Driven Brands Holdings Inc. (DRVN) Earnings Call Transcript & Summary

Thanks, everybody. We're very pleased to have Driven Brands' leadership team with here, including Jonathan Fitzpatrick, President and CEO; Mike Diamond, CFO; and we've got Danny Rivera, COO, with us here today. I'm going to kick it off to you guys just to -- maybe to start, walk us through the business as you guys -- maybe a brief introduction of the business as you guys operate, just for those that aren't as engaged with you as they should be.

Thanks, Robby. Thanks for having us here today. So Driven Brands, automotive aftermarket. We have over 5,000 locations. We are segmented into a handful of segments. Our biggest segment is our Take 5 Oil Change business. We've got about 1,200 units, about 40% franchised. We are -- have been growing that business exponentially since about 2016. We started off with less than 60 units. We now have 1,200 units. The business, the Take 5 Oil Change business, is very comparable to a public quick lube competitor that we have. So you can think about the business like that. That's really our growth engine at Driven Brands. Then our second segment is what we call our franchise segment, which is 4 or 5 large-scale tenured franchise brands. It's a 99% franchise segment. So that generates a lot of free cash flow at a very good margin. We use that cash to invest into our oil change business. And then finally, we have an international car wash business called IMO, which is an independently operated model based in Europe with about 725 locations. So when you put it all together, automotive aftermarket, significant franchise exposure, and then we've got this really fast-growing quick lube business, and that's really sort of the funnel of Driven. We like to talk about Driven really in 2 components. There's cash coming from our franchise businesses, which then we generate and then put back into our quick lube business, which is our growth engine. So growth in cash is how we think about the business.

Yes. Maybe to start, you guys had a great fourth quarter, and Take 5 continue to be very strong. I know you guys have done some marketing initiatives there. Tell us what worked that drove that strength and what you see working there in 2025.

Yes. So Take 5, to your point, we put up 9.2% comps for the quarter. It was a really strong quarter for us. The primary driver is actually non-oil change revenue, and we'll get into the marketing stuff as well, which we did see an acceleration in Q3 over Q4. But we continue to see growth with non-oil change revenue. So we offer 5 services today. They're not oil change services directly. We've been growing that part of the business for several quarters now. We talk about attachment rates for our non-oil change revenue service is in the high 40s. And again, that's been growing pretty steadily here for a few quarters now, and that's been a strong part of the business. Premium oil continues to be a nice tailwind for us as well. So premium oil, what we refer to as the amount of times that we pour either a semisynthetic product or a full synthetic product. We call that premium mix. And so that's been a steady growing part of the business as well as a nice tailwind in the industry. So primary driver has been the non-oil change revenue and the premium growth that we've seen. We did also see, as I mentioned, kind of a sequential acceleration in transactions Q3 to Q4. We deploy a 2-part marketing strategy. So one part of it is an always on top of funnel brand strategy. In the oil change space, it's very important -- when that check engine light goes on, it's important that you're top of mind for that consumer. And so anywhere that we operate, we want to be top of mind when that light goes on. And so we do this kind of upper funnel brand strategy. Second part of the strategy is a pretty surgical, data-driven, lower funnel tactic usually through digital channels. And that's where we're specifically targeting certain customers and certain DMAs where we know that we have opportunities. That 2-part strategy in Q4 paid dividends [indiscernible] worked really well.

You mentioned premiumization of oil. I just want to touch on that a little bit more. So north of 90% of the oil put in cars is now synthetic or semisynthetic oil. How much more room is there for more premiumization? And then how much longer is the tailwind going to last?

Yes. It's a great question. So we've mentioned historically, again, premium oil, as we define it, is a semisynthetic or a full synthetic product. And we've mentioned, to your point, that we're at about 90%. And so we tend to get the question, is there a ceiling there? Is there kind of an end of the road, so to speak? At the last earnings, we spoke a little bit more in depth, and we double-clicked into the premium oil mix. So if you look at the mix within the mix, so our advanced full synthetic oil, which is our most premium product, that's in the mid-30s as far as attachment rate goes. So when we look at premium oil, it's a great tailwind, has been for some time now. But as we double-click again in the mix within the mix, we see that we have plenty of room to continue to grow premium oil here for the foreseeable future.

And then for Take 5, you're now building 2/3 store franchise and 1/3 company-owned and you're trying to get to that 50-50 mix. Could you share the rationale behind that decision? And why not favor one versus the other?

Yes, I'll take that. I think it speaks to, one, just the fundamental underlying economics of our business are so strong, both from a corporate-owned store perspective and a franchisee-owned perspective. Franchising is a great model, particularly when you're offering a product like the Take 5 business that has such strong unit level economics. We've got great franchisee partners who are able to deploy their capital as or more quickly than we can to help us grow this at a pretty rapid clip. And so we'll continue to invest behind our franchise partners and see there's a really good opportunity there to continue that growth engine. On the flip side, the unit economics still are quite strong. And so when we have the opportunity to deploy our capital, thoughtfully targeted, that generate such strong economic returns, I would argue we're not doing our job if we don't find those opportunities as well. But in general, as Jonathan mentioned, the growth plus cash, one of the ways franchising helps is a way to grow without all of that cash. And so we feel really good about our franchise partners and the ability to continue to develop, leveraging our great franchise partnerships.

Vicky, I would just add to that. We today have a pipeline of about 1,000 locations in the company. So we have great visibility into the number of locations that are going to open up over the next sort of 3 to 5 years. Additionally, we have defined core company markets, which were markets that we defined 5, 6, 7, 8 years ago. So when we think about that 1,000-unit pipeline, you can think of that about 300 of those locations will be corporate stores filling out the existing markets we're in and the balance would be franchise stores in the markets that they operate in. So what's great about this unit growth pipeline is that it gives us direct visibility into what the unit count looks like for the next, again, 3 to 5 years. And I don't believe there's anyone in the industry that has the pipeline, the signed development agreements or the visibility into real estate that we have, which gives us great confidence in the unit growth for the next few years.

Maybe you could talk a little bit about the decision to sell the U.S. car wash business and what led to that in the strategic review and then somewhat disconnected, why the international car wash business is so much healthier than the U.S. car wash outlook.

I'll take that, Robby. We just announced about 10 days ago a definitive agreement to sell our U.S. car wash assets. We signed out, again, about 10 days ago. It should close broadly in the next 45 to 60 days. We set about a strategic review of the U.S. car wash assets probably 12 months ago at this point. And I give Danny and the team great credit for sort of stabilizing the business over that period. We've now crossed 1 million members, which is a nice opportunity for us. Really when we looked at the business, we said, does this make long-term sense for Driven Brands? We really wanted to focus on our cash-generating franchise businesses and then this great growth engine. And quite frankly, some of the volatility that we've seen within the car wash business made sense for us to think about, let's get out of that asset class in the U.S., again, focus on franchise and the Take 5 business. The international business is almost franchise-like in its construct. It's an independently operated model. When we release our new segmentation, which I think is coming out later this week or early next week, people will see that the international car wash business is very stable, very predictable at a very attractive margin rate. So I think the volatility associated with the U.S. car wash business is what led us to the strategic review and ultimately the signing of the deal.

And then another question, just very broadly speaking because you do touch a lot of the consumers in the U.S. We'd love to just get -- what's your opinion of what is or is not happening with the U.S. consumer right now?

I mean I think, look, it's clear, and we've called this out for the last couple of quarters, we're starting to see some softness within the lower-income consumer. I don't think that's a surprise given everyone else who's been announcing over the last kind of 6 to 12 weeks. But I would say the beauty of Driven, the beauty of our platform, the beauty of the diversification is the fact that we're a nondiscretionary service. And so -- and I think Danny says it best, when the check engine light comes on, you need to get your oil changed. And it doesn't really matter if you want to get your oil changed or not. If you want to keep driving your car, you need to get your oil changed. And I think it's one of, to me, the most compelling pieces of the broader Driven portfolio. If your car gets in an accident, you need to get it fixed, you need to get your oil changed. You got to chip in your windshield -- like it is, to some degree, independent of economic forces. And so I think it's why we've been able to be so resilient at least so far is -- it's a really good space to be in. People need to take care of their cars. As the car part gets older, that requires more service, and we're well positioned across a variety of oil, collision, paint, glass to be able to service that. And so we believe we're really well positioned kind of regardless of the macroeconomic climate. We've got, as Danny has mentioned, opportunities for us to continue to drive the ticket up in nonprice taking ways. It's just the premiumization of oil and other services we can offer. And the nature of the product we offer is just, to some degree, detached from the overall economic picture.

And Robby, I would just add, our last earnings, which we just reported about 10 days ago, was our 16th consecutive quarter of positive same-store sales growth. So just a great testament to the resiliency and the nature of needs-based services, which is what we offer at Driven Brands.

And following up on the consumer question, given the nondiscretionary nature of your business, how will Driven react to tariff increase?

Yes. I would say, in general -- you've answered part of that question, which is the nondiscretionary nature means in general, the customers want to come. But taking a step back from a more strategic perspective, we source our products from many different sources, from many different countries. And so we have pretty good flexibility about where we're able to source our product from. From a couple of the products where we may need to shift production, we tend to hold enough inventory that we have enough time to manage that accordingly. And so it is clearly something we're keeping an eye on. Danny and I have spent a lot of time over the last 6 weeks making sure that we feel comfortable on sourcing, comfortable on the product we have, understanding where it comes from. But in general, we feel pretty confident with where we are. We're a nondiscretionary service, so that does give us a little bit more flexibility. But I think most importantly, the flexibility of our supply chain, led by a fantastic dedicated supply chain team, is all over it to make sure we not only have a surety of supply, but the flexibility of where it's sourced from to manage that as we need to.

So far, we've talked about the oil change business and car wash. I wanted to touch a little bit on glass as well. So the glass business can be broken down into 3 parts: we have retail, commercial and insurance. How do you plan to grow each part of that glass business? And what strategies do you have to grow more insurance contracts?

Yes. I'll take that one. It's a great question. So let's focus on the insurance and the commercial side, which is -- they're similar in terms of how you go to market. So I think the first thing to understand is we believe, and that was part of the thinking behind getting into this industry from the beginning, we have a right to win in this space, right? And the reason that we say that is we've been working with major commercial partners and insurance carriers, if you look at the top 20 carriers, we've been working with these folks for going on 10 years now through our collision businesses. So whether it's CARSTAR or Maaco, we've been servicing these accounts for a long time. So if you want to win in that space, number one, you need scale. We've built up scale. We're now the second biggest glass provider in North America. Number two is you need to have these deep relationships with these insurance carriers and these commercial vendors, right? And we have that. And not only it's having the relationships, which is step one, but you have to know how to service these accounts and keep these folks happy. So the really neat thing about the insurance space is that it's a meritocratic environment, right? So they're -- the insurance carriers are very specific about what it takes to do business with them. And if you do a good job, then you win more business. If you don't, then obviously, the inverse happens. And we've been winning in that space for 10 years now. So when we look at insurance and commercial, we believe we have a right to win. We've won in this environment for some time now. We'll continue to lean into that deep expertise and make sure that we continue to win these accounts. So we're super focused on the insurance and on the commercial side. On the retail side, it's really about meeting the consumer where they need to be, and it's all about speed and simplicity, right? So you want to be fast, the way the consumer would think about it in a retail environment, we talk about same-day, next-day service. That's not easy to provide. And frankly, in the space, we're not seeing a lot of folks providing that. So you want to be fast in terms of the consumers' expectations. And then you want to do simple to do business with, right? So that means you're available in all the channels that the consumer expects, so yes, obviously, a phone. But are you available online? Are you available through text? Are you just easy to transact with? And so that's -- we're leaning heavily into that to make sure that we win in that space.

Can I -- I'd love to get a discussion on just the franchising environment and if that's changing. Are people wanting to become franchisees? Maybe even a broader discussion, how many of your franchise partners are like mega franchisees versus mom-and-pops? And maybe walk us through a Maaco franchisee versus a Take 5. [ And even ] more growth at Take 5, but are you still growing [ Maacos ] and things like that?

So let's start with Take 5. Let's start with what are we looking for from a franchisee. So generally speaking, in the Take 5 space, we're looking for 3 things. We're looking for someone or an entity that's got franchise experience. Number two, they have a strong capital position that they can deploy capital into the market. And number three, we're looking for them to bring to bear a subject matter expertise either in development or in operations or both, which is fortuitous when that happens. So that's what we're looking for. As far as the standard agreement, if you look at our standard kind of area development agreement, it's going to be for 8 to 15 units. It's going to be over 4 years. It's going to be very prescriptive in terms of how many units you're supposed to open each year. About half of our franchisees so far have moved on to a second or third development agreement. So the most -- sincerest compliment I can think of as a franchisor is you bought the rights to 15 locations and you came back a few years later and said, this is amazing, and I want to do more, right? There are some incentives as far as growth is concerned. But I'd say the most pragmatic incentive is just the returns that our franchisees are seeing through the units, right? So average franchise unit in Take 5 right now is ramping to $1.5 million top line, high teens as far as 4-wall EBITDA margins and a 30% or thereabout, 30% cash-on-cash return. So with those kind of unit level economics, that provides all the incentive necessary. On the other side of the business, right, so the franchising business, as you mentioned, Maaco or Meineke is very similar. So there -- these are very mature businesses. In the case of Maaco and Meineke, you're talking about 50-year-old businesses. Generally speaking, this is going to be more of an owner-operator model. So that owner, they have skin in the game. They've put, in some cases, their entire life savings into this business. They're in the 4 walls every single day. They have all the incentive in the world to not only keep the customers happy, as it stands to reason, but to keep the employee base happy, which is very important in a world where you have skilled technicians and you really want that labor to stay put. So different types of franchisees for, frankly, slightly different types of business models.

And do you see different -- what's the performance differences in different operating environments? So if it's a recession, which -- what ones to me are recession-resistant, which ones less?

I mean, honestly, in a post U.S. car wash world, where we've mentioned already that we've divested that asset. I mean everything that's left within Driven is -- it's very recession-resilient, right? I mean at the end of the day, like nothing's recession-proof, but Mike said it a second ago, if your check engine light goes on, you need oil. If your breaks are grinding, you need brakes. So when you get outside of the discretionary nature of our U.S. car wash business, which is another underlying factor as to why we decided to exit that business, what you have left in Driven is a really nice portfolio of businesses that are all needs-based and, I mean, frankly, just fairly recession-resilient across the board.

Could you talk about what you're seeing in labor costs and labor turnover? And what kind of labor investments is Driven making?

Yes. Obviously, in the franchise model, Vicky, we -- our franchisees manage their own labor. So that's one of the benefits of being a franchisor. A lot of our franchisees are very adept at hiring within the local market. In many cases, they're offering equity or sweat equity to their senior employees. So our franchisees do a magnificent job of recruiting, retaining and developing their own talent. Case in point, in the dark days of COVID, we never lost one store or closed any stores during that time frame, which is testament to how strong the labor model was with our franchisees. At Driven, in our corporate stores in total, between our company quick lube stores and our glass company stores, we've got about 8,000 employees that work in those shops -- are in the field. One of the things that we pride ourselves on is giving people a real career path within our company-owned businesses. So if you look at our -- we've got about 700 company Take 5 quick lube stores. I think the number is about 70% of the managers in those stores were promoted from within. So people can join our stores as lube technicians, get promoted multiple times and then be store managers because we're growing -- there's incremental opportunities for those folks. The other thing that we pride ourselves on is making sure that we have variable compensation at all levels within our company stores. So if you're an entry-level technician making $12, $13, $14 an hour, we offer incremental variable compensation based on KPIs that matter to us, so you can make an extra $2 an hour, an extra $3 an hour. We also have some inherent tailwinds, I think, in terms of labor. One is our store operating hours are typically 8 to 6, 6 days a week, so people have the evenings off, maybe a day on the weekend off. We also have a lot of our employees that want to work in and around automobile. So they have a bit of a passion or an interest in the car business. So I think the other thing that when we think about company-operated businesses, our labor models are quite efficient. So if you think about a Take 5 quick lube store, we can run that store with 4 to 5 people. So unlike some other multiunit categories where you may have 10, 15, 20 people, we have a much smaller labor pool. So that makes things a little bit easier to manage. So I would say that overall, the pendulum has swung over the last couple of years. I think it's now become more of an employer-friendly model. I think that pendulum has swung back to the employer over the last couple of years. But we're very happy with our continued investment in our employees and sort of the turnover and the growth that we get from those employees. So I'd say overall, very good.

And on the cost side, more generally, where are you seeing more favorable cost versus some cost pressure?

Yes. I mean I think just given the -- what we've seen in the economy over the last 12 to 18 months, in general, modest inflationary pressure across a lot of our categories, which is not a surprise. I do think -- I want to go back to a comment I made earlier. We have a really good procurement team that helps us look not only at some of the internal stuff but the products we sell through all of our stores. And they do a really good job of keeping a clamp down on prices, of costs as we think about it. And then even just recently, we negotiated a couple of good deals where the -- for example, the capital that we're spending in our new stores, we were able to actually negotiate a reduction. And that's just through, I would argue, good negotiation, good conversations, consolidating purchase price. And so I would say, in general, we're seeing that modest inflation, but our team is working hard, whether it's finding additional suppliers, concentrating purchase with those who are willing to give us better offers, finding ways to mitigate that and in some instances, even find cost savings as we continue to grow. I will also say the fact that we're growing is just an incredibly strong, powerful negotiation tool with our suppliers. They want to be with people who are growing. The fact that we're adding close to 200 stores a year with top line sales growth is a really great conversation to have as you're going to suppliers and they want to take cost increases. And we say, great, but we can also give you a lot more volume if you're our partner. And so it really is a good partnership with them led by our really strong procurement team.

Vicky, I'd add a couple of points on top of what Mike said. One is real estate, we buy and lease a lot of real estate. We've seen moderation in the price of leases or real estate over the last 6 to 12 months. There was a bit of a spike over the last sort of 4 years, but I think things have moderated right now. We're not seeing real estate or lease costs continue to go up. Construction costs grew fairly significantly from 2020 through 2024. We've now seen moderation. No more cost increases in the construction, arguably some deflationary pressures on the construction side. And the last thing I would say is in terms of overall costs, we invested significantly into this e-commerce platform that we have called Driven Advantage, and that allows our franchisees to buy product and services in one place. So we've got an e-commerce marketplace now called Driven Advantage, which has 100,000 SKUs available for our franchisees to purchase. So what we're trying to do is harness the total purchasing power of Driven, put all that accessibility into one place, which makes it easier for our franchisees to get the best price on product.

I love -- I can't wait for the restatements, the classifications you guys have laid out. So amazing. The only one I want to ask about is Auto Glass going into the other category. It seemed like the Auto Glass area had -- there's some progress being made there with some insurance partnerships and things like that. Was that a sign that it's not going to grow as fast as you guys initially thought? Or it's just small, and that's why it ended up there? But maybe talk about the Auto Glass outlook and what could happen there.

Let me start with some of the details of the segmentation for the rest of the audience and then we can get in more strategically on glass. So we are resegmenting the business. Jonathan gave a summary of what our new segments are. Take 5, which is focused on the Take 5 business, both the equity part and our franchise business. We've got the Franchise Brands, which is a collection of all the remaining franchise brands. So most of them typically lived in PCG. We also had Meineke as well as 1-800-Radiator, are all going to go into that. We've got the remainder of our car wash international business, which is the remainder of our car wash business, which is now the IMO business based over in Europe, run by a really strong team in Tracy. And then we've got the Corporate and Other, which in addition to the Auto Glass Now business, includes all of the corporate shared costs, IT, technology, finance, HR, legal that you'd expect there. Tomorrow, we plan to put out some financial modeling help that will recast our historical 2024 financials quarterly in these new segments that include sales revenue, same-store sales growth, units, adjusted EBITDA as a way to hopefully help at least from a '24 to '25 [ perspective ]. I think a lot of what I just said will also be there if in case you didn't catch that. We have that in the [ pros ]. Let me give the kind of financial answer on the AGN. And then I don't know if, Danny, you want to add anything there. The fact of the matter is AGN is still small enough that we thought it made sense to keep it in corporate. It is still leveraging a lot of the resources at corporate given its size. It doesn't change my interest in the business from a growth perspective. But it is small. And so as opposed to shining a spotlight on a business that is still small, nascent, big opportunity but growing, the fact of the matter is, I'm going to go back to what Jonathan said, growth in cash. The story of Driven right now is the growth trajectory of Take 5 and the cash flow profile of the franchise brands. And so we felt as we were deciding how to make sure we communicate that and ease the modeling for investors, like being able to focus on those 2 pieces, what was both most relevant, most driving of the valuation, most important to the narrative at least in the short to medium term. And so I wanted to make sure we engineered a segmentation that not only is how we look at the business, but also kind of reflects where we see that growth coming in the near term.

That's helpful. And then maybe just -- you guys are targeting this 3x or less leverage ratio by the end of 2026. What are the 2 or 3 most important drivers to that?

Yes. And I will -- I think I've said this before. As a CFO, I view capital allocation as probably one of, if not the most important thing I get to think about, right? It is so critical to how we make our decision-making. We feel very good about our path to getting to 3x net leverage by the end of 2026. We still have some time to get there. For me, capital allocation is really focused on 2 things. One is paying down debt, how do we continue to leverage our free cash flow to make sure we continue to delever. We mentioned on the earnings call about 10 days ago, we've already paid down $35 million in the quarter. The team doesn't love me all the time because -- I had a conversation this morning in a text exchange, Mike, if only we can spend cash on this, and it's like, no, guys, our focus needs to be on delevering. But we have a fantastic growth engine in Take 5. And so the one area where I am more inclined to think about at least spending cash, and you've seen this through our growth, we will continue to grow Take 5s primarily through franchise. But as Jonathan mentioned, we have these markets the 4-wall EBITDA returns are so strong that we're not doing our best towards deploying our capital if we don't find opportunities to facilitate that growth through Take 5. That's where the tension point comes, but that's really the only tension point is -- maybe there are some stores that we want to build. The 3 of us on the stage look at every single unit that we're looking to build, and we approve some and we don't approve some because the return is not high enough. And just last month, I said, guys, I get why you want to build that store, but I'd much rather use it to delever. But for me in capital allocation, that's what it is. It's how do you make sure we continue to the drumbeat of delevering and then finding those opportunistic opportunities to invest our capital in really, really high-return Take 5 units.

In the past, Driven has grown through acquisitions and now you're planning to grow more organically. Could you share how you make that decision to favor organic growth versus through acquisitions and how you plan to drive more organic growth going forward?

Yes. So most of our growth, as we've mentioned a couple of times, is going to come through Take 5, right? And so historically, M&A at Take 5 was all about getting scale and getting scale quickly. We're very skilled at this point. We've got north of 1,100 locations. And frankly, from a return profile, it's more lucrative for us to grow organically. So we'll continue to grow that business aggressively down a couple of different lanes, right? I'd say number one, we've mentioned it a few times, is new units. So we've committed publicly and we've been doing this for some time now, we're going to open north of 150 locations a year. We'll open approximately 2 franchise locations for every one company location. Jonathan mentioned a few moments ago, we have a really strong pipeline of 1,000 locations. So all of that feels really good, number one, because we have a pipeline of 1,000 locations, which not everybody can say. And number two, we have a track record of opening north of 150 locations. So we'll open through units. We'll grow organically from a comp sales perspective down the lanes that I mentioned a little while ago, right? So non-oil change revenue has been strong for us for a few quarters now. There's plenty of room to continue to grow that. I mentioned that our attachment rates on our 5 non-oil change services is in the high 40s. We have franchise and company locations with attachment rates into the 60s. So we don't think that there's any ceiling anytime soon as far as non-oil change revenue is concerned with our existing services. Another really neat tailwind for us is that today, we offer 5 non-oil change services. There's no reason there can't be a 6th, a 7th or an 8th, right? And there will be. So not only can we continue to grow our attachment rates with the services we sell today, but we know that we can continue to add more services to the portfolio, which is going to continue to create growth in that space. Premium oil, we talked about we're going to continue to grow that. We talked about our advanced full synthetic in the mid 30s. That's going to continue to grow. So that's another growth vector for us. And then we mentioned it earlier as well, traffic. So we'll continue to focus that 2-part strategy on driving traffic. You put all of that in the blender and we feel really good about the growth prospects of Take 5.

Maybe a follow-up on that. I mean Take 5 has been crushing it for a while. What types of competitive reactions have you seen? And could there be some competitive reactions on the horizon?

No, I mean -- so I'd say the way that we think about the competitive set for Take 5 is you've got your classic competitor, which is Valvoline. They do a really nice job. We compete with them. We open the same markets that they do. And I think there's a healthy respect there. They do a really nice job. And I think that's where everybody's mind immediately goes to when you talk about competitive set. The reality is the vast majority of competitors are mom-and-pop independents, right? And so when you think about where are we taking share from, it's more so that mom-and-pop independent and frankly, also Jiffy Lube, where we continue to see every time we open in a market, that's where we're taking share from. And I think at the end of the day, there's 2 main factors. Number one is scale. So if you look at some of the markets that we operate in, Dallas or New Orleans, I mean, we're ubiquitous in these markets. So as far as competing with a mom-and-pop in a world where being top of mind is important when that check engine light goes on or that oil light goes on, if you've got 50 rooftops in a DMA, you're more likely to be top of mind. So that's very important. The other thing is we fundamentally offer a better experience, right? And it's not me just saying that. If you look at our NPS scores at Take 5, our NPS scores are in the high 70s. So that's an amazing score in any retail business, let alone an automotive where let's just say the expectation is maybe a little bit lower than that. So we're offering a stay in your car, 10-minute oil change with NPS scores in the high 70s. There's literally nobody else in the country that can say that. And so I think that's been the big contributors to us winning in this space.

That's very helpful. Let me just pause and see if there are any questions from the audience? I do not see any. That's good because I have another question. This is a question I'm just very curious about. Like circling back to the Meinekes and Maaco type franchisees, how did they -- if these are older franchisees, how do they sort of transition if this is -- I think you mentioned, I think, the term 50-year-old came up. When these people want to retire or whatever, what typically happens? And is there any kind of risk of it's going to be a challenge to sort of pass on some of these franchises?

Yes. Look, I'd say -- to your point, these are mature -- we don't say older, right? So more mature businesses. These folks -- the businesses, especially Meineke and Maaco, you're talking about north of 50 years. So the pragmatic answer is there's already been turnover, right? At the end of the day, the folks that opened these businesses 50 years ago are not the same ones operating today. I ran the Meineke business personally for 5 years. You see a variety of different things. In some cases, you see the business handed down through the generations. We've got some Meineke owners that are literally third-generation owners of their business and you have -- their grandfather opened it in the '70s, and now they're up to 5 locations or something like that. So those are really neat Americana-type stories, which are great. The other thing that you'll see is you'll see resales sometimes happen. So maybe there's somebody that wants to come into a Meineke or a Maaco or a CARSTAR or something like that. There's a specific market that they're interested in. And so there's a franchisee that's towards the end of their career, let's say, and they're going to sell that business. So there's a variety of ways that we see those businesses change hands. We've been operating those businesses for 50 years, and it's been pretty steady across any KPI, whether it's comp sales or openings or closures. That's a very steady business. So there's a variety of ways that we keep those businesses operational.

That's helpful.

And previously, you mentioned Take 5 has a very high NPS score at roughly at the high 70s. Just wondering, are there specific markets where you see opportunities in improving that NPS score even more? Are there markets that the NPS score is very, very strong at?

So I would say, generally speaking, for Take 5, one of the beautiful things about the business is that there's not a lot of variability within the business, right? So yes, there's a high quartile, low quartile across any KPI that you look at. I would say the single biggest factor in seeing a difference in the numbers is the maturity of the store. So there is a dynamic where if it's -- if the store is 1 year old, it's still ramping and ramping not just from a financial perspective, but the processes inside the store, which will ultimately lead to a high NPS score. So our newer stores is where you see some variability and all I mean is in terms of comparing it to the mature stores. But outside of that, whether it's company-owned stores or franchise stores, I mean, Jonathan and I have been doing franchising for a long time. A lot of times when you see a store or you see businesses that are operating both company ops and franchise ops, there's a huge difference in terms of how those businesses perform. For us, if I gave you a sheet of data and said, pick out the company store or the franchise store, you wouldn't be able to. So financially, they operate similarly. From an ops KPI perspective, they operate similarly. From an NPS score, they operate similarly. What you'll see is our best-performing markets, generally speaking, are just our most mature markets. So a market like New Orleans comes to mind, Dallas, Tampa. These are markets that we've been in now for -- in the case of New Orleans, Take 5 was founded in New Orleans. So you're talking about since 1985, we've been there. Take 5 is ubiquitous in New Orleans, very mature operations, and it's just a great experience overall.

Are there any other changes in the franchising industry that are potential headwinds or tailwinds? Any kind of contractual changes across the industry or anything that are worth pointing out?

I have to bring you back to the comment about 50-year-old people being old, Robby. No, look, the franchise industry has, in my mind, never been healthier. The franchise model allows entrepreneurs to be in business by themselves with great support. And that is a tried and trusted operating model, which I think has never been healthier. If you look at our franchise brands outside of Take 5, our average tenure of our franchisees is over 17 years. Our renewal rates are in the high 90%. So we have these amazing franchisees that stay with us for a long time and renew their franchise agreements. As I mentioned earlier, we have a pipeline of 1,000 sites with about 70% of those being franchised for Take 5. So I'd say for automotive aftermarket, the franchise construct has never been stronger. And quite frankly, it's relatively newer in automotive versus some of the other mature segments. So I think the franchising industry in totality is in unbelievably positive shape.

Well, that is a great way to end. I want to thank the entire Driven management team for being here today, and we look forward to hosting you again in the future. Thank you so much.

Thank you.

Thank you very much.

Thank you.