate key questions about profitability, support, and the franchisor relationship for these calls.
  • Discuss the turnover rates and the franchisor’s explanations for them with a business advisor to assess the overall health of the system.
Citations: Item 20, FDD Exhibit K-2

Rapid System Growth

Low Risk

Explanation

The franchise system is large and mature, with 462 franchised outlets. Item 20 data shows a net increase of two franchised units in the most recent fiscal year, following a larger increase of 26 units the prior year. This indicates a slowing of growth rather than a rapid expansion that might strain support resources. Therefore, the specific risk of overstretched support due to excessively fast growth was not identified in the FDD package.

Potential Mitigations

  • Engaging a business advisor to analyze the system's growth trajectory in relation to the franchisor's support capabilities is a prudent step.
  • Discuss the current quality and responsiveness of franchisor support with a broad sample of existing franchisees.
  • An accountant can help assess whether the franchisor's financial resources, as shown in Item 21, are adequate for supporting the current system size.
Citations: Item 20

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified in the FDD package. Big O Tires, LLC and its predecessors have been franchising since the 1960s. This represents a mature, well-established franchise system, not a new or unproven one. An unproven system typically presents higher risks related to the viability of the business model, brand recognition, and the adequacy of franchisor support systems, which are less of a concern here given the brand's long history.

Potential Mitigations

  • When evaluating any franchise, it is wise to have a business advisor help you assess the system's age and market position.
  • For new systems, your attorney should scrutinize the experience of the management team listed in Item 2.
  • An accountant can analyze the financials of a new franchisor to determine if it is adequately capitalized for growth.
Citations: Not applicable

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. The automotive tire and service industry is a long-established, mainstream consumer market. The business model is based on consistent and widespread demand for vehicle maintenance and repair, not on a fleeting trend or novelty. Therefore, the risk of the business being a short-lived fad is considered very low.

Potential Mitigations

  • With any business opportunity, a business advisor can help you conduct independent market research to confirm sustained consumer demand.
  • Review the franchisor's history in Item 1 with your attorney to understand its adaptability and longevity in the marketplace.
  • Your financial advisor can help you assess the resilience of the industry to economic cycles and changing consumer behavior.
Citations: Not applicable

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD package. The executive team described in Item 2 appears to have considerable experience within the Big O Tires system or its parent and affiliate companies, such as TBC Corporation and Midas. This long tenure suggests a stable management team with deep knowledge of the industry and the franchise system itself, which is generally a positive indicator for a prospective franchisee.

Potential Mitigations

  • It is always a good practice to have your business advisor help you research the backgrounds of the key executives listed in Item 2.
  • Discuss management's reputation and effectiveness with current franchisees to get an on-the-ground perspective.
  • Your attorney can help you understand the implications of any recent high-level management changes.
Citations: Not applicable

Private Equity Ownership

Medium Risk

Explanation

Big O Tires, LLC is part of a complex corporate structure ultimately owned by a joint venture of Michelin and Sumitomo, which are large, established corporations, not a typical private equity firm. However, the operational parent, TBC Holdings, LLC, recently sold off a major part of its business (TBC Retail). While not a PE-driven flip, such major divestitures can lead to strategic shifts focused on improving financials, which may not always align with the long-term interests of individual franchisees.

Potential Mitigations

  • A business advisor can help you research the ownership structure and any recent major corporate transactions to understand the strategic direction.
  • It is important to discuss with current franchisees whether they have experienced changes in support or focus following the recent divestiture.
  • Your attorney should review transfer and assignment clauses in the Franchise Agreement to understand your rights if the system is sold again.
Citations: Item 1, Item 21, FDD Exhibit N

Non-Disclosure of Parent Company

High Risk

Explanation

The FDD discloses the parent company, TBC Holdings, LLC, and includes its audited consolidated financial statements as a guarantor. The financials reveal that the parent's recent profitability stems from the sale of discontinued operations, while its continuing operations reported a loss. This structure and financial performance are disclosed, but the complexity and reliance on a guarantor whose core business is in flux presents a risk that must be carefully evaluated for its potential impact on long-term support and stability.

Potential Mitigations

  • Have your franchise accountant conduct a detailed analysis of the parent company's financial statements, focusing on the health of continuing operations.
  • Your attorney should examine the language of the parent company guarantee to ensure it is robust and unconditional.
  • Discuss the implications of the complex corporate structure with your business advisor to understand potential impacts on decision-making and support.
Citations: Item 1, Item 21, FDD Exhibit N

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 provides a clear history of the franchisor, including its predecessor, Big O Tire Dealers, Inc., which was formed in 1962 and merged with the current entity in 1986. The FDD appears to provide the necessary historical context regarding the system's lineage, and Items 3 and 4 do not indicate any bankruptcy or undisclosed litigation related to this predecessor.

Potential Mitigations

  • When analyzing any FDD, ask your attorney to review Item 1 for any mention of predecessors.
  • A business advisor can help you research the history and reputation of any predecessor entities if they are disclosed.
  • It is wise to ask long-tenured franchisees about their experiences under any previous ownership or corporate structure.
Citations: Not applicable

Pattern of Litigation

High Risk

Explanation

Item 3 discloses a history of significant litigation, including class action lawsuits from customers and employees that resulted in multi-million dollar settlements. It also details a large lawsuit initiated by a group of franchisees alleging misrepresentation. While these specific cases are resolved, a history of such disputes can indicate potential systemic problems with the franchisor's past operations, disclosure practices, or franchisee relations that could pose a risk for new franchisees entering the system.

Potential Mitigations

  • A thorough review of the details of all past litigation in Item 3 with your franchise attorney is crucial.
  • It may be beneficial to have your attorney research the court records for these cases to gain a deeper understanding of the issues.
  • Discuss the franchisor's litigation history with current and former franchisees to gauge if the underlying issues have been resolved.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
3
2
10

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

3

Financial & Fee Risks

Total: 10
5
4
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

4

Legal & Contract Risks

Total: 16
8
2
6

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
2
3
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
6
3
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
1
3
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
7
4
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
8
4
6

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
2
0
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.