Bottom line
- Total investment $512K – $1.9M including a $18K franchise fee, 3.5% ongoing royalty.
- Average unit revenue of $2.8M/year. Estimated payback in 4.6 years.
- Rated STRONG with a risk score of 50/100. SBA loan default rate of 0.0% across 471 loans (below the industry average).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Big O Tires unit return on the cash you put in?
Unlevered ROIC · per unit
45%
In Yale's "attractive" band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Big O Tires units return on equity?
Equity IRR · 5-yr
24.4%
2.98× MOIC
Year-1 DSCR
3.50×
EBITDA ÷ debt service
Equity required
$21.9M
on $38.4M purchase
Total debt
$16.5M
SBA $5.0M + senior + seller note
Overview
About
Franchisees operate retail tire sales and automotive service locations, managing daily tire sales, installations, wheel alignments, and vehicle maintenance services. Operations require managing inventory, technician staff, customer service, and compliance with local automotive regulations. Franchisees must adhere to Big O's brand standards while competing against both independent shops and national chains like Discount Tire and Firestone.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 3 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Big O Tires presents high risk due to active litigation alleging franchisor misrepresentation, declining unit count, thin profit margins, and high capital requirements that compress ROI.
Score breakdown · what drove the 50 / 100 rating
- 01HIGHActive multi-front litigation including franchisee misrepresentation claims that directly undermine trust in franchisor disclosures
- 02MINORUnit count declining (-0.2% YoY) despite 461-unit system size, indicating market saturation or franchisee attrition
- 03MINORNet profit margin of only 9.2% ($258,878 on $2.8M avg revenue) leaves minimal buffer for royalty payments (3.5-5%), labor costs, and unexpected expenses
- 04MINORThree separate class action lawsuits (tire protection program, wage/hour violations at company stores, and franchisee false representations) suggest systemic operational or disclosure issues
- 05MINORHigh initial investment range ($511.5K-$1.88M) combined with thin margins creates extended payback period and capital recovery risk
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
100 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Big O Tires · FDD (2025) PDF