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What changed in Driven Brands Holdings Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Driven Brands Holdings Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+339 added−333 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in Driven Brands Holdings Inc.'s 2024 10-K

339 paragraphs added · 333 removed · 143 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur services primarily consist of express-style exterior car wash services that utilize an automated conveyor belt to pull vehicles along a track where they are machine washed. 5 Our car wash services in Europe and Australia are primarily offered through the IMO brand, which has a history of over 55-years of providing express-style conveyor car wash services.
Biggest changeCar Wash We are the world’s largest conveyor car wash company by location count with 1,102 total locations across North America, Europe, and Australia as of December 28, 2024. Our services primarily consist of express-style exterior car wash services that utilize an automated conveyor belt to pull vehicles along a track where they are machine washed.
We also license or sublicense, as applicable, the Fix Auto USA ® trademark for use in connection with our business in the U.S. We also own domain names, including our primary domain “www.drivenbrands.com.” Seasonality Seasonal changes, including inclement weather, impact the demand for our automotive repair and maintenance services, car washes, and products.
We license or sublicense, as applicable, the Fix Auto trademark for use in connection with our business in the U.S. We also own domain names, including our primary domain “www.drivenbrands.com.” Seasonality Seasonal changes, including inclement weather, impact the demand for our automotive repair and maintenance services, car washes, and products.
We believe ATI’s leading training program further enhances Driven Brands’ training platform, providing opportunities to improve operational support and increase profitability for both Driven Brands and our franchisees. In addition, ATI’s deep customer database of independent automotive shops provides us with a pipeline for future franchise development and acquisitions.
We believe ATI’s leading training program further enhances Driven Brands’ 6 training platform, providing opportunities to improve operational support and increase profitability for both Driven Brands and our franchisees. In addition, ATI’s deep customer database of independent automotive shops provides us with a pipeline for future franchise development and acquisitions.
In certain jurisdictions, we must obtain licenses or permits in order to comply with standards governing employee selection, training, and business conduct. We, as a franchisor, are subject to various state and provincial laws, and the Federal Trade Commission (the “FTC”) regulates our franchising activities in the U.S.
In certain jurisdictions, we must obtain licenses or permits to comply with standards governing employee selection, training, and business conduct. We, as a franchisor, are subject to various state and provincial laws, and the Federal Trade Commission (the “FTC”) regulates our franchising activities in the U.S.
We strive for exceptional performance and results, which is why meritocracy and performance-based compensation are part of our core values. We provide employees the opportunity to grow and to be rewarded based on results. Our franchises are independently owned and operated businesses. As such, employees of our franchisees are not employees of Driven Brands.
We strive for exceptional performance and results, which is why meritocracy and performance-based compensation are part of our core values. We provide employees with the opportunity to grow and to be rewarded based on results. Our franchises are independently owned and operated businesses. As such, employees of our franchisees are not employees of Driven Brands.
For example, customers may purchase fewer undercar services during the winter months, when miles 10 driven tend to be lower. In addition, customers may defer or forego car washes or vehicle maintenance such as oil changes at any time during periods of inclement weather.
For example, customers may purchase fewer undercar services during the winter months, when miles driven tend to be lower. In addition, customers may defer or forego car washes or vehicle maintenance such as oil changes at any time during periods of inclement weather.
Competitors include international, national, regional, and local repair and maintenance shops, oil change shops, car washes, paint and collision repair shops, glass repair and replacement shops, automobile dealerships, and suppliers of automotive parts, including online retailers, wholesale distributors, hardware stores, and discount and mass market merchandise 9 stores.
Competitors include international, national, regional, and local repair and maintenance shops, oil change shops, car washes, paint and collision repair shops, glass repair and replacement shops, automobile dealerships, and suppliers of automotive parts, including online retailers, wholesale distributors, hardware stores, and discount and mass market merchandise stores.
Driven Advantage and Spire Supply provide attractive pricing to franchisees relative to other options as well as incremental EBITDA to Driven Brands. In addition, Driven Advantage and Spire Supply 6 simplify operations for franchisees and company-operated stores by reducing inventory needs and ensuring availability of supplies.
Driven Advantage and Spire Supply provide attractive pricing to franchisees relative to other options as well as incremental EBITDA to Driven Brands. In addition, Driven Advantage and Spire Supply simplify operations for franchisees and company-operated stores by reducing inventory needs and ensuring availability of supplies.
Our paint services include full body repainting and touch-up, surface preparation and protection, and refinishing and other cosmetic repairs; our collision services include full collision repair and refinishing services; and our glass services include replacement, repair, and calibration services for automotive glass. Our paint services are offered through Maaco, which was founded in 1972.
Our paint services include full body repainting and touch-up, surface preparation and protection, and refinishing and other cosmetic repairs; our collision services include full collision repair and refinishing services; and our glass services include replacement, repair, and calibration services for automotive glass. 5 Our paint services are offered through Maaco, which was founded in 1972.
Item 1. Business Overview Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of approximately 5,000 locations across 49 U.S. states and 13 other countries. Our scaled, diversified platform provides high-quality services to an extensive range of retail and commercial customers.
Item 1. Business Overview Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of approximately 5,200 locations across 49 U.S. states and 13 other countries. Our scaled, diversified platform provides high-quality services to an extensive range of retail and commercial customers.
In addition, our data provides insights that are enabling us to identify and roll out new product offerings, improve menu design, and optimize pricing structure across our brands. Use cases like these are regularly tested, refined, and deployed across our network to drive store performance.
In addition, our data provides insights that enables us to identify and roll out new product offerings, improve menu design, and optimize pricing structure across our brands. Use cases like these are regularly tested, refined, and deployed across our network to drive store performance.
Our distribution services are primarily offered through 1-800 Radiator, which was founded in 2001, and is one of the largest franchised distributors in the automotive parts industry. 1-800 Radiator’s 206 locations, as of December 30, 2023, are almost exclusively franchised and distribute a broad, diverse mix of long-tail automotive parts, including radiators, air conditioning components, and exhaust products to automotive repair shops, auto parts stores, body shops, and other auto repair outlets. 1-800 Radiator’s best-in-class operating model is fueled by proprietary algorithmic sourcing technology that enables franchisees to effectively order inventory, manage pricing, and deliver parts to customers within hours.
Our distribution services are primarily offered through 1-800 Radiator, which was founded in 2001, and is one of the largest franchised distributors in the automotive parts industry. 1-800 Radiator’s 205 locations, as of December 28, 2024, are almost exclusively franchised and distribute a broad, diverse mix of long-tail automotive parts, including radiators, air conditioning components, and exhaust products to automotive repair shops, auto parts stores, body shops, and other auto repair outlets. 1-800 Radiator’s best-in-class operating model is fueled by proprietary algorithmic sourcing technology that enables franchisees to effectively order inventory, manage pricing, and deliver parts to customers within hours.
Our network generated approximately $2.3 billion in net revenue from approximately $6.3 billion in system-wide sales in 2023. The Company operates and reports financial information on a 52 or 53 week year with the fiscal year ending on the last Saturday in December.
Our network generated approximately $2.3 billion in net revenue from approximately $6.5 billion in system-wide sales in 2024. The Company operates and reports financial information on a 52-or 53-week year with the fiscal year ending on the last Saturday in December.
Furthermore, Take 5 Oil’s compact store layout and unique shallow pit design reduce upfront build out costs, increase efficiency, and provide real estate flexibility. Take 5 Oil’s franchising efforts are experiencing strong momentum and are expected to continue to drive long-term unit growth through its robust and growing pipeline of franchise commitments.
Furthermore, Take 5 Oil’s compact store layout and unique shallow pit design reduces upfront build out costs, increase efficiency, and provides real estate flexibility. Take 5 Oil’s franchising efforts are experiencing strong momentum and are expected to continue to drive long-term unit growth through its robust and growing pipeline of franchise commitments.
However, we cannot predict the effect on our operations, particularly on our relationship with franchisees, of any pending or future legislation or regulations or the future interpretation of any existing laws, including any newly enacted laws, that may impact us or our franchisees.
However, we cannot 9 predict the effect on our operations, particularly on our relationship with franchisees, of any pending or future legislation or regulations or the future interpretation of any existing laws, including any newly enacted laws, which may impact us or our franchisees.
We continue to expand our company-operated footprint through a combination of greenfield openings as well as acquiring and converting stores while maintaining a rigorous capital review. Our company-operated stores benefit from the cross-brand procurement strategy resulting in lower operational costs. 8 Franchising Strategy Our franchising strategy is to grow certain of our brands’ footprints in a capital efficient manner.
We continue to expand our company-operated footprint through a combination of greenfield openings as well as acquiring and converting stores. Our company-operated stores benefit from the cross-brand procurement strategy resulting in lower operational costs. Franchising Strategy Our franchising strategy is to grow certain of our brands’ footprints in a capital efficient manner.
Our Maintenance brands service a combination of retail and commercial customers, such as fleet operators, through 1,786 total locations as of December 30, 2023. Our maintenance services include oil changes and other regularly scheduled or as-needed automotive services, including vehicle component repair and replacement. Founded in 1984, Take 5 Oil specializes in providing efficient drive-thru-style oil changes.
Our Maintenance brands service a combination of retail and commercial customers, such as fleet operators, through 1,960 total locations as of December 28, 2024. Our maintenance services include oil changes and other regularly scheduled or as-needed automotive services, including vehicle component repair and replacement. Founded in 1984, Take 5 Oil specializes in providing efficient drive-thru-style oil changes.
Our collision repair services are primarily offered through CARSTAR, ABRA, and Fix Auto, which were founded in 1989, 1984, and 1997, respectively, and together comprise the largest franchised collision repair network in North America. Our 1,028 collision locations as of December 30, 2023 are 99% franchised and offer full collision repair and refinishing services in addition to other cosmetic repairs.
Our collision repair services are primarily offered through CARSTAR, ABRA, and Fix Auto, which were founded in 1989, 1984, and 1997, respectively, and together comprise the largest franchised collision repair network in North America. Our 1,052 collision locations, as of December 28, 2024, are 99% franchised and offer full collision repair and refinishing services in addition to other cosmetic repairs.
In order to receive notifications regarding new postings to our website, investors are encouraged to enroll on our website to receive automatic email alerts. The contents of our websites are not incorporated into this Annual Report. 11
To receive notifications regarding new postings to our website, investors are encouraged to enroll on our website to receive automatic email alerts. The contents of our websites are not incorporated into this Annual Report. 10
As of December 30, 2023, we have agreements to open approximately 1,300 new franchised units, which provides us with clear visibility into future franchise unit growth.
As of December 28, 2024, we have agreements to open approximately 1,300 new franchised units, which provides us with clear visibility into future franchise unit growth.
Employees and Human Capital Resources As of December 30, 2023, we employed approximately 10,600 full-time employees, including approximately 8,800 employees at company-operated locations. None of these employees are covered by a collective bargaining agreement. We consider our relations with our employees to be good.
Employees and Human Capital Resources As of December 28, 2024, we employed approximately 10,700 full-time employees, including approximately 8,800 employees at company-operated locations. None of these employees are covered by a collective bargaining agreement. We consider our relations with our employees to be good.
As of December 30, 2023, we had agreements to open approximately 1,300 new franchised units, which provides us with visibility into future franchise unit growth. 7 Same Store Sales Growth We have demonstrated an ability to drive attractive organic growth with positive same store sales performance over 15 of the past 16 years.
As of December 28, 2024, we had agreements to open approximately 1,300 new franchised units, which provides us with visibility into future franchise unit growth. Same Store Sales Growth We have demonstrated an ability to drive attractive organic growth with positive same store sales performance over 16 of the past 17 years.
Our other maintenance services offered at 779 locations as of December 30, 2023 are 100% franchised and predominantly operate under the Meineke brand.
Our other maintenance services offered at 779 locations as of December 28, 2024 are 100% franchised and predominantly operate under the Meineke brand.
We are the largest provider of diversified automotive services in North America and have a portfolio of well-known brands, including CARSTAR ® , IMO ® , MAACO ® (“Maaco”), Meineke Car Care Centers ® (“Meineke”), PH Vitres D’Autos ® (“PH”), Take 5 Oil Change ® (“Take 5 Oil”), Take 5 Car Wash ® , Auto Glass Now ® (“AGN”), Fix Auto USA ® (“Fix Auto”), and 1-800-Radiator & A/C ® (“1-800 Radiator”), among others.
We are the largest provider of diversified automotive services in North America and have a portfolio of well-known brands, including Take 5 Oil Change ® (“Take 5 Oil”), Meineke Car Care Center ® (“Meineke”), MAACO ® (“Maaco”), CARSTAR ® , IMO ® , Take 5 Car Wash ® , AutoGlassNow ® (“AGN”), Fix Auto (“Fix Auto”), and 1-800-Radiator & A/C ® (“1-800 Radiator”), among others.
Our 392 franchised locations, as of December 30, 2023, offer an extensive suite of services including paint services, surface preparation, protection, and refinishing, reconditioning, and other cosmetic external and internal repairs.
Our 380 franchised locations, as of December 28, 2024, offer an extensive suite of services including paint services, surface preparation, protection, and refinishing, reconditioning, and other cosmetic external and internal repairs.
Our 237 franchised and 231 company-operated glass services locations across the U.S. and Canada as of December 30, 2023 primarily offer replacement, repair, and calibration services for automotive glass to retail customers as well as commercial fleet operators and insurance carriers.
Our 252 franchised and 228 company-operated glass services locations across the U.S. and Canada, as of December 28, 2024, primarily offer replacement, repair, and calibration services for automotive glass to retail customers as well as commercial fleet operators and insurance carriers.
Company-Operated Store Strategy Our company-operated store strategy involves executing our simple operating model, which allows us to adapt to changing economic conditions. Following the creation of the Chief Operating Officer role, the Company has focused on standardizing practices and operating models across brands at company-operated locations to drive further efficiencies and margin expansion.
Company-Operated Store Strategy Our company-operated store strategy involves executing our simple operating model, which allows us to adapt to changing economic conditions. In recent years, the Company has focused on standardizing practices and operating models across brands at company-operated locations to drive further efficiencies and margin expansion.
The success of our company-operated locations is supported by our deep data analytics capabilities that use proprietary algorithms and insights to enable optimal site identification and selection. Our franchised and company-operated Take 5 Oil business has grown to 1,007 locations and has provided strong same store sales and margin growth.
The markets we operate in North America are highly fragmented. The success of our company-operated locations is supported by our deep data analytics capabilities that use proprietary algorithms and insights to enable optimal site identification and selection. Our franchised and company-operated Take 5 Oil business has grown to 1,181 locations and has provided strong same store sales and margin growth.
We have a strong pipeline for franchise locations as well as greenfield and tuck-in company-operated stores and plan to continue to expand our market presence and product offerings leveraging our Driven Advantage and Spire Supply buying power. In 2022, we expanded into the U.S. glass market and have grown to 218 company-operated U.S. glass stores.
We have a strong pipeline for franchise locations as well as greenfield and tuck-in company-operated stores and plan to continue to expand our market presence and product offerings leveraging our Driven Advantage and Spire Supply buying power.
Paint, Collision & Glass Our Paint, Collision & Glass segment is primarily composed of the CARSTAR, ABRA, Fix Auto, Maaco, Uniban, and AGN brands and serves both retail and commercial customers through 1,888 total locations as of December 30, 2023.
Paint, Collision & Glass Our Paint, Collision & Glass segment is primarily composed of the CARSTAR, ABRA, Fix Auto, Maaco, Uniban, and AGN brands and serves retail, commercial, and insurance customers through 1,912 total locations as of December 28, 2024.
Trademarks that are important in identifying and distinguishing our products and services include, but are not limited to ABRA ® , CARSTAR ® , DrivenBrands ® , IMO ® , MAACO ® , Meineke Car Care Centers ® , PH Vitres D’Autos ® , Spire Supply ® , Take 5 Oil Change ® , Take 5 Car Wash ® , Uniban ® , Auto Glass Now ® , and 1-800-Radiator & A/C ® .
Trademarks that are important in identifying and distinguishing our products and services include, but are not limited to ABRA ® , CARSTAR ® , DrivenBrands ® , IMO ® , MAACO ® , Meineke Car Care Center ® , Spire Supply ® , Take 5 Oil Change ® , Take 5 Car Wash ® , AutoGlassNow ® , and 1-800-Radiator & A/C ® .
Our 2023 and 2021 fiscal years ending December 30, 2023 and December 25, 2021 each consisted of 52 weeks and our 2022 fiscal year ending December 31, 2022 consisted of 53 weeks.
Our 2024 and 2023 fiscal years ending December 28, 2024 and December 30, 2023, respectively, each consisted of 52 weeks and our 2022 fiscal year ending December 31, 2022 consisted of 53 weeks.
Our advertising strategy includes CRM, social and digital media as well as television, print, radio, and sponsorships. We have implemented highly professionalized and data-driven marketing practices and have dedicated brand marketing funds supported by contributions from our franchisees. Industry Overview and Competition We compete with a variety of service providers within the highly-fragmented automotive services and parts distribution market.
We have implemented highly professionalized and data-driven marketing practices and have dedicated brand marketing funds supported by contributions from our franchisees. Industry Overview and Competition We compete with a variety of service providers within the highly-fragmented automotive services and parts distribution market.
Since entering the U.S. market in 2015, we have grown to become one of the largest domestic operators of conveyor car wash sites with 391 company-operated locations across the U.S. as of December 30, 2023, predominately under the Take 5 Car Wash brand.
We have grown to become one of the largest domestic operators of conveyor car wash sites with 382 company-operated locations across the U.S. as of December 28, 2024, predominately under the Take 5 Car Wash brand.
Take 5 Oil’s 355 franchised and 652 company-operated locations as of December 30, 2023, primarily offer oil changes to retail and commercial customers.
Take 5 Oil’s 463 franchised and 718 company-operated locations, as of December 28, 2024, primarily offer oil changes to retail and commercial customers.
In 2023, we launched our U.S. claims management business to expand volume and insurance revenues. Our franchise growth is driven both by new store openings as well as through conversions of independent market participants that do not have the benefits of our scaled platform.
Our franchise growth is driven both by new store openings as well as through conversions of independent market participants that do not have the benefits of our scaled platform.
To further strengthen customer loyalty and visit frequency, we also utilize a subscription membership program, which in 2023, accounted for approximately 60% of our domestic car wash revenue, an increase from approximately 50% in the prior year.
To further strengthen customer loyalty and visit frequency, we also utilize a subscription membership program, which in 2024, accounted for approximately 69% of our domestic car wash revenue, an increase from approximately 60% in the prior year. Platform Services Our Platform Services segment is primarily composed of the 1-800 Radiator, Spire Supply, Driven Advantage, and Automotive Training Institute (“ATI”) businesses.
We also offer technology-enabled glass claims management services for insurance carriers, which drives incremental business to our glass service locations and our distribution business and are complementary to our paint and collision businesses. Platform Services Our Platform Services segment is primarily composed of the 1-800 Radiator, PH, Spire Supply, Driven Advantage, and Automotive Training Institute (“ATI”) businesses.
We also offer technology-enabled glass claims management services for insurance carriers, which drives incremental business to our glass service locations and our distribution business and are complementary to our paint and collision businesses.
IMO’s operations appeal to a broad consumer base seeking a low-cost and high-speed car wash at easily-accessible locations. Our 717 international locations as of December 30, 2023 operate an independent operator model, whereby a third-party is responsible for site-level labor and receives commissions based on a percent of site revenue from car washes.
Our 720 international locations, as of December 28, 2024, operate an independent operator model, whereby a third-party is responsible for site-level labor and receives commissions based on a percent of site revenue from car washes.
Franchisees of some of our brands also make, or may be required to make, contributions towards marketing funds, typically based on a percentage of gross sales or, in some instances, based on a flat amount or weekly marketing budgets in the applicable designated marketing area.
Franchisees of some of our brands also make, or may be required to make, contributions towards marketing funds, typically based on a percentage of gross sales or, in some instances, based on a flat amount or weekly marketing budgets in the applicable designated marketing area. 8 Our franchise agreements also require franchisees to comply with our standard operating methods that govern the provision of services and use of vendors and may include a requirement to purchase specified products from us, our affiliates and/or designated vendors.
New Unit Growth We have a proven track record of unit growth and believe our competitive strengths provide us with a solid financial and operational foundation that positions us to deliver growth. The markets we operate in North America are highly fragmented.
Our fleet business is outpacing our overall company growth, driven by both ticket growth and transaction growth, due to new customer acquisitions and expanded business with existing customers. New Unit Growth We have a proven track record of unit growth and believe our competitive strengths provide us with a solid financial and operational foundation that positions us to deliver growth.
In addition to fostering strong customer loyalty to our stores, we believe the subscription program has the potential to generate predictable and recurring revenue and provides incremental data and customer insights, further strengthening our data analytics capabilities. • Leverage Data Analytics to Optimize Marketing, Product Offerings, and Pricing : We have large, dedicated brand marketing funds supported by contributions from our franchisees, and in 2023 we spent approximately $159 million for marketing across our brands.
In 7 2024, our Paint, Collision & Glass segment generated approximately $2.4 billion in system-wide sales from relationships with insurance carriers. • Leverage Data Analytics to Optimize Marketing, Product Offerings, and Pricing : We have large, dedicated brand marketing funds supported by contributions from our franchisees, and in 2024 we spent approximately $148 million for marketing across our brands.
Within our product offerings, each year, on average, there are opportunities for approximately 14 touchpoints with unique customers annually relating to car wash, oil change, and maintenance and repair services. We use a variety of marketing techniques to build awareness of, and create demand for, our brands and the products and services they offer.
We use a variety of marketing techniques to build awareness of, and create demand for, our brands and the products and services they offer. Our advertising strategy includes CRM, social and digital media as well as television, print, radio, and sponsorships.
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Car Wash We are the world’s largest conveyor car wash company by location count with 1,108 total locations across North America, Europe, and Australia as of December 30, 2023.
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Our car wash services in Europe and Australia are primarily offered through the IMO brand, which has a history of over 55-years of providing express-style conveyor car wash services. IMO’s operations appeal to a broad consumer base seeking a low-cost and high-speed car wash at easily-accessible locations.
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Founded in 1967, PH distributes windshields and glass accessories through a network of distribution centers across Canada and provides direct installation services. PH is the main glass distributor to our company-operated and franchised Uniban locations.
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Take 5 Oil continues to execute at a high level, and we anticipate continued growth supported by our robust company-operated and franchise location pipeline that we built and continue to build organically and through acquisitions. A key strength of Take 5 Oil’s growth strategy is our ability to expand through both franchised and company-owned locations.
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The execution of organic greenfield real estate development and mergers and acquisitions is a core competency and an important shared service capability across the Driven Brands platform. We believe we are well-positioned to continue our long and successful track record of acquisitions, which will provide us with new organic and acquisition growth opportunities in highly fragmented service categories.
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Demand from franchisees to open new locations remains high, and many of our existing franchisees have well-developed real estate pipelines in place. We acquire customers by executing a balanced marketing strategy that combines broad-reach brand campaigns with cost-efficient, data-driven local campaigns and experience repeat business by delivering exceptional customer experience.
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In addition, the evolving vehicle technology landscape provides numerous opportunities for Driven Brands to leverage its scale and core competencies to continue to expand our market share.
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Our comprehensive strategy positions us well to capitalize on new opportunities and drive long-term growth. We have a diversified multi-channel business that can grow in various economic environments. Across our platform, we have developed a significant fleet business serving customers across national rental, fleet management, and government sectors, as well as local fleet accounts from small businesses nationwide.
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We continue to leverage our scale and combined resources in the creation of a unique and powerful shared services, which we believe provide each brand with more resources and produce better results than any individual brand could achieve on its own.
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Our locations are strengthened by ongoing training initiatives, targeted marketing enhancements, procurement savings, and cost efficiencies, driving revenue and profitability growth for both Driven Brands and for our franchisees.
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Our organic growth and acquisition strategy is enhanced by our data analytics engine, which is powered by internally-collected data from consumers, their vehicles, and services that are provided to us at each transaction, and further enriched by third-party data.
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This powerful data gathering capability holds unique customer data, which we use throughout our platform for improving our marketing and customer prospecting capabilities, measuring location performance, enhancing store-level operations, and optimizing our real estate site selection.
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As we grow organically and through acquisitions, we believe the power of our shared services and data analytics will grow and will continue to be a key differentiator for our business.
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We have gained market share through 12 acquisitions making us the second-largest glass services business in the U.S. During 2023, we focused on business integration and margin expansion. With the low cost of store expansion, we continue to seek opportunities to grow our network and market share.
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In 2023, our Paint, Collision & Glass segment generated approximately $2.5 billion in system-wide sales from relationships with insurance carriers. • Car Wash Revenue Model : Since acquiring ICWG in 2020, we have expanded our subscription membership program across our U.S. car wash stores to approximately 60% of domestic car wash revenue in 2023.
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Our franchise agreements also require franchisees to comply with our standard operating methods that govern the provision of services and use of vendors and may include a requirement to purchase specified products from us, our affiliates and/or designated vendors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny lack of management continuity could adversely affect our ability to successfully manage our business and execute our growth strategy, as well as result in operational and administrative inefficiencies and added costs, and may make recruiting for future management positions more difficult.
Biggest changeAny lack of management continuity could adversely affect our ability to successfully manage our business and execute our growth strategy, cause a loss of institutional knowledge, increase demands on other employees, result in operational and administrative inefficiencies and added costs, and may make recruiting for future management positions more difficult. 23 Risks Related to Intellectual Property and Technology We depend on our intellectual property to protect our brands, we may fail to establish trademark rights in the countries we operate and litigation to enforce or defend our intellectual property rights may be costly.
These provisions include: • providing that our Board of Directors will be divided into three classes, with each class of directors serving staggered three-year terms; • providing for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; • empowering only the board to fill any vacancy on our Board of Directors (other than in respect of our Principal Stockholders’ directors (as defined below)), whether such vacancy occurs as a result of an increase in the number of directors or otherwise, if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; • authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; • prohibiting stockholders from acting by written consent if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; • to the extent permitted by law, prohibiting stockholders from calling a special meeting of stockholders if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; and • establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.
These provisions include: • providing that our Board of Directors will be divided into three classes, with each class of directors serving staggered three-year terms; 33 • providing for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; • empowering only the board to fill any vacancy on our Board of Directors (other than in respect of our Principal Stockholders’ directors (as defined below)), whether such vacancy occurs as a result of an increase in the number of directors or otherwise, if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; • authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; • prohibiting stockholders from acting by written consent if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; • to the extent permitted by law, prohibiting stockholders from calling a special meeting of stockholders if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; and • establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.
These risks include, among others, the following: • Competition may harm our business and results of operations. • Changes in consumer preferences and perceptions, and in economic, market, and other conditions could adversely affect our business and results of operations. • Our business is affected by the financial results of our franchisees. • Increases in operating costs, including labor and commodity costs and interest rates have, and may again in the future, adversely affect our results of operations. • Our business is affected by advances in automotive technology. • We depend on key suppliers, including international suppliers, to deliver timely high-quality products at quantities and prices required for our businesses. • We may not be able to execute on our plans to open additional locations and enter new markets. • Our business may be adversely impacted by our indebtedness, including additional leverage in connection with acquisitions and other capital expenditure initiatives. • If franchisees and other licensees do not observe the required quality and trademark usage standards, our brands may suffer reputational damage, which could in turn adversely affect our business. • We are heavily dependent on information systems and technology, and any significant failure, interruption, or security incident could impair our ability to efficiently operate our business or timely or accurately prepare financial reports. • Our failure or our franchisees and independent operators’ failure to comply with health, employment, and other federal, state, local, and provincial laws, rules, and regulations may lead to losses and harm our brands. • The documents governing our indebtedness have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects. • The Securitization Senior Notes Indenture governing the securitized debt facility may restrict the cash flow from the entities subject to the securitization to us and our subsidiaries and, upon the occurrence of certain events, cash flow would be further restricted. • We are a “controlled company” within the meaning of NASDAQ rules and, as a result, qualify for exemptions from certain corporate governance requirements that we have relied on in the past and may do so in the future. • Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price. 12 Risks Relating to Our Business Competition may harm our business and results of operations.
These risks include, among others, the following: • Competition may harm our business and results of operations. • Changes in consumer preferences and perceptions, and in economic, market, and other conditions could adversely affect our business and results of operations. • Our business is affected by the financial results of our franchisees. • Increases in operating costs, including labor and commodity costs and interest rates have, and may again in the future, adversely affect our results of operations. • Our business is affected by advances in automotive technology. • We depend on key suppliers, including international suppliers, to deliver timely high-quality products at quantities and prices required for our businesses. • We may not be able to execute on our plans to open additional locations and enter new markets. • Our business may be adversely impacted by our indebtedness, including additional leverage in connection with acquisitions and other capital expenditure initiatives. • If franchisees and other licensees do not observe the required quality and trademark usage standards, our brands may suffer reputational damage, which could in turn adversely affect our business. • We are heavily dependent on information systems and technology, and any significant failure, interruption, or security incident could impair our ability to efficiently operate our business or timely or accurately prepare financial reports. • Our failure or our franchisees and independent operators’ failure to comply with health, employment, and other federal, state, local, and provincial laws, rules, and regulations may lead to losses and harm our brands. • The documents governing our indebtedness have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects. • The Securitization Senior Notes Indenture governing the securitized debt facility may restrict the cash flow from the entities subject to the securitization to us and our subsidiaries and, upon the occurrence of certain events, cash flow would be further restricted. • We are a “controlled company” within the meaning of NASDAQ rules and, as a result, qualify for exemptions from certain corporate governance requirements that we have relied on in the past and may do so in the future. • Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price. 11 Risks Relating to Our Business Competition may harm our business and results of operations.
These tax benefits, which we refer to as the Pre-IPO and IPO-Related Tax Benefits, include: (i) all depreciation and amortization deductions, and any offset to taxable income and gain or increase to taxable loss, resulting from the tax basis that we have in our and our subsidiaries’ intangible assets, (ii) the utilization of certain of our and our subsidiaries’ U.S. federal and Canadian federal and provincial net operating losses, capital losses, non-capital losses, disallowed interest expense carryforwards and tax credits, if any, attributable to periods prior to the effective date of the Company’s initial public offering, (iii) deductions in respect of debt issuance costs associated with certain of our and our subsidiaries’ financing arrangements, and (iv) deductions with respect to our and our subsidiaries’ initial public offering-related expenses.
These tax benefits, which we refer to as the Pre-IPO and IPO-Related Tax Benefits, include: (i) all depreciation and amortization deductions, and any offset to taxable income and gain or increase to taxable loss, resulting from the tax basis that we have in our and our subsidiaries’ 31 intangible assets, (ii) the utilization of certain of our and our subsidiaries’ U.S. federal and Canadian federal and provincial net operating losses, capital losses, non-capital losses, disallowed interest expense carryforwards and tax credits, if any, attributable to periods prior to the effective date of the Company’s initial public offering, (iii) deductions in respect of debt issuance costs associated with certain of our and our subsidiaries’ financing arrangements, and (iv) deductions with respect to our and our subsidiaries’ initial public offering-related expenses.
In addition, any testing by us conducted in connection with management’s assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
In addition, any testing by us conducted in connection with management’s assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, or any subsequent testing by our independent registered 32 public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
Although we believe this exclusive forum provision benefits us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, other employees or stockholders, which may discourage such lawsuits against us and our directors, officers, other employees, or stockholders.
Although we believe this exclusive forum provision benefits us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, other employees or stockholders, which may discourage such lawsuits against us and our directors, officers, 34 other employees, or stockholders.
However, our certificate of incorporation includes a provision 34 that restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder, but such restrictions do not apply to any business combination between our Principal Stockholders and any affiliate thereof or their direct and indirect transferees, on the one hand, and us, on the other.
However, our certificate of incorporation includes a provision that restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder, but such restrictions do not apply to any business combination between our Principal Stockholders and any affiliate thereof or their direct and indirect transferees, on the one hand, and us, on the other.
Increasing complexity in the systems used in vehicles exacerbates this risk. • Restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, which may limit our ability to perform maintenance and repairs. • Negative publicity associated with any of our services and products, or regarding the automotive aftermarket industries generally, whether or not factually accurate, could cause consumers to lose confidence in, or could harm the reputation of our brands. • Changes in travel patterns, which may cause consumers to rely more heavily on mass transportation or to travel less frequently. 13 • Payments for automobile repairs, which may be dependent on insurance programs, and insurance companies may require repair technicians to hold certain certifications that the personnel at our locations do not hold. • Changes in governmental regulations in the automotive sector, including pollution prevention laws, which may affect demand for automotive repair and maintenance services and increase our costs in unknown ways.
Increasing complexity in the systems used in vehicles exacerbates this risk. • Restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, which may limit our ability to perform maintenance and repairs. • Negative publicity associated with any of our services and products, or regarding the automotive aftermarket industries generally, whether or not factually accurate, could cause consumers to lose confidence in, or could harm the reputation of our brands. 12 • Changes in travel patterns, which may cause consumers to rely more heavily on mass transportation or to travel less frequently. • Payments for automobile repairs, which may be dependent on insurance programs, and insurance companies may require repair technicians to hold certain certifications that the personnel at our locations do not hold. • Changes in governmental regulations in the automotive sector, including pollution prevention laws, which may affect demand for automotive repair and maintenance services and increase our costs in unknown ways.
Customers may purchase fewer under car services during the winter months, when miles driven tend to be lower. Conversely, demand for collision repair and services is lower outside of winter months, when collisions are typically less common due to improved driving conditions. Our 1-800 Radiator brand experiences seasonal fluctuations related to the sale of air conditioning and heating parts.
Customers may purchase fewer under car services during the winter months, when miles driven tend to be lower. Conversely, demand for collision repair and services is lower outside of winter months, when collisions are typically less common due to improved driving conditions. Our 1-800 Radiator brand experiences seasonal fluctuations related to the sale of air conditioning 18 and heating parts.
Additionally, depending upon the outcome and application of certain legal proceedings pending or concluded in federal and state courts in California involving the wage and hour laws of California in another franchise system, 21 franchisors may be subject to claims that their franchisees should be treated as employees and not as independent contractors under the wage and hour laws of California and, potentially, certain other states with similar wage and hour laws.
Additionally, depending upon the outcome and application of certain legal proceedings pending or concluded in federal and state courts in California involving the wage and hour laws of California in another franchise system, franchisors may be subject to claims that their franchisees should be treated as employees and not as independent contractors under the wage and hour laws of California and, potentially, certain other states with similar wage and hour laws.
The attendant expenses that we bear could require the expenditure of additional capital, and there would be expenses associated with the defense of any infringement, misappropriation, or other third- party claims, and there could be attendant negative publicity, even if ultimately decided in our favor. In addition, third parties may assert that our intellectual property is 25 invalid or unenforceable.
The attendant expenses that we bear could require the expenditure of additional capital, and there would be expenses associated with the defense of any infringement, misappropriation, or other third- party claims, and there could be attendant negative publicity, even if ultimately decided in our favor. In addition, third parties may assert that our intellectual property is invalid or unenforceable.
These potential conflicts of interest could 35 have a material adverse effect on our business, financial condition, results of operations, or prospects if attractive corporate opportunities are allocated by one of our Principal Stockholders to itself or its affiliated funds, the portfolio companies owned by such funds, or any affiliates of a Principal Stockholder instead of to us.
These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations, or prospects if attractive corporate opportunities are allocated by one of our Principal Stockholders to itself or its affiliated funds, the portfolio companies owned by such funds, or any affiliates of a Principal Stockholder, instead of to us.
Our and our affiliated entities and’ or services providers’ failure to comply with such laws could result in potentially significant regulatory investigations or government actions, litigation, operational disruptions, penalties or remediation, and other costs, as well as adverse publicity, loss of sales and profits, and an increase in fees payable to third parties.
Our and our affiliated entities and or services providers’ failure to comply with such laws could result in potentially significant regulatory investigations or government actions, litigation, operational disruptions, penalties or remediation, and other costs, as well as adverse publicity, loss of sales and profits, and an increase in fees payable to third parties.
The success of our business strategy depends, in part, on our continued ability to use our existing trademarks 24 and service marks to increase brand awareness and further develop our branded services and products in both existing and new markets. We have registered certain trademarks and have other trademark applications pending in the U.S. and certain foreign jurisdictions.
The success of our business strategy depends, in part, on our continued ability to use our existing trademarks and service marks to increase brand awareness and further develop our branded services and products in both existing and new markets. We have registered certain trademarks and have other trademark applications pending in the U.S. and certain foreign jurisdictions.
Profitability of franchisees is also typically lower during months in which revenue composition is more heavily weighted toward tires, which is a lower margin category. In addition, profitability in certain areas of North 19 America and Europe may be lower in the winter months when certain costs, such as utilities and snow plowing, are typically higher.
Profitability of franchisees is also typically lower during months in which revenue composition is more heavily weighted toward tires, which is a lower margin category. In addition, profitability in certain areas of North America and Europe may be lower in the winter months when certain costs, such as utilities and snow plowing, are typically higher.
Generally, the default provisions under the franchise documents are drafted broadly and include, among other things, any failure to meet operating standards and actions that may threaten our intellectual property. In addition, certain of the franchise documents have terms that will expire over the next 12 months.
Generally, the default provisions under the franchise documents are drafted broadly and include, among other things, any failure to meet operating standards and actions that may threaten our intellectual property. 27 In addition, certain of the franchise documents have terms that will expire over the next 12 months.
In such an environment, our suppliers may seek to change the terms on which they do business with us in order to lessen the impact of any current and future economic or regulatory challenges on their businesses or may cease or suspend operations.
In such an environment, our suppliers may seek to change the terms on which they do business with us to lessen the impact of any current and future economic or regulatory challenges on their businesses or may cease or suspend operations.
Our suppliers may be adversely impacted by economic weakness and uncertainty, such as increased commodity prices, increased fuel costs, tight credit markets, and various other factors, including geopolitical uncertainty, transportation interruptions, import and export regulations, sanctions, and labor shortages.
Our suppliers may be adversely impacted by economic weakness and uncertainty, such as increased commodity prices, increased fuel costs, tight credit markets, and various other factors, including geopolitical uncertainty, transportation interruptions, import and export regulations, sanctions, tariffs, and labor shortages.
In addition, a variety of risks are associated with the use of social media and digital 20 marketing, including the improper disclosure of proprietary information, negative comments about or negative incidents regarding us, exposure of personally identifiable information, fraud, or out-of-date information.
In addition, a variety of risks are associated with the use of social media and digital marketing, including the improper disclosure of proprietary information, negative comments about or negative incidents regarding us, exposure of personally identifiable information, fraud, or out-of-date information.
In certain circumstances, the documents governing our indebtedness also require us to maintain specified financial ratios. Our ability to meet these financial ratios can be affected by events beyond our control, and we may not satisfy such a 30 test.
In certain circumstances, the documents governing our indebtedness also require us to maintain specified financial ratios. Our ability to meet these financial ratios can be affected by events beyond our control, and we may not satisfy such a test.
In addition to the risk of adverse legislation or regulations being enacted in the future, we cannot predict how existing or future laws or regulations will be administered or interpreted. Further, we cannot predict the amount of future expenditures that may be required in order to comply with any such laws or regulations.
In addition to the risk of adverse legislation or regulations being enacted in the future, we cannot predict how existing or future laws or regulations will be administered or interpreted. Further, we cannot predict the amount of future expenditures that may be required to comply with any such laws or regulations.
In addition, litigation against a franchisee, independent operator, or their affiliates or against a company-operated location by third parties, whether in the ordinary course of business or otherwise, 22 may include claims against us by virtue of our relationship with the franchisee, independent operator or company-operated location.
In addition, litigation against a franchisee, independent operator, or their affiliates or against a company-operated location by third parties, whether in the ordinary course of business or otherwise, may include claims against us by virtue of our relationship with the franchisee, independent operator or company-operated location.
Any failure to comply with the foregoing rules or requirements could harm our brand, reputation, business, and results of operations. Catastrophic events may disrupt our business in a manner that adversely affects our business.
Any failure to comply with the foregoing rules or requirements could harm our brand, reputation, business, and results of operations. 22 Catastrophic events may disrupt our business in a manner that adversely affects our business.
Tariffs imposed by the U.S. and/or other governments and geopolitical uncertainty could increase our supply costs, which could materially and adversely affect our business and results of operations. Higher tariffs in the U.S. and elsewhere could increase our supply costs and adversely impact our profitability.
Tariffs imposed by the U.S. and/or other governments and geopolitical uncertainty could increase our supply costs, which could materially and adversely affect our business and results of operations. Higher tariffs imposed by the U.S. and elsewhere could increase our supply costs and adversely impact our profitability.
We rely on these networks and systems to process, transmit, and store electronic information that is important to the 26 operation of our business and the services we offer, as well as to manage and support our core business operations.
We rely on these networks and systems to process, transmit, and store electronic information that is important to the operation of our business and the services we offer, as well as to manage and support our core business operations.
Unforeseen events, including war, terrorism and other international, regional or local instability, or conflicts (including current or future civil unrest and labor issues), embargoes, public health issues, and natural disasters such as hurricanes, earthquakes, or other adverse weather and climate conditions, whether occurring in the U.S. or abroad, could disrupt our operations, disrupt the operations of franchisees, distributors, suppliers, or customers, or result in political or economic 23 instability.
Unforeseen events, including war, terrorism and other international, regional or local instability, or conflicts (including current or future civil unrest and labor issues), embargoes, public health issues, and natural disasters such as hurricanes, earthquakes, wildfires, or other adverse weather and climate conditions, whether occurring in the U.S. or abroad, could disrupt our operations, disrupt the operations of franchisees, distributors, suppliers, or customers, or result in political or economic instability.
As a result, any such claim could harm our business and cause a decline in our results of operations and financial condition, which in turn may materially and adversely affect our business and results of operations.
As a result, any such claim 24 could harm our business and cause a decline in our results of operations and financial condition, which in turn may materially and adversely affect our business and results of operations.
Our failure to maintain our current product sourcing income could have a material 16 adverse effect on our sales and profit margins, which in turn could materially and adversely affect our business and results of operations. We benefit from negotiated discounts with certain large oil and other suppliers based on our scale and ability to meet volume requirements.
Our failure to maintain our current product sourcing income could have a material 15 adverse effect on our sales and profit margins, which in turn could materially and adversely affect our business and results of operations. We benefit from negotiated discounts with certain large oil and other suppliers based on our scale and ability to meet volume requirements.
Litigation may lead to a decline in the sales and operating results of our locations and divert our management resources regardless of whether the allegations in such litigation are valid or whether we are liable. See Item 3 and Note 19 included elsewhere within this Form 10-K for additional information on matters in dispute.
Litigation may lead to a decline in the sales and operating results of our locations and divert our management resources regardless of whether the allegations in such litigation are valid or whether we are liable. See Item 3 and Note 17 included elsewhere within this Form 10-K for additional information on matters in dispute.
We do not generally provide our franchisees with direct financing and therefore their ability to access borrowed funds generally depends on their independent relationships with various financial institutions. In addition, 18 labor and material costs expended will vary by geographical location and are subject to general price increases.
We do not generally provide our franchisees with direct financing and therefore their ability to access borrowed funds generally depends on their independent relationships with various financial institutions. In addition, 17 labor and material costs expended will vary by geographical location and are subject to general price increases.
Consequently, franchisees may not successfully operate stores in a manner consistent with our standards and requirements or may not hire and train qualified managers and other store personnel. If they do not, our image and reputation may suffer, and revenues could decline. 14 Our business is affected by advances in automotive technology .
Consequently, franchisees may not successfully operate stores in a manner consistent with our standards and requirements or may not hire and train qualified managers and other store personnel. If they do not, our image and reputation may suffer, and revenues could decline. 13 Our business is affected by advances in automotive technology .
Any future changes in the realizability of the Pre-IPO and IPO-Related Tax Benefits will impact the amount of the liability under the Tax Receivable Agreement. Based on our current taxable income estimates, we expect to repay the majority of this obligation by the end of our 2025 fiscal year.
Any future changes in the realizability of the Pre-IPO and IPO-Related Tax Benefits will impact the amount of the liability under the Tax Receivable Agreement. Based on our current taxable income estimates, we expect to repay the majority of this obligation by the end of our 2034 fiscal year.
Any such future difficulties could result in a decline in the sales and operating results of our locations, which could in turn materially and adversely affect our revenues, results of operations, business, and financial condition. 15 Insurance coverage may not be adequate, and increased self-insurance and other insurance costs could adversely affect our results of operations.
Any such future difficulties could result in a decline in the sales and operating results of our locations, which could in turn materially and adversely affect our revenues, results of operations, business, and financial condition. 14 Insurance coverage may not be adequate, and increased self-insurance and other insurance costs could adversely affect our results of operations.
If a franchisee is unable or unwilling to satisfy any of the foregoing conditions, such franchisee’s expiring franchise document and the related franchisee payments will terminate upon expiration of the term of the franchise document unless we decide to restructure the franchise documents in order to induce such franchisee to renew the franchise document.
If a franchisee is unable or unwilling to satisfy any of the foregoing conditions, such franchisee’s expiring franchise document and the related franchisee payments will terminate upon expiration of the term of the franchise document unless we decide to restructure the franchise documents to induce such franchisee to renew the franchise document.
Sales of significant amounts of stock in the public market or the perception that such sales may occur could adversely affect prevailing market prices of our common stock or make it more difficult for you to sell your shares of common stock at a time and price that you deem appropriate. Item 1B. Unresolved Staff Comments None.
Sales of significant amounts of stock in the public market or the perception that such sales may occur could adversely affect prevailing market prices of our common stock or make it more difficult for our stockholders to sell your shares of common stock at a time and price that they deem appropriate. Item 1B. Unresolved Staff Comments None.
Franchisees will be subject to specified product quality standards and other requirements pursuant to the related franchise agreements in order to protect our brands and to optimize their performance. However, franchisees may provide substandard services or receive through the supply chain or produce defective products, which may adversely impact the goodwill of our brands.
Franchisees will be subject to specified product quality standards and other requirements pursuant to the related franchise agreements to protect our brands and to optimize their performance. 28 However, franchisees may provide substandard services or receive through the supply chain or produce defective products, which may adversely impact the goodwill of our brands.
All of the foregoing, in the event of recurrence, may negatively affect our sales, which could have a material adverse effect on our business and results of operations. We and our franchisees lease or sublease the land and buildings where a number of our locations are situated, which could expose us to possible liabilities and losses.
All of the foregoing, may negatively affect our sales, which could have a material adverse effect on our business and results of operations. We and our franchisees lease or sublease the land and buildings where a number of our locations are situated, which could expose us to possible liabilities and losses.
Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third parties (other than Mondofix in the case of “Fix Auto USA”) may have filed for marks in countries where we have not registered the brands as trademarks.
Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third parties (other than Mondofix in the case of “Fix Auto”) may have filed for marks in countries where we have not registered the brands as trademarks.
The following factors could affect our stock price: • our operating and financial performance and prospects; • quarterly variations in the rate of growth (if any) of our financial indicators, such as net income per share, net income, and revenues; • the public reaction to our press releases, our other public announcements, and our filings with the SEC; • strategic actions by our competitors; • changes in operating performance and the stock market valuations of other companies; • overall conditions in our industry and the markets in which we operate; • announcements related to litigation; • our failure to meet revenue or earnings estimates made by research analysts or other investors; • changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • speculation in the press or investment community; • issuance of new or updated research or reports by securities analysts; • sales of our common stock by us or our stockholders, or the perception that such sales may occur; • changes in accounting principles, policies, guidance, interpretations, or standards; • additions or departures of key management personnel; • actions by our stockholders, including our Principal Stockholders; • general market conditions; • domestic and international economic, legal, and regulatory factors unrelated to our performance; • announcement by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; • security breaches impacting us or other similar companies; • material weakness in our internal control over financial reporting; and • the realization of any risks described under this “Risk Factors” section, or other risks that may materialize in the future. 31 The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
The following factors could affect our stock price: • our operating and financial performance and prospects; • quarterly variations in the rate of growth (if any) of our financial indicators, such as net income per share, net income, and revenues; • the public reaction to our press releases, our other public announcements, and our filings with the SEC; • strategic actions by our competitors; • changes in operating performance and the stock market valuations of other companies; • overall conditions in our industry and the markets in which we operate; • announcements related to litigation; • our failure to meet revenue or earnings estimates made by research analysts or other investors; 30 • changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • speculation in the press or investment community; • issuance of new or updated research or reports by securities analysts; • sales of our common stock by us or our stockholders, or the perception that such sales may occur; • changes in accounting principles, policies, guidance, interpretations, or standards; • additions or departures of key management personnel; • actions by our stockholders, including our Principal Stockholders; • general market conditions; • domestic and international economic, legal, and regulatory factors unrelated to our performance; • announcement by us or our competitors of significant acquisitions, divestitures, strategic partnerships, joint ventures, or capital commitments; • security breaches impacting us or other similar companies; • material weakness in our internal control over financial reporting; and • the realization of any risks described under this “Risk Factors” section, or other risks that may materialize in the future.
Instability, disruption, or destruction caused by civil insurrection or social unrest may affect the markets in which we operate, our suppliers, customers, sales of products, and customer service. Our business, and the business of our suppliers, may be adversely affected by instability, disruption, or destruction caused by riots, civil insurrection, social unrest, man made disasters, or crimes.
Instability, disruption, or destruction caused by civil insurrection or social unrest may affect the markets in which we operate, our suppliers, customers, sales of products, and customer service. Our business, and the business of our suppliers, may be adversely affected by instability, disruption, or destruction caused by riots, civil insurrection, social unrest, man made disasters, or criminal activity.
We implement new systems, including our continued implementation of a new enterprise resource planning (“ERP”) system, as a part of our ongoing technology and process improvements. The ERP system is designed to provide a standardized method of accounting for the enterprise and enhance our ability to implement strategic initiatives.
We implement new systems, including our implementation of a new enterprise resource planning (“ERP”) system in 2024, as a part of our ongoing technology and process improvements. The ERP system is designed to provide a standardized method of accounting for the enterprise and enhance our ability to implement strategic initiatives.
Registrations for “Fix Auto USA” are owned and maintained by a third-party licensor. We have not registered all of the trademarks that we use in all of the countries in which we do business or may do business in the future, and some trademarks may never be registered in all of these countries.
Registrations for “Fix Auto” are owned and maintained by a third-party licensor. We have not registered all of the trademarks that we use in all of the countries in which we do business or may do business in the future, and some trademarks may never be registered in all of these countries.
Further, our ability to continue to grow our business, including opening 17 additional locations to maintain existing business volume and pricing, is related to our ability to maintain and grow our relationships with insurance providers.
Further, our ability to continue to grow our business, including opening 16 additional locations to maintain existing business volume and pricing, is related to our ability to maintain and grow our relationships with insurance providers.
Our Principal Stockholders collectively have significant influence over us, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote. As of February 26, 2024, our Principal Stockholders hold approximately 62% of the outstanding shares of our common stock.
Our Principal Stockholders collectively have significant influence over us, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote. As of February 24, 2025, our Principal Stockholders hold approximately 62% of the outstanding shares of our common stock.
As of December 30, 2023, there were locations in 49 states in the U.S. and 13 other countries. In the U.S., our locations were most concentrated in California, Texas, Florida, Illinois, and Ohio, in Canada our locations were most concentrated in Ontario and Quebec and in Europe our locations were most concentrated in the United Kingdom (“U.K.”) and Germany.
As of December 28, 2024, there were locations in 49 states in the U.S. and 13 other countries. In the U.S., our locations were most concentrated in California, Texas, Florida, Illinois, and Ohio, in Canada our locations were most concentrated in Ontario and Quebec and in Europe our locations were most concentrated in the United Kingdom (“U.K.”) and Germany.
Our success depends on our and our franchisees’ continued ability to use our intellectual property and on the adequate protection and enforcement of such intellectual property. We rely on a combination of trademarks, service marks, copyrights trade secrets, and similar intellectual property rights to protect our brands.
Our intellectual property is material to the conduct of our business. Our success depends on our and our franchisees’ continued ability to use our intellectual property and on the adequate protection and enforcement of such intellectual property. We rely on a combination of trademarks, service marks, copyrights trade secrets, and similar intellectual property rights to protect our brands.
As of February 2024, fourteen U.S. states will have passed separate privacy laws, the majority of which will be effective in the next year. With no Federal standard likely to be voted on in the coming legislative year, we are required to observe and satisfy each of the differing requirements.
As of December 2024, nineteen U.S. states will have passed separate privacy laws, the majority of which are or will be effective in the next year. With no Federal standard likely to be voted on in the coming legislative year, we are required to observe and satisfy each of the differing requirements.
Economic weakness and uncertainty has previously forced some suppliers to seek financing in order to stabilize their businesses, and others have been forced to restructure or have ceased operations completely.
Economic weakness and uncertainty have previously forced some suppliers to seek financing to stabilize their businesses, and others have been forced to restructure or have ceased operations completely.
Assuming no material changes in the relevant tax law, and that we and our subsidiaries earn sufficient income to realize the full Pre-IPO and IPO-Related Tax Benefits, we expect that future payments under the Tax Receivable Agreement will aggregate to between $160 million and $180 million.
Assuming there are no material changes in the relevant tax law, and that we and our subsidiaries earn sufficient income to realize the full Pre-IPO and IPO-Related Tax Benefits, we expect that future payments under the Tax Receivable Agreement will aggregate to between $130 million and $150 million.
A smaller, younger population of vehicles in operation could lessen demand for our services. • Rising energy prices, because increases in energy prices may cause customers to defer certain repairs or purchases because they use a higher percentage of their income to pay for gasoline and other energy costs and drive their vehicles less frequently, resulting in less wear and tear and lower demand for repairs and maintenance. • Advances and changes in automotive technology and parts design, may result in cars needing repairs and maintenance, such as motor oil changes, less frequently and parts lasting longer, may make customers more likely to use dealership automotive repair services, or may increase the cost to our locations to obtain relevant parts or training for employees. • Economic downturns, as declining economic conditions may cause customers to defer vehicle maintenance, repairs, oil changes, car washes, or other services, obtain credit, or repair and maintain their vehicles themselves.
As the price of used cars decreases, the number of cars being deemed a total loss increases, resulting in less demand for repairs and maintenance. • Rising energy prices, because increases in energy prices may cause customers to defer certain repairs or purchases because they use a higher percentage of their income to pay for gasoline and other energy costs and drive their vehicles less frequently, resulting in less wear and tear and lower demand for repairs and maintenance. • Advances and changes in automotive technology and parts design, may result in cars needing repairs and maintenance, such as motor oil changes, less frequently, and parts lasting longer, may make customers more likely to use dealership automotive repair services, or may increase the cost to our locations to obtain relevant parts or training for employees. • Economic downturns, such as declining economic conditions may cause customers to defer vehicle maintenance, repairs, oil changes, car washes, or other services, obtain credit, or repair and maintain their vehicles themselves.
In addition, we may not be able to accurately forecast the financial impact of a disposition, as each transaction may have an unexpected impact to other aspects of our Company, including but not limited to, the loss of network benefits, reduced rebate revenue, disruption to other parts of the businesses and distraction of management, loss of key employees, suppliers or customers, and exposure to unanticipated liabilities or ongoing obligations to support the business following such disposition.
In addition, we may not be able to accurately forecast the financial impact of a disposition, as each transaction may have an unexpected impact to other aspects of our Company, including but not limited to, the loss of network benefits, reduced rebate revenue, disruption to other parts of the businesses, distraction of management, and loss of key employees, suppliers or customers.
In addition, consumer reaction to any statements we or our franchisees or independent operators made in response to the protests, or to matters directly or indirectly related to the protests, could have been perceived in a way that negatively impacts our reputation, value and image.
In addition, consumer reaction to any statements we, our franchisees, or independent operators make in response to any protests, or to matters directly or indirectly related to protests, could be perceived in a way that negatively impacts our reputation, value and image.
In recent years, there were significant demonstrations and protests in cities throughout the U.S. Though they were generally peaceful, in some locations they were accompanied by damage and loss of merchandise. Such events could result in closures of some of our locations, declines in customer traffic, and/or property damage and loss to some of our locations.
In recent years, there have been significant demonstrations and protests in cities throughout the U.S. Though these demonstrations have been generally peaceful, in some instances they were accompanied by damage and loss of merchandise. Similar protests could result in closures of some of our locations, declines in customer traffic, and/or property damage and loss.
We have seven series of securitization term notes, approximately $2.2 billion of which were outstanding as of December 30, 2023, and one series of variable funding notes, which had no outstanding 29 balance as of December 30, 2023, pursuant to the Securitization Senior Notes Indenture.
We have seven series of securitization term notes, approximately $2.2 billion of which were outstanding as of December 28, 2024, and two series of variable funding notes, which had no outstanding balance as of December 28, 2024, pursuant to the Securitization Senior Notes Indenture.
We expect competition to continue to intensify as existing competitors continue to expand operations, product offering mixes, and promote aggressive marketing campaigns and new competitors emerge. These increased competitive pressures could have a material adverse effect on our business, financial condition, and operating results.
In addition, advances in technology such as artificial intelligence (“AI”) and machine learning pose competitive risks. We expect competition to continue to intensify as existing competitors continue to expand operations, product offering mixes, and promote aggressive marketing campaigns and new competitors emerge. These increased competitive pressures could have a material adverse effect on our business, financial condition, and operating results.
As a result, in such circumstances we could make payments under the Tax Receivable Agreement that are greater than our and our subsidiaries’ actual cash tax savings. 32 The payments we make under the Tax Receivable Agreement could be material. We made an initial payment of $24.7 million under the Tax Receivable Agreement in January 2024.
As a result, in such circumstances we could make payments under the Tax Receivable Agreement that are greater than our and our subsidiaries’ actual cash tax savings. The payments we make under the Tax Receivable Agreement could be material. We made payments in the aggregate amount of $38 million under the Tax Receivable Agreement in 2024.
During implementation, we may experience disruption of our financial functions, potential loss or corruption of data, and technical challenges with migration from legacy systems; and if we experience unforeseen problems with the ERP system, we may need to implement additional systems or transition to other systems that would require further expenditures to function effectively as a public company, such implementation problems could adversely affect business operations and result in financial loss and reputational harm.
If we experience unforeseen problems with the ERP system, we may need to implement additional systems or transition to other systems that would require further expenditures to function effectively as a public company, such problems could adversely affect business operations and result in financial loss and reputational harm.
When our franchisees are impacted by weak economic conditions and are unable to secure adequate sources of financing, their financial health worsens, our revenues may decline and we may need to offer extended payment terms or make other concessions.
If our franchisees are unsuccessful in meeting their productivity and growth goals, our business could be adversely affected. When our franchisees are impacted by weak economic conditions and are unable to secure adequate sources of financing, their financial health worsens, our revenues may decline and we may need to offer extended payment terms or make other concessions.
In Canada, the federal Personal Information Protection and Electronic Documents Act and similar laws in several Canadian provinces. In the European Union, this includes the implementation of the General Data Protection Regulation (the “GDPR”), which came into effect in May 2018, and in the U.K. they include the U.K.-GDPR, and the U.K. Data Protection Act of 2018 (the “UK Laws”).
The Privacy and Data Protection Laws include, the federal Personal Information Protection and Electronic Documents Act and similar laws in several Canadian provinces, the General Data Protection Regulation (the “GDPR”) in the European Union, the U.K.-GDPR, and the U.K. Data Protection Act of 2018 (the “UK Laws”) in the U.K.
If income and appreciation from acquisitions acquired through debt are less than the cost of the debt, the total return will decrease. Accordingly, any event which adversely affects the value of an acquisition will be magnified to the extent we are leveraged and we could experience losses substantially greater than if we did not use leverage.
Accordingly, any event which adversely affects the value of an acquisition will be magnified to the extent we are leveraged and we could experience losses substantially greater than if we did not use leverage.
We also have a $491 million term loan facility outstanding and a $300 million revolving credit facility, which had an outstanding balance of $248 million as of December 30, 2023.
We also have a $354 million term loan facility outstanding and a $300 million revolving credit facility, which had an outstanding balance of $190 million as of December 28, 2024.
As long as affiliates of our Principal Stockholders own or control a majority of our outstanding voting power, our Principal Stockholders and their affiliates will have the ability to exercise substantial control over all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including: • the election and removal of directors and the size of our Board of Directors; • any amendment of our articles of incorporation or bylaws; or • the approval of mergers and other significant corporate transactions, including a sale of substantially all of our assets. 33 Moreover, ownership of our shares by affiliates of our Principal Stockholders may also adversely affect the trading price for our common stock to the extent investors perceive disadvantages in owning shares of a company with a controlling shareholder.
As long as affiliates of our Principal Stockholders own or control a majority of our outstanding voting power, our Principal Stockholders and their affiliates will have the ability to exercise substantial control over all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including: • the election and removal of directors and the size of our Board of Directors; • any amendment of our articles of incorporation or bylaws; or • the approval of mergers and other significant corporate transactions, including a sale of substantially all of our assets.
Further, governmental authorities in affected cities and regions may take action in an effort to protect people and property while permitting lawful and non- violent protest, including curfews and restrictions on business operations, neither of which was disruptive to our operations nor harmed consumer confidence and perceptions of personal well-being and security.
Further, governmental authorities in affected cities and regions may take action in an effort to protect people and property while permitting lawful and non- violent protest, including curfews and restrictions on business operations, which could potentially be disruptive to our operations or harm consumer confidence.
The U.S., Canada, and other jurisdictions in which we operate have adopted, and continue to revise, privacy, information security and data protection laws and regulations (“Privacy and Data Protection Laws”) that could have a significant impact on our current and planned privacy, data protection and information security related practices, including our collection, use, sharing, retention, and safeguarding of consumer and/or employee information, and some of our current or planned business activities.
The U.S., Canada, and other jurisdictions in which we operate have adopted, and continue to revise, privacy, information security and data protection laws and regulations (“Privacy and Data Protection Laws”) that could have a significant impact on our current and planned privacy, data protection and information security related practices, including our collection, use, sharing, retention, and safeguarding of consumer and/or employee information, and some of our current or planned business activities. 26 In the U.S., for example, this includes increased privacy related enforcement activity at both the federal level and the state level, including the implementation of the amended version of the California Consumer Protection Act (the “CCPA”) and its implementing regulations, which are currently in effect.
In the future, we may need to raise additional funds through the issuance of new equity securities, debt, or a combination of both. Additional financing may not be available on favorable terms or at all. If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements.
Our ability to raise capital in the future may be limited. Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt, or a combination of both. Additional financing may not be available on favorable terms or at all.
We, our affiliated entities, and our service providers may need to take measures to ensure compliance with new, evolving and existing requirements contained in the GDPR, the CCPA, the U.K.
We, our affiliated entities, and our service providers may need to take measures to ensure compliance with new, evolving and existing requirements contained in the GDPR, the CCPA, the U.K. Laws and other Privacy and Data Protection Laws and to address customer concerns related to their rights under any such Privacy and Data Protection Laws.
There can be no assurance that we will be able to make such dispositions at satisfactory prices and terms in a timely manner, or at all.
There can be no assurance that we will be able to make such dispositions at satisfactory prices and terms in a timely manner, or at all, and sourcing and negotiating these transactions may divert our management’s attention and resources from continuing businesses.
Laws and other Privacy and Data Protection Laws and to address customer concerns related to their rights under any such Privacy and Data Protection Laws. 27 We also may need to continue to make adjustments to our compliance efforts as more clarification and guidance on the requirements of the GDPR, the CCPA, the U.K.
We also may need to continue to make adjustments to our compliance efforts as more clarification and guidance on the requirements of the GDPR, the CCPA, the U.K. Laws and other Privacy and Data Protection Laws becomes available. Our ongoing efforts to ensure our and our affiliated entities’ compliance with the CCPA, GDPR, and U.K.
Laws and other Privacy and Data Protection Laws becomes available. Our ongoing efforts to ensure our and our affiliated entities’ compliance with the CCPA, GDPR, and U.K Laws and other existing or future Privacy and Data Protection Laws affecting customer or employee data to which we are subject could result in additional costs and operational disruptions.
Laws and other existing or future Privacy and Data Protection Laws affecting customer or employee data to which we are subject could result in additional costs and operational disruptions.
Terminations or restructurings of franchise documents could reduce franchise payments or require us to incur expenses to solicit and qualify new franchises, which in turn may materially and adversely affect our business and results of operations.
Terminations or restructurings of franchise documents could reduce franchise payments or require us to incur expenses to solicit and qualify new franchises, which in turn may materially and adversely affect our business and results of operations. We may not be able to retain franchisees or maintain the quality of existing franchisees. Each franchised location is heavily reliant on its franchisee.
Any delay in its implementation could adversely affect our ability to timely and accurately report financial information, including the filing of our quarterly or annual reports with the SEC.
Complications with the ERP system’s implementation could also cause challenges with maintaining and achieving effective internal controls, and adversely affect our ability to timely and accurately report financial information, including the filing of our quarterly or annual reports with the SEC.
The documents governing our indebtedness have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects.
If we are unable to refinance any of our indebtedness on commercially reasonable terms or at all or to affect any other action relating to our indebtedness on satisfactory terms or at all, our business may be harmed. 29 The documents governing our indebtedness have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects.
Any of these factors could adversely affect our business and financial results. Our business may be adversely impacted by our indebtedness, including additional leverage in connection with acquisitions and other capital expenditure initiatives. We may pursue strategic acquisitions as part of our business strategy.
Our business may be adversely impacted by our indebtedness, including additional leverage in connection with acquisitions and other capital expenditure initiatives. We may pursue strategic acquisitions as part of our business strategy. If we are able to identify acquisition candidates, such acquisitions may be financed with a substantial amount of additional indebtedness.
We also maintain important internal company data, such as PII about our employees, franchisees, and independent operators and information relating to our operations. Due to the evolving sophistication of technology and techniques employed by third parties and threat actors, a compromise of our customer transaction, PII or other sensitive data may occur.
Due to the evolving sophistication of technology and techniques employed by third parties and threat actors, such as through the use of AI and other technologies we are increasingly vulnerable to a compromise of our customer transaction, PII or other sensitive data.
In addition, adverse publicity related to litigation could negatively impact the reputation of our brands, even if such litigation is not valid, or a substantial judgment against us could negatively impact the reputation of our brands, resulting in further adverse impacts to results of operations.
In addition, adverse publicity related to litigation could negatively impact the reputation of our brands, even if such litigation is not valid, or a substantial judgment against us could negatively impact the reputation of our brands, resulting in further adverse impacts to results of operations. 21 In the ordinary course of business, we will be, from time to time, the subject of complaints or litigation from franchisees and independent operators, which could relate to alleged breaches of contract or wrongful termination under the franchise documents and independent operator documents.
We have experienced and expect further increases in payroll expenses as a result of federal, state, and provincial mandated increases in the minimum wage. In addition, our vendors may be affected by higher minimum wage standards, which may increase the price of goods and services they supply to our brands.
We have experienced and expect further increases in payroll expenses as a result of federal, state, and provincial mandated increases in the minimum wage.
Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources, and harm our business, financial condition, and results of operations. Our ability to raise capital in the future may be limited. Our business and operations may consume resources faster than we anticipate.
Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources, and harm our business, financial condition, and results of operations.
These broad market fluctuations may adversely affect the trading price of our common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities.
The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.
Companies that operate franchise systems may also be subject to claims for allegedly being a joint employer with a franchisee.
In addition, our vendors may be affected by higher minimum wage standards, which may increase the price of goods and services they supply to our brands. 20 Companies that operate franchise systems may also be subject to claims for allegedly being a joint employer with a franchisee.
If we are able to identify acquisition candidates, such acquisitions may be financed with a substantial amount of additional indebtedness. Although the use of leverage presents opportunities to increase our profitability, it has the effect of potentially increasing losses as well.
Although the use of leverage presents opportunities to increase our profitability, it has the effect of potentially increasing losses as well. If income and appreciation from acquisitions acquired through debt are less than the cost of the debt, the total return will decrease.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Management Our Cybersecurity Team, led by our Chief Information Security Officer (“CISO”), is responsible for the implementation, monitoring, and maintenance of the cybersecurity and data protection practices across the Company. The CISO, in conjunction with a cross-functional team, regularly reviews risk management measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
Biggest changeOur CISO is supported by a Cybersecurity Team of enterprise information system security and risk professionals. Our 36 CISO receives periodic reports on cybersecurity threats and regularly reviews risk management measures implemented by the Company to identify and mitigate cybersecurity risks.
The IRP sets out a coordinated approach to investigating, containing, documenting, and mitigating incidents, including reporting findings and keeping senior management and other key stakeholders informed and involved as appropriate, and complying with application regulatory notifications and standards.
The IRP sets out a coordinated approach to investigating, responding to, containing, documenting, and mitigating incidents, including reporting findings and keeping senior management and other key stakeholders informed and involved as appropriate, and complying with applicable regulatory notifications and standards.
Item 1C. Cybersecurity We maintain a cybersecurity program that is reasonably designed to protect our information, and our customers’ information, from cybersecurity threats against us, our franchisees, our third-party vendors, and services providers, that may result in a material adverse effect on the confidentiality, integrity, and availability of our information systems.
Item 1C. Cybersecurity We maintain a risk-based cybersecurity program designed to protect our information and our customers’ information from cybersecurity threats against us, our franchisees, our third-party vendors, and services providers, which may result in a material adverse effect on the confidentiality, integrity, and availability of our information systems.
Risk Management and Strategy We employ a defense-in-depth approach with systems and processes designed to oversee, identify, and reduce the potential impact of a security incident against us or a third-party vendor or service provider.
Cybersecurity Risk Management and Strategy We employ a defense-in-depth approach for our cybersecurity program, with policies, systems, and processes designed to oversee, identify, prevent, and reduce the potential impact of a cybersecurity threat against us or a third-party vendor or service provider.
The IRP applies to all Company personnel (including third-party contractors, vendors and partners) that perform functions or services require access to secure Company information, and to all devices and network services that are owned or managed by the Company. 36
The IRP applies to Company personnel (including third-party contractors, vendors and partners) that perform functions or services that require access to secure Company information, and to applicable devices and network services.
Incident Response We have adopted a Cybersecurity Incident Response Plan (the “IRP”) that applies in the event of a cybersecurity incident that provides a standardized framework for responding to cybersecurity incidents.
Incident Response In addition to policies and processes designed to prevent and detect cybersecurity incidents, we have adopted a Cybersecurity Incident Response Plan (the “IRP”) that provides a standardized framework for responding to cybersecurity incidents.
These include but are not limited to: Multi-factor Authentication, Privileged Account Management, Endpoint, Email and Cloud Security platforms, immutable backups, vulnerability scanning, third party risk assessments, and other applicable controls.
These policies, systems and processes include but are not limited to: Multi-factor Authentication, Privileged Account Management, Endpoint, Email and Cloud Security platforms, immutable backups, vulnerability scanning, third-party risk assessments, and other applicable controls. Driven Brands’ risk management program for information security and cybersecurity aims to protect the confidentiality, integrity, and availability of our information assets.
Board of Directors Our Board of Directors, in coordination with its Audit Committee, oversees the Company’s enterprise risk management process, including the management of risks arising from cybersecurity threats. The Audit Committee regularly receives reports and presentations from the CISO regarding cybersecurity. The CISO also reports to the Board at least annually on cybersecurity matters.
Board of Directors Oversight Our Board of Directors, in coordination with its Audit Committee, oversees the Company’s enterprise risk management process, including the management of risks arising from cybersecurity threats. Both the Board of Directors and the Audit Committee periodically review the measures we have implemented to identify and mitigate data protection and cybersecurity risks.
In addition to our internal cybersecurity capabilities, we also regularly engage consultants, and other third parties to assist with assessing, identifying, and managing cybersecurity risks and to participate in tabletop and other training exercises.
In addition to our internal cybersecurity capabilities, we also engage consultants and other third-party service providers where appropriate to inform our understanding of cybersecurity risks and enable risk-based measures to defend against cybersecurity threats.
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In general, the IRP leverages the NIST Cybersecurity Framework and the Computer Security Incident Handling Guide (NIST SP 800-61) to guide practices in preparation; detection and analysis; containment, eradication and recovery; and post-incident remediation.
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Cybersecurity Governance Management’s Role in Cybersecurity Risk Management At the management level, our cybersecurity team is led by our Chief Information Security Officer (“CISO”), a certified information systems security professional with decades of experience in both the public and private sectors, who has led cybersecurity teams at large organizations and held leadership roles in information security and cybersecurity industry groups.
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Our CISO, in consultation with senior leadership and the Board of Directors, sets the strategic direction of our cybersecurity program across the Company and is responsible for implementing, monitoring, and maintaining it. The cybersecurity program includes processes related to the prevention, detection, mitigation, and remediation of cybersecurity threats.
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The Audit Committee, as part of the governance and oversight of company risk management, also periodically receives reports and presentations from the CISO regarding the Company’s cybersecurity risk management. The Board receives reports of Audit Committee discussions regarding its oversight of cybersecurity risk.
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It is designed using people, processes, technologies, and capabilities, such as monitoring, alerting, scanning, testing, tabletop exercises, trainings, and assessments, to identify risks from cybersecurity threats, system vulnerabilities, or third-party service providers and vendors.
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The Company’s cybersecurity programs are updated regularly to align with emerging technical threats, such as those introduced through threat actors’ adoption of AI, changes in regulatory requirements, and industry best practices.
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These processes include clear escalation paths to ensure that cybersecurity incidents that meet established reporting thresholds are escalated within the Company and, where appropriate, are reported to the Board of Directors and/or Audit Committee.
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Material Cybersecurity Risks, Threats and Incidents Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, to date have not materially affected the Company, including its business strategy, results of operations or financial condition.
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Additional information on cybersecurity risks we face is discussed in Part I, Item 1A “Risk Factors” under the heading “ Risks Related to Intellectual Property and Technology ,” which should be read in conjunction with the foregoing information.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe leases generally have initial expiration dates ranging from 5 and 20 years, with certain renewal options available. We also leased 44 properties that were either leased or subleased principally to franchisees as of December 30, 2023. We believe that the properties are suitable and adequate for the Company’s business.
Biggest changeThe leases generally have initial expiration dates ranging from 5 and 20 years, with certain renewal options available. We also leased 45 properties that were either leased or subleased principally to franchisees as of December 28, 2024.
We held leases covering the building and/or land for 1,110 of our company-operated locations, 618 of our independently-operated locations, 22 distribution centers and 15 offices and training centers in the U.S., Canada, and Europe, including our corporate headquarters located in Charlotte, North Carolina.
We held leases covering the building and/or land for 1,094 of our company-operated locations, 621 of our independently-operated locations, 6 distribution centers and 15 offices and training centers in the U.S., Canada, and Europe, including our corporate headquarters located in Charlotte, North Carolina.
See the “Segment” caption in Part I, Item 1, “Business,” earlier in this report for more information about these properties and locations.
We believe that the properties are suitable and adequate for the Company’s business. 37 See the “Segment” caption in Part I, Item 1, “Business,” earlier in this report for more information about these properties and locations.
Item 2. Properties As of December 30, 2023, we had 4,988 company-operated, franchised, and independently-operated locations, and of these we owned 175 company-operated store locations and 99 independently-operated store locations.
Item 2. Properties As of December 28, 2024, we had 5,179 company-operated, franchised, and independently-operated locations, and of these we owned 236 company-operated store locations and 99 independently-operated store locations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph is not, and is not intended to be, indicative of future performance of our common stock. 1/15/21 6/26/21 12/25/21 6/25/22 12/31/22 7/1/23 12/30/23 Driven Brands Holdings Inc. $ 100.00 $ 115.58 $ 124.75 $ 109.98 $ 102.30 $ 101.35 $ 53.41 S&P Midcap 400 Index $ 100.00 $ 113.08 $ 116.70 $ 98.20 $ 103.18 $ 112.30 $ 120.14 S&P Retailing Industry Group Index $ 100.00 $ 111.78 $ 119.94 $ 87.03 $ 79.10 $ 100.29 $ 112.64 38 Dividend policy We currently do not intend to pay cash dividends on our common stock in the foreseeable future.
Biggest changeThe graph is not, and is not intended to be, indicative of future performance of our common stock. 1/15/21 12/25/21 12/31/22 12/30/23 12/28/24 Driven Brands Holdings Inc. $100.00 $124.75 $102.30 $53.41 $60.74 S&P Midcap 400 Index $100.00 $116.70 $103.18 $120.14 $137.58 S&P Retailing Industry Group Index $100.00 $119.94 $79.10 $112.64 $152.60 39 Dividend policy We currently do not intend to pay cash dividends on our common stock in the foreseeable future.
Stock Performance Graph The following graph and table provide a comparison of the cumulative total stockholder return on our common stock from January 15, 2021 (first day of trading following the effective date of our IPO) through December 30, 2023 to the returns of the Standard & Poor's (“S&P”) MidCap 400 Index, and the S&P Retailing Industry Group Index, a peer group.
Stock Performance Graph The following graph and table provide a comparison of the cumulative total stockholder return on our common stock from January 15, 2021 (first day of trading following the effective date of our IPO) through December 28, 2024 to the returns of the Standard & Poor's (“S&P”) MidCap 400 Index, and the S&P Retailing Industry Group Index, a peer group.
Holders On February 26, 2024, we had 53 holders of record of our common stock.
Holders On February 24, 2025, we had 53 holders of record of our common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. Reserved 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 40 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 60 Item 8. Financial Statements, Supplementary Data, and Reports of Independent Registered Public Accounting Firms (PCAOB ID Number 238 and 248 ) 61
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Item 6. Reserved 40 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis for Driven Brands Holdings Inc. and Subsidiaries (“Driven Brands,” “the Company,” “we,” “us,” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this Annual Report.
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We operate on a 52-or 53-week fiscal year, which ends on the last Saturday in December. The twelve months ended December 28, 2024 and December 30, 2023 were both 52 week periods.
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Comparative results for the years ending December 30, 2023 and December 31, 2022 are included in “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our previously filed 2023 Annual Report on Form 10-K.
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Overview Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of approximately 5,200 locations across 49 U.S. states and 13 other countries.
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Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including paint, collision, glass, and repair services, as well as a variety of high-frequency services, such as oil changes and car washes. We have continued to grow our base of consistent recurring revenue by adding new franchised and company-operated stores and same store sales growth.
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Driven Brands generated net revenue of approximately $2.3 billion during the year ended December 28, 2024, an increase of 2% compared to the prior year, and system-wide sales of approximately $6.5 billion during the year ended December 28, 2024, an increase of 4% from the prior year.
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Although we have continued to experience total Company same store sales growth for 16 consecutive quarters through our diversified customer base and service offerings, we have experienced and expect to continue experiencing softening demand across several of our segments, primarily as a result of inflationary pressures, increased competition, industry dynamics, and negative weather patterns, including hurricanes.
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During the fourth quarter of 2024, the Company performed a step one quantitative impairment analysis of the U.S. Car Wash long-lived assets. Based on the results of our impairment analysis, we concluded the carrying value of the U.S.
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Car Wash long-lived assets exceeded the fair value and an impairment charge of $325 million was recorded. 2024 Highlights and Key Performance Indicators (as compared to same period in the prior year, unless otherwise noted) • Net revenue increased 2% to $2.3 billion, driven by company-operated store revenue, primarily due to net new store growth and same store sales growth. • Consolidated same store sales increased 1.3%. • Net new stores were 191 for 2024. • Net Loss decreased $452 million to $292 million or $1.82 loss per diluted share in the current year compared to $745 million or $4.53 loss per diluted share in the prior year period, primarily relating to improved operating margins within our Maintenance, Platform Services and Paint, Collision & Glass segments, net new store growth, same store sales growth, and a goodwill impairment charge lapping in the prior year, partially offset by increased employee related benefit costs, including performance-based and share-based compensation expense, reduced margins within the Car Wash segment, a lower tax benefit, an unfavorable impact from foreign exchange, increased loss on disposal or sale of assets, and increased asset impairment charges in the current period. • Adjusted Net Income (non-GAAP) increased 31% to $186 million or $1.14 per diluted share.
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The increase was primarily due to improved operating margins within our Maintenance, Platform Services and Paint, Collision & Glass segments, net new store growth, and same store sales growth, partially offset by increased employee related benefit costs, including performance-based compensation, and reduced margins within the Car Wash segment. • Adjusted EBITDA (non-GAAP) increased 7% to $553 million.
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The increase was primarily due to improved operating margins within our Maintenance, Platform Services and Paint, Collision & Glass segments, net new store growth, and same store sales growth, partially offset by increased employee related benefit costs, including performance-based compensation, and reduced margins within the Car Wash segment. 41 Key Performance Indicators Key measures that we use in assessing our business and evaluating our segments include the following: System-wide sales.
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System-wide sales represent the total of net sales for our franchised, independently-operated, and company-operated stores. This measure allows management to better assess the total size and health of each segment, our overall store performance, and the strength of our market position relative to competitors.
Added
Sales at franchised stores are not included as revenue in our results from operations, but rather, we include franchise royalties and fees that are derived from sales at franchised stores. Store count. Store count reflects the number of franchised, independently-operated, and company-operated stores open at the end of the reporting period.
Added
Management reviews the number of new, closed, acquired, and divested stores to assess net unit growth and drivers of trends in system-wide sales, franchise royalties and fees revenue, company-operated store sales, and independently-operated store sales. Same store sales. Same store sales reflect the change in sales year-over-year for the same store base.
Added
We define the same store base to include all franchised, independently-operated, and company-operated stores open for comparable weeks during the given fiscal period in both the current and prior year, which may be different from how others define similar terms.
Added
This measure highlights the performance of existing stores, while excluding the impact of new store openings and closures and acquisitions and divestitures. Adjusted EBITDA.
Added
We define Adjusted EBITDA as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, equity compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, store opening costs, cloud computing amortization, and certain non-recurring and non-core, infrequent or unusual charges.
Added
Adjusted EBITDA is a supplemental measure of operating performance of our segments and may not be comparable to similar measures reported by other companies. Adjusted EBITDA is a performance metric utilized by our Chief Operating Decision Maker to allocate resources to and assess performance of our segments.
Added
Refer to Note 9 in our consolidated financial statements for a reconciliation of income (loss) before taxes to Adjusted EBITDA for the years ended December 28, 2024 and December 30, 2023. 42 The following table sets forth our key performance indicators for the years ended December 28, 2024 and December 30, 2023: Year Ended (in thousands, except store count or as otherwise noted) December 28, 2024 December 30, 2023 System-Wide Sales System-Wide Sales by Segment: Maintenance $ 2,103,954 $ 1,899,813 Car Wash 580,554 591,752 Paint, Collision & Glass 3,450,660 3,389,565 Platform Services 374,150 402,598 Total $ 6,509,318 $ 6,283,728 System-Wide Sales by Business Model: Franchised Stores $ 4,751,990 $ 4,560,980 Company-Operated Stores 1,544,932 1,526,353 Independently-Operated Stores 212,396 196,395 Total $ 6,509,318 $ 6,283,728 Store Count Store Count by Segment: Maintenance 1,960 1,786 Car Wash 1,102 1,108 Paint, Collision & Glass 1,912 1,888 Platform Services 205 206 Total 5,179 4,988 Store Count by Business Model: Franchised Stores 3,129 2,986 Company-Operated Stores 1,330 1,285 Independently-Operated Stores 720 717 Total 5,179 4,988 Same Store Sales % Maintenance 4.5 % 9.2 % Car Wash (0.9 %) (5.6 %) Paint, Collision & Glass 0.8 % 11.4 % Total consolidated 1.3 % 7.4 % Adjusted EBITDA by segment Maintenance $ 385,853 $ 325,593 Car Wash 117,140 128,050 Paint, Collision & Glass 133,519 139,590 Platform Services 83,918 80,492 Total consolidated 552,721 516,887 Adjusted EBITDA margin Maintenance 34.9 % 33.9 % Car Wash 19.9 % 21.4 % Paint, Collision & Glass 31.4 % 27.9 % Platform Services 40.4 % 37.3 % Total consolidated 23.6 % 22.4 % 43 Reconciliation of Non-GAAP Financial Information To supplement our consolidated financial statements prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures throughout this Annual Report, as described further below, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making.
Added
Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.
Added
As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our consolidated financial statements prepared and presented in accordance with GAAP. Adjusted Net Income/Adjusted Earnings per Share .
Added
We define Adjusted Net Income as net income calculated in accordance with GAAP, adjusted for acquisition related costs, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges, amortization related to acquired intangible assets, and the tax effect of the adjustments.
Added
Adjusted Earnings Per Share is calculated by dividing Adjusted Net Income by the weighted average shares outstanding.
Added
Management believes this non-GAAP financial measure is useful because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions. 44 The following table provides a reconciliation of Net Loss to Adjusted Net Income and Adjusted Earnings per Share: Adjusted Net Loss/Adjusted Earnings per Share Year Ended (in thousands, except per share data) December 28, 2024 December 30, 2023 Net loss $ (292,496) $ (744,962) Acquisition related costs (a) 2,325 13,174 Non-core items and project costs, net (b) 18,403 7,343 Cloud computing amortization (c) 8,270 1,923 Share-based compensation expense (d) 48,139 15,300 Foreign currency transaction loss (gain), net (e) 20,239 (3,078) Asset sale leaseback (gain) loss, net, impairment and closed store expenses (f) 435,703 990,384 Loss on debt extinguishment (g) 205 — Amortization related to acquired intangible assets (h) 25,690 28,756 Provision for uncertain tax positions (i) — (354) Valuation allowance for deferred tax asset (j) 51,186 17,729 Adjusted net income before tax impact of adjustments 317,664 326,215 Tax impact of adjustments (k) (131,337) (183,754) Adjusted net income $ 186,327 $ 142,461 Loss per share Basic $ (1.79) $ (4.50) Diluted $ (1.82) $ (4.53) Adjusted earnings per share Basic $ 1.14 $ 0.86 Diluted $ 1.14 $ 0.85 Weighted average shares outstanding Basic 160,319 161,917 Diluted 160,319 161,917 Weighted average shares outstanding for Adjusted Net Income Basic 160,319 161,917 Diluted 161,210 164,100 Adjusted EBITDA.
Added
We define Adjusted EBITDA as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges.
Added
Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.
Added
Management believes this non-GAAP financial measure is useful because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions. 45 The following table provides a reconciliation of Net Loss to Adjusted EBITDA: Adjusted EBITDA Year Ended December 28, 2024 December 30, 2023 Net loss $ (292,496) $ (744,962) Income tax benefit (25,143) (102,689) Interest expense, net 156,964 164,196 Depreciation and amortization 180,112 175,296 EBITDA 19,437 (508,159) Acquisition related costs (a) 2,325 13,174 Non-core items and project costs, net (b) 18,403 7,343 Cloud computing amortization (c) 8,270 1,923 Share-based compensation expense (d) 48,139 15,300 Foreign currency transaction loss (gain), net (e) 20,239 (3,078) Asset sale leaseback (gain) loss, net, impairment and closed store expenses (f) 435,703 990,384 Loss on debt extinguishment (g) 205 — Adjusted EBITDA $ 552,721 $ 516,887 (a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions.
Added
We expect to incur similar costs in connection with other acquisitions in the future and, under GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized. (b) Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs.
Added
(c) Includes non-cash amortization expenses relating to cloud computing arrangements. (d) Represents non-cash share-based compensation expense. (e) Represents foreign currency transaction (gains) losses, net that primarily related to the remeasurement of our intercompany loans as well as gains and losses on cross currency swaps and forward contracts.
Added
(f) Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates, as well as goodwill impairment within the Car Wash segment.
Added
Refer to Note 7 for additional information. (g) Represents charges incurred related to the Company’s partial repayment of Senior Secured Notes in conjunction with the sale of its Canadian distribution business. (h) Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statement of operations.
Added
(i) Represents amounts recorded for uncertain tax positions, inclusive of interest and penalties. (j) Represents valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized.
Added
(k) Represents the tax impact of adjustments associated with the reconciling items between net income (loss) and Adjusted Net Income, excluding the provision for uncertain tax positions and valuation allowance for certain deferred tax assets.
Added
To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction. 46 Results of Operations for the Year Ended December 28, 2024 Compared to the Year Ended December 30, 2023 Net Loss We recognized a net loss of $292 million, or $1.82 loss per diluted share, for the year ended December 28, 2024, compared to a net loss of $745 million, or $4.53 loss per diluted share, for the year ended December 30, 2023.
Added
The improvement of approximately $452 million was primarily due to the following: • positive same store sales within the Maintenance and Paint, Collision & Glass segments; • net new store openings, primarily within the Maintenance segment; • operating margin improvements within the Maintenance, Paint, Collision & Glass, and Platform Services segments; and • a non-cash goodwill impairment charge in the prior year period of $851 million.
Added
These increases were partially offset by: • increased payroll and employee benefit costs, including performance-based compensation and $33 million of additional share-based compensation expense primarily relating to the modification of pre-IPO awards in the fourth quarter of 2023; • decreased operating margins within the Car Wash segment; • decreased tax benefit of $78 million, primarily relating to goodwill impairment charges in the prior year; • an unfavorable impact from foreign exchange of $23 million compared to the prior year; • non-cash asset impairment charges of $389 million in the current period, which primarily related to our step one quantitative analysis of long-lived assets as well as assets held for sale and right-of-use assets at closed stores in the current period compared to $133 million in the prior year period, which related to Car Wash fixed assets and right-of-use assets at closed stores and assets held for sale; and • a net loss of $36 million in the current period primarily comprised of a loss on sale and disposals of fixed assets in our Car Wash business as well as gains on the sale of assets held for sale, compared to a loss on sale or disposals of fixed assets of approximately $5 million during the year ended December 30, 2023.
Added
Adjusted Net Income Adjusted net income was $186 million for the year ended December 28, 2024 compared to $142 million for the year ended December 30, 2023.
Added
This increase of $44 million was primarily due to the following: • positive same store sales within the Maintenance and Paint, Collision & Glass segments; • net new store openings, primarily within the Maintenance segment; and • operating margin improvements within the Maintenance, Paint, Collision & Glass, and Platform Services segments.
Added
The increases were partially offset by: • increased payroll and employee benefit costs, including performance-based compensation; and • decreased operating margins within the Car Wash segment. Adjusted EBITDA Adjusted EBITDA was $553 million for the year ended December 28, 2024 compared to $517 million for the year ended December 30, 2023.
Added
The increase of $36 million was primarily due to: • positive same store sales within the Maintenance and Paint, Collision & Glass segments; • net new store openings, primarily within the Maintenance segment; and • operating margin improvements within the Maintenance, Paint, Collision & Glass, and Platform Services segments.
Added
The increase was partially offset by: • increased payroll and employee benefit costs, including performance-based compensation; and • decreased operating margins within the Car Wash segment. 47 To facilitate the review of our results of operations, the following tables set forth our financial results for the periods indicated. All information is derived from the consolidated statements of operations.
Added
Certain percentages presented have been rounded to the nearest number, therefore, totals may not equal the sum of the line items in the tables below.
Added
Net Revenue Year Ended (in thousands) December 28, 2024 % of Net Revenues December 30, 2023 % of Net Revenues Franchise royalties and fees $ 188,634 8.1 % $ 190,367 8.3 % Company-operated store sales 1,544,932 66.0 % 1,526,353 66.2 % Independently-operated store sales 212,396 9.1 % 196,395 8.5 % Advertising fund contributions 101,316 4.3 % 98,850 4.3 % Supply and other revenue 292,310 12.5 % 292,064 12.7 % Total net revenue $ 2,339,588 100.0 % $ 2,304,029 100.0 % Franchise Royalties and Fees Franchise royalties and fees decreased less than $2 million, or 1%, primarily due to a decrease in average royalty rates within the Paint, Collision & Glass segment and decreased franchise system-wide sales within the Platform Services segment, partially offset by an increase in franchise system-wide sales of $191 million, or 4%, driven by franchise same store sales growth within the Paint, Collision & Glass and Maintenance segments and the addition of 143 net new franchised stores.
Added
Company-Operated Store Sales Company-operated store sales increased $19 million, or 1%, of which $111 million related to an increase in the Maintenance segment, partially offset by a decrease of $65 million and $27 million related to the Paint, Collision & Glass and Car Wash segments, respectively.
Added
The sales increase in the Maintenance segment was primarily due to same store sales growth and 66 net new company-operated stores. The decrease in the Paint, Collision & Glass sales was primarily driven by revenue associated with the sale of nine company-operated stores to a franchisee in the current year.
Added
The decrease in Car Wash sales is primarily due to the full year impact in 2024 relating to stores closed during the fourth quarter of 2023 and a decrease in same store sales primarily relating to lower volume. On a net basis, the Company added 45 company-operated stores year-over-year.
Added
Independently-Operated Store Sales Independently-operated store sales (comprised entirely of sales from the international car wash locations) increased $16 million, or 8%, due to same store sales growth as a result of improved price realization and new product offerings. Advertising Fund Contributions Advertising fund contributions increased by $2 million, or 2%, primarily due to an increase in franchise system-wide sales.
Added
Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of the franchisee’s gross sales or a stated fee.
Added
Supply and Other Revenue Supply and other revenue remained flat, primarily due to growth in product and service revenue within the Maintenance segment as a result of an increase in system-wide sales and net store growth, partially offset by the sale of our Canadian distribution business in the current year. 48 Operating Expenses Year Ended (in thousands) December 28, 2024 % of Net Revenues December 30, 2023 % of Net Revenues Company-operated store expenses $ 993,090 42.4 % $ 1,004,472 43.6 % Independently-operated store expenses 121,325 5.2 % 109,078 4.7 % Advertising fund expenses 101,617 4.3 % 97,290 4.2 % Supply and other expenses 139,658 6.0 % 158,436 6.9 % Selling, general, and administrative expenses 554,775 23.7 % 462,117 20.1 % Depreciation and amortization 180,112 7.7 % 175,296 7.6 % Goodwill impairment — — % — 850,970 36.9 % Asset impairment charges and lease terminations 389,242 16.6 % 132,903 5.8 % Total operating expenses $ 2,479,819 106.0 % $ 2,990,562 129.8 % Company-Operated Store Expenses Company-operated store expenses decreased $11 million, or 1%, primarily due to lower inventory costs and labor efficiency, partially offset by increased rent and property related expenses.
Added
Independently-Operated Store Expenses Independently-operated store expenses (comprised entirely of expenses from the international car wash locations) increased $12 million, or 11%, primarily due to variable costs associated with the increase in sales. Advertising Fund Expenses Advertising fund expenses increased by $4 million, or 4%, which is commensurate with the increase to advertising fund contributions during the period.
Added
Advertising fund expenses generally trend consistent with advertising fund contributions. Supply and Other Expenses Supply and other expenses decreased $19 million, or 12%, primarily related to the sale of our Canadian distribution business in the current year.
Added
Selling, General, and Administrative Expenses Selling, general, and administrative expenses increased $93 million, or 20%, primarily due to increased payroll and employee benefit costs, including performance-based compensation and $33 million of additional share-based compensation expense primarily relating to the modification of pre-IPO awards in the fourth quarter of 2023, loss on the sale or disposal of assets and businesses of $36 million compared to $5 million in the prior year, and increased cloud computing amortization.
Added
Depreciation and Amortization Depreciation and amortization expense increased $5 million, or 3%, due to additional fixed assets, primarily related to Take 5 Oil site development. Goodwill Impairment Goodwill impairment charge of $851 million in the year ended December 30, 2023 is directly attributable to our Car Wash segment.
Added
For more information, refer to Note 7 in our consolidated financial statements included in this 10-K. Asset Impairment Charges and Lease Terminations Asset impairment charges and lease terminations increased by $256 million for the year ended December 28, 2024 compared to the year ended December 30, 2023.
Added
During the year ended December 28, 2024, impairment charges were primarily related to our U.S. Car Wash step one quantitative analysis of long-lived assets as well as assets held for sale and right-of-use assets at closed stores in the current period. During the year ended December 30, 2023, impairment charges were primarily related to U.S.
Added
Car Wash fixed assets and right-of-use assets at closed stores and assets held for sale.
Added
For more information, refer to Note 7 in our consolidated financial statements included within this Form 10-K. 49 Interest Expense, Net Year Ended (in thousands) December 28, 2024 % of Net Revenues December 30, 2023 % of Net Revenues Interest expense, net $ 156,964 6.7 % $ 164,196 7.1 % Interest expense, net decreased $7 million, or 4%, primarily due to net debt reduction of $250 million in the current year, primarily relating to the Term loan and Revolving Credit Facility, interest income earned in the current year, and reduced interest related to the Tax Receivable Agreement, partially offset by increased interest and costs associated with the 2024-1 Senior Notes.
Added
Foreign Currency Transactions Loss (Gain), Net Year Ended (in thousands) December 28, 2024 % of Net Revenues December 30, 2023 % of Net Revenues Foreign currency transaction loss (gain), net $ 20,239 0.9 % $ (3,078) (0.1 %) The foreign currency transaction loss for the year ended December 28, 2024 was primarily comprised of transaction remeasurement losses in our foreign operations of $29 million, partially offset by a gain on foreign currency hedges of $9 million.
Added
The foreign currency transaction gain for the year ended December 30, 2023 was primarily comprised of transaction remeasurement gains in our foreign operations of $2 million and a gain on foreign currency hedges of $1 million.
Added
Loss on Debt Extinguishment Year Ended (in thousands) December 28, 2024 % of Net Revenues December 30, 2023 % of Net Revenues Loss on Debt Extinguishment $ 205 — % $ — — % Represents charges incurred related to the Company’s partial repayment of Senior Secured Notes in conjunction with the sale of its Canadian distribution business.
Added
Income Tax Benefit Year Ended (in thousands) December 28, 2024 % of Net Revenues December 30, 2023 % of Net Revenues Income tax benefit $ (25,143) (1.1 %) $ (102,689) (4.5 %) Income tax benefit was $25 million for the year ended December 28, 2024 compared to $103 million for the year ended December 30, 2023.
Added
The effective tax rate for the year ended December 28, 2024 was 7.9% primarily driven by the recognition of valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized, non-deductible share-based compensation and state taxes related to pre-tax income compared to 12.1% for the year ended December 30, 2023. 50 Segment Results of Operations for the Year Ended December 28, 2024 Compared to the Year Ended December 30, 2023 We assess the performance of our segments based on Adjusted EBITDA, which is defined as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, store closure costs, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges.
Added
Shared services costs are not allocated to these segments and are included in Corporate and Other. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.
Added
Maintenance Year Ended 2024 2023 (in thousands, unless otherwise noted) December 28, 2024 December 30, 2023 % Net Revenue For Segment % Net Revenue For Segment Franchise royalties and fees $ 60,825 $ 56,298 5.5 % 5.8 % Company-operated store sales 920,548 809,356 83.4 % 84.3 % Supply and other revenue 122,771 94,746 11.1 % 9.9 % Total net revenue $ 1,104,144 $ 960,400 100.0 % 100.0 % Adjusted EBITDA $ 385,853 $ 325,593 34.9 % 33.9 % System-Wide Sales Change Franchised stores $ 1,183,406 $ 1,090,457 $ 92,949 8.5 % Company-operated stores 920,548 809,356 111,192 13.7 % Total System-Wide Sales $ 2,103,954 $ 1,899,813 $ 204,141 10.7 % Store Count (in whole numbers) Change Franchised stores 1,242 1,134 108 9.5 % Company-operated stores 718 652 66 10.1 % Total Store Count 1,960 1,786 174 9.7 % Same Store Sales % 4.5 % 9.2 % Maintenance net revenue increased $144 million, or 15%, driven primarily by a $111 million increase in company-operated store sales from same store sales growth and 66 net new company-operated stores.
Added
Supply and other revenue increased by $28 million, or 30%, primarily due to higher system-wide sales. Franchise royalties and fees increased by $5 million, or 8%, primarily due to a $93 million, or 9%, increase in franchise system-wide sales from same store sales growth and 108 net new franchise stores.
Added
Maintenance Adjusted EBITDA increased $60 million, or 19%, primarily due to net new store growth, same store sales growth, cost management, and operational leverage. 51 Car Wash Year Ended 2024 2023 (in thousands, unless otherwise noted) December 28, 2024 December 30, 2023 % Net Revenue For Segment % Net Revenue For Segment Company-operated store sales $ 368,158 $ 395,357 62.7 % 66.1 % Independently-operated store sales 212,396 196,395 36.2 % 32.9 % Supply and other revenue 6,683 5,992 1.1 % 1.0 % Total net revenue $ 587,237 $ 597,744 100.0 % 100.0 % Adjusted EBITDA $ 117,140 $ 128,050 19.9 % 21.4 % System-Wide Sales Change Company-operated stores $ 368,158 $ 395,357 $ (27,199) (6.9 %) Independently-operated stores 212,396 196,395 16,001 8.1 % Total System-Wide Sales $ 580,554 $ 591,752 $ (11,198) (1.9 %) Store Count (in whole numbers) Change Company-operated stores 382 391 (9) (2.3 %) Independently-operated stores 720 717 3 0.4 % Total Store Count 1,102 1,108 (6) (0.5 %) Same Store Sales % (0.9 %) (5.6 %) Car Wash segment net revenue decreased $11 million, or 2%, driven primarily by a $27 million, or 7%, decrease in company-operated store sales due to the full year impact in 2024 relating to stores closed during the fourth quarter of 2023 and a decrease in same store sales primarily relating to lower volume.
Added
Independently-operated store sales increased $16 million primarily due to an increase in same store sales as a result of new product offerings and improved price realization.
Added
Car Wash Adjusted EBITDA decreased by $11 million, or 9%, primarily driven by decreased same store sales within company-operated stores, partially offset by positive same store sales within the independently-operated stores and improved inventory cost management. 52 Paint, Collision & Glass Year Ended 2024 2023 (in thousands, unless otherwise noted) December 28, 2024 December 30, 2023 % Net Revenue For Segment % Net Revenue For Segment Franchise royalties and fees $ 97,542 $ 103,604 23.0 % 20.7 % Company-operated store sales 252,162 317,428 59.4 % 63.4 % Supply and other revenue 74,926 79,342 17.6 % 15.9 % Total net revenue $ 424,630 $ 500,374 100.0 % 100.0 % Adjusted EBITDA $ 133,519 $ 139,590 31.4 % 27.9 % System-Wide Sales Change Franchised stores $ 3,198,498 $ 3,072,137 $ 126,361 4.1 % Company-operated stores 252,162 317,428 (65,266) (20.6 %) Total System-Wide Sales $ 3,450,660 $ 3,389,565 $ 61,095 1.8 % Store Count (in whole numbers) Change Franchised stores 1,683 1,647 36 2.2 % Company-operated stores 229 241 (12) (5.0 %) Total Store Count 1,912 1,888 24 1.3 % Same Store Sales % 0.8 % 11.4 % Paint, Collision & Glass net revenue decreased $76 million, or 15%, for the year ended December 28, 2024, primarily driven by a decrease in company-operated store sales of $65 million, or 21%, primarily driven by revenue associated with nine company-operated stores that were sold to a franchisee in the current year as well as decreased volume associated with company-operated stores.
Added
Franchise royalties and fees decreased $6 million, or 6%, primarily due to a decrease in average royalty rates, partially offset by a $126 million, or 4%, increase in franchise system-wide sales generated by same store sales growth.
Added
Paint, Collision & Glass Adjusted EBITDA decreased $6 million, or 4%, primarily due to Adjusted EBITDA associated with the nine company-operated stores sold to a franchisee in the current year as well as decreased volume associated with company-operated stores, partially offset by an improvement in operating margin. 53 Platform Services Year Ended 2024 2023 (in thousands, unless otherwise noted) December 28, 2024 December 30, 2023 % Net Revenue For Segment % Net Revenue For Segment Franchise royalties and fees $ 30,267 $ 30,465 14.6 % 14.1 % Company-operated store sales 4,064 4,212 2.0 % 1.9 % Supply and other revenue 173,184 181,327 83.4 % 84.0 % Total net revenue $ 207,515 $ 216,004 100.0 % 100.0 % Adjusted EBITDA $ 83,918 $ 80,492 40.4 % 37.3 % System-Wide Sales Change Franchised stores $ 370,086 $ 398,386 $ (28,300) (7.1 %) Company-operated stores 4,064 4,212 (148) (3.5 %) Total System-Wide Sales $ 374,150 $ 402,598 $ (28,448) (7.1 %) Store Count (in whole numbers) Change Franchised stores 204 205 (1) (0.5 %) Company-operated stores 1 1 — — % Total Store Count 205 206 (1) (0.5 %) Platform Services net revenue decreased $8 million, or 4%, primarily due to the sale of our Canadian distribution business, partially offset by supply sales relating to total company system-wide sales increases in the current year.
Added
Platform Services Adjusted EBITDA increased $3 million, or 4%, primarily driven by cost management. 54 Financial Condition, Liquidity and Capital Resources Sources of Liquidity and Capital Resources Cash flow from operations, supplemented with our long-term borrowings and revolving credit facilities, has been sufficient to fund our operations while allowing us to make strategic investments to grow our business.
Added
We believe that our sources of liquidity and capital resources will be adequate to fund our operations, acquisitions, company-operated store development, other general corporate needs, and the additional expenses we expect to incur for at least the next twelve months. We expect to continue to have access to the capital markets at acceptable terms.
Added
However, this could be adversely affected by many factors including macroeconomic factors, a downgrade of our credit rating, or a deterioration of certain financial ratios.
Added
Driven Brands Funding, LLC (the “Issuer”), a wholly-owned subsidiary of the Company, and Driven Brands Canada Funding Corporation (along with the Issuer, the “Co-Issuers”) are subject to certain quantitative covenants related to debt service coverage and leverage ratios in connection with our securitization senior notes. Our Term Loan Facility and Revolving Credit Facility also have certain qualitative covenants.
Added
As of December 28, 2024, the Co-Issuers and Driven Holdings were in material compliance with all such covenants under their respective credit agreements. In July 2024, the Company issued $275 million of 2024-1 Senior Notes as well as replaced the 2019 VFN with a $400 million 2024 VFN.
Added
Proceeds from the 2024-1 Senior Notes were primarily used to repay the Company’s 2018-1 Senior Notes. See Note 8 to our consolidated financial statements for additional information regarding the Company’s debt.
Added
At December 28, 2024, the Company had total liquidity of $649 million, which included $170 million in cash and cash equivalents and $374 million and $105 million of undrawn capacity on its 2024 VFN and Revolving Credit Facility, respectively.
Added
This does not include the additional $135 million Series 2022-1 Class A-1 Notes that expand our variable funding note borrowing capacity when the company elects to exercise it, assuming certain conditions continue to be met. On February 24, 2025, the Company entered into a definitive agreement to sell its U.S.
Added
Car Wash business to Express Wash Operations, LLC dba Whistle Express Car Wash (the “Buyer”). The aggregate purchase price is $385 million, subject to customary adjustments for cash, indebtedness, working capital, and transaction expenses.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis for Driven Brands Holdings Inc. and Subsidiaries (“Driven Brands”, “the Company”, “we”, “us” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this Annual Report.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 60 Item 8. Financial Statements, Supplementary Data, and Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 238 ) 61
Removed
We operate on a 52 or 53-week fiscal year, which ends on the last Saturday in December. The twelve months ended December 30, 2023 and December 31, 2022 were 52 and 53 week periods, respectively.
Removed
Comparative results for the years ending December 31, 2022 and December 25, 2021 are included in “Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our previously filed 2022 Annual Report on Form 10-K.
Removed
Overview Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of approximately 5,000 locations across 49 U.S. states and 13 other countries.
Removed
Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including paint, collision, glass, and repair services, as well as a variety of high-frequency services, such as oil changes and car washes. We have continued to grow our base of consistent recurring revenue by adding new franchised and company-operated stores and same store sales growth.
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Driven Brands generated net revenue of approximately $2.3 billion during the year ended December 30, 2023, an increase of 13% compared to the prior year, and system wide sales of approximately $6.3 billion during the year ended December 30, 2023, an increase of 12% from the prior year.
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During the third quarter of 2023, management initiated a strategic review of the U.S. car wash operations, which included, but was not limited to, an evaluation of the following: store performance, the competitive landscape, revenue and expense optimization opportunities, and capital requirements.
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As a result of this review, management approved the closure of 29 stores, halted the opening of new company-operated stores, and began marketing property and equipment for sale that will not be utilized by the Company. These actions resulted in impairment charges of $122 million relating to U.S.
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Car Wash property and equipment and right-of-use assets during the year ended December 30, 2023. As of December 30, 2023, the Company has reclassified $301 million of assets from property and equipment to assets held for sale on the consolidated balance sheet.
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As a result of the evaluation performed above, as well as other qualitative and quantitative factors, including a decline in the stock price during 2023, management determined a triggering event had occurred requiring an interim step one quantitative analysis of the Company’s goodwill and indefinite lived intangible assets during the third quarter of 2023.
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Based on the results of our interim impairment analysis, we concluded the carrying value of the U.S. Car Wash reporting unit exceeded its fair value, and we recorded a full goodwill impairment charge of $851 million during the third quarter of 2023.
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The Company performed its annual impairment analysis as of the first day of the fourth quarter and no additional impairments were recorded.
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During the fourth quarter of 2023, management evaluated price/mix metrics for U.S. car wash locations and adjusted product offerings to improve retail customer revenue as well as executed cost saving measures to ensure detergent, water usage, and labor optimization.
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In addition, as part of management’s review of the U.S. glass business integration, management performed a store footprint analysis, which included redundant locations within a market, and closed 22 U.S. glass stores, reduced labor headcount, and implemented technology to improve customer experience and conversion.
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Costs associated with store closures were not material due to the asset-light nature of this business. 2023 Highlights and Key Performance Indicators (as compared to same period in the prior year, unless otherwise noted) • Net revenue increased 13% to $2.3 billion, driven by same store sales and net store growth. • Consolidated same store sales increased 7%. • Net new stores were 183 for 2023. • Net Loss of $745 million or $4.53 loss per diluted share in the current year compared to Net Income of $43 million or $0.25 earnings per diluted share in the prior year period, primarily relating to impairment charges and related tax benefits recorded in the current period. • Adjusted Net Income (non-GAAP) decreased 28% to $142 million or $0.85 per diluted share.
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The decrease was primarily due to decreased Segment Adjusted EBITDA within our Car Wash segment as well as increased interest and depreciation 40 expense, partially offset by increased Segment Adjusted EBITDA within our Maintenance, Paint, Collision & Glass, and Platform Services segments. • Adjusted EBITDA (non-GAAP) increased 4% to $517 million.
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The increase was primarily due to increased Segment Adjusted EBITDA within our Maintenance, Paint, Collision & Glass, and Platform Services segments, partially offset by decreased Segment Adjusted EBITDA within our Car Wash segment. Key Performance Indicators Key measures that we use in assessing our business and evaluating our segments include the following: System-wide sales.
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System-wide sales represent the total of net sales for our franchised, independently-operated, and company-operated stores. This measure allows management to better assess the total size and health of each segment, our overall store performance, and the strength of our market position relative to competitors.
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Sales at franchised stores are not included as revenue in our results from operations, but rather, we include franchise royalties and fees that are derived from sales at franchised stores. Store count. Store count reflects the number of franchised, independently-operated, and company-operated stores open at the end of the reporting period.
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Management reviews the number of new, closed, acquired, and divested stores to assess net unit growth and drivers of trends in system-wide sales, franchise royalties and fees revenue, company-operated store sales, and independently-operated store sales. Same store sales. Same store sales reflect the change in sales year-over-year for the same store base.
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We define the same store base to include all franchised, independently-operated, and company-operated stores open for comparable weeks during the given fiscal period in both the current and prior year, which may be different from how others define similar terms.
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This measure highlights the performance of existing stores, while excluding the impact of new store openings and closures and acquisitions and divestitures. Segment Adjusted EBITDA.
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We define Segment Adjusted EBITDA as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition-related costs, equity compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, store opening costs, cloud computing amortization, and certain non-recurring and non-core, infrequent or unusual charges.
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Segment Adjusted EBITDA is a supplemental measure of operating performance of our segments and may not be comparable to similar measures reported by other companies. Segment Adjusted EBITDA is a performance metric utilized by our Chief Operating Decision Maker to allocate resources to and assess performance of our segments.
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Refer to Note 10 in our consolidated financial statements for a reconciliation of income before taxes to Segment Adjusted EBITDA for the years ended December 30, 2023 and December 31, 2022. 41 The following table sets forth our key performance indicators for the year ended December 30, 2023 and December 31, 2022: Year Ended (in thousands, except store count or as otherwise noted) December 30, 2023 December 31, 2022 System-Wide Sales System-Wide Sales by Segment: Maintenance $ 1,899,813 $ 1,616,100 Car Wash 591,752 585,659 Paint, Collision & Glass 3,389,565 2,958,971 Platform Services 402,598 445,726 Total $ 6,283,728 $ 5,606,456 System-Wide Sales by Business Model: Franchised Stores $ 4,560,980 $ 4,086,891 Company-Operated Stores 1,526,353 1,324,408 Independently-Operated Stores 196,395 195,157 Total $ 6,283,728 $ 5,606,456 Store Count Store Count by Segment: Maintenance 1,786 1,645 Car Wash 1,108 1,111 Paint, Collision & Glass 1,888 1,846 Platform Services 206 203 Total 4,988 4,805 Store Count by Business Model: Franchised Stores 2,986 2,882 Company-Operated Stores 1,285 1,202 Independently-Operated Stores 717 721 Total 4,988 4,805 Same Store Sales % (1) Maintenance 9.2 % 16.1 % Car Wash (5.6 %) (3.9 %) Paint, Collision & Glass 11.4 % 17.1 % Total consolidated 7.4 % 14.1 % Segment Adjusted EBITDA Maintenance $ 329,498 $ 258,470 Car Wash 128,996 175,326 Paint, Collision & Glass 140,569 134,818 Platform Services 80,492 72,383 Adjusted EBITDA as a percentage of net revenue by segment Maintenance 34.3 % 32.3 % Car Wash 21.6 % 29.6 % Paint, Collision & Glass 28.1 % 32.8 % Platform Services 37.3 % 36.9 % Total consolidated 22.4 % 24.5 % (1) Platform Services same store sales metrics were removed as a Key Performance Indicator as sales included within the calculation represented an insignificant portion of Platform Services total sales. 42 Reconciliation of Non-GAAP Financial Information To supplement our consolidated financial statements prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures throughout this Annual Report, as described further below, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making.
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Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.
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As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our consolidated financial statements prepared and presented in accordance with GAAP. Adjusted Net Income/Adjusted Earnings per Share .
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We define Adjusted Net Income as net income calculated in accordance with GAAP, adjusted for acquisition-related costs, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges, amortization related to acquired intangible assets and the tax effect of the adjustments.
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Adjusted Earnings Per Share is calculated by dividing Adjusted Net Income by the weighted average shares outstanding.
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Management believes this non-GAAP financial measure is useful because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions. 43 The following table provides a reconciliation of Net (Loss) Income to Adjusted Net Income and Adjusted Earnings per Share: Adjusted Net Income /Adjusted Earnings per Share Year Ended (in thousands, except per share data) December 30, 2023 December 31, 2022 Net (loss) income $ (744,962) $ 43,173 Acquisition related costs (a) 13,174 15,304 Non-core items and project costs, net (b) 7,343 20,241 Cloud computing amortization (c) 1,923 — Equity-based compensation expense (d) 15,300 20,583 Foreign currency transaction (gain) loss, net (e) (3,078) 17,168 Bad debt recovery (f) — (449) Goodwill impairment (g) 850,970 — Trade name impairment (h) — 125,450 Asset sale leaseback (gain) loss, impairment and closed store expenses (i) 139,414 (29,083) Amortization related to acquired intangible assets (j) 28,756 27,059 Provision for uncertain tax positions (k) (354) (148) Valuation allowance for deferred tax asset (l) 17,729 3,051 Adjusted net income before tax impact of adjustments 326,215 242,349 Tax impact of adjustments (m) (183,754) (45,567) Adjusted net income 142,461 196,782 Net loss attributable to non-controlling interest — (15) Adjusted net income attributable to Driven Brands Holdings Inc. $ 142,461 $ 196,797 Earnings per share Basic $ (4.50) $ 0.26 Diluted $ (4.53) $ 0.25 Weighted average shares outstanding for Net Income Basic $ 161,917 $ 162,762 Diluted $ 161,917 $ 166,743 Adjusted earnings per share Basic $ 0.86 $ 1.18 Diluted $ 0.85 $ 1.16 Weighted average shares outstanding for Adjusted Net Income Basic 161,917 162,762 Diluted 164,100 166,743 Adjusted EBITDA.
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We define Adjusted EBITDA as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition-related costs, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.
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Management believes this non-GAAP financial measure is useful because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions. 44 The following table provides a reconciliation of Net (Loss) Income to Adjusted EBITDA: Adjusted EBITDA Year Ended December 30, 2023 December 31, 2022 Net (loss) income $ (744,962) $ 43,173 Income tax (benefit) expense (102,689) 25,167 Interest expense, net 164,196 114,096 Depreciation and amortization 175,296 147,156 EBITDA (508,159) 329,592 Acquisition related costs (a) 13,174 15,304 Non-core items and project costs, net (b) 7,343 20,241 Cloud computing amortization (c) 1,923 — Equity-based compensation expense (d) 15,300 20,583 Foreign currency transaction (gain) loss, net (e) (3,078) 17,168 Bad debt recovery (f) — (449) Goodwill impairment (g) 850,970 — Trade name impairment (h) — 125,450 Asset sale leaseback (gain) loss, impairment and closed store expenses (i) 139,414 (29,083) Adjusted EBITDA $ 516,887 $ 498,806 (a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions.
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We expect to incur similar costs in connection with other acquisitions in the future and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized. (b) Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs.
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A $15 million change in estimate related to the Tax Receivable Agreement that we entered into at the IPO related to the filing of our 2021 tax returns was recorded in the fourth quarter of 2022. (c) Includes non-cash amortization expenses relating to cloud computing arrangements. (d) Represents non-cash equity-based compensation expense.
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(e) Represents foreign currency transaction (gains) losses, net that primarily related to the remeasurement of our intercompany loans as well as unrealized gains and losses on remeasurement of cross currency swaps and forward contracts. (f) Represents the recovery of previously uncollectible receivables outside of normal operations. (g) Relates to goodwill impairment charges within the Car Wash segment.
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Refer to Note 7 in our consolidated financial statements for additional information. (h) Certain indefinite-lived Car Wash trade names were impaired as the Company elected to discontinue their use. Refer to Note 7 in our consolidated financial statements for additional information.
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(i) Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates.
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Refer to Note 7 in our consolidated financial statements for additional information. (j) Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statements of operations.
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(k) Represents amounts recorded for uncertain tax positions, inclusive of interest and penalties. 45 (l) Represents valuation allowances on income tax carryforwards in certain domestic and foreign jurisdictions that are not more likely than not to be realized.
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(m) Represents the tax impact of adjustments associated with the reconciling items between Net Loss (Income) and Adjusted Net Income, excluding the provision for uncertain tax positions.
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To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction. 46 Results of Operations for the Year Ended December 30, 2023 Compared to the Year Ended December 31, 2022 Net Income We recognized a net loss of $745 million, or $4.53 loss per diluted share for the year ended December 30, 2023, compared to a net income of $43 million, or $0.25 earnings per diluted share for the year ended December 31, 2022.
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The decrease of $788 million was primarily due to the following: • a non-cash goodwill impairment charge of $851 million included in the Car Wash segment as well as $133 million of consolidated asset impairment charges, primarily relating to Car Wash assets for the 29 approved store closures, underperforming stores, and assets held for sale in the current period; • a loss on sale or disposals of fixed assets of approximately $5 million during the year ended December 30, 2023 compared to a gain of $35 million during the year ended December 31, 2022, primarily relating to sale leaseback transactions and a gain on the sale of CARSTAR company-operated stores in the prior year; • increased interest expense of $50 million, primarily relating to a higher variable interest rate on the Term Loan Facility in the current period, the full-year impact of interest relating to borrowings under the Series 2022-1 Class A-2 Securitization Senior Notes issued in the fourth quarter of 2022, and increased borrowings on the Revolving Credit Facility; • decreased operating margins within the Car Wash segment; and • increased depreciation and amortization expenses of $28 million relating to capital expenditures and new store openings during 2023.
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These decreases were partially offset by: • a $125 million non-cash intangible impairment charge related to the change in intended use of certain existing Car Wash trade names migrating to the Take 5 Car Wash brand in the prior period; • a decrease in tax expense of $128 million; • reduced losses for foreign exchange of $20 million; and • increases related to same store sales growth, primarily within the Maintenance segment, organic store count growth, and unit growth from acquisitions during 2023.
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Adjusted Net Income Adjusted net income was $142 million for the year ended December 30, 2023, a decrease of $54 million, compared to $197 million for the year ended December 31, 2022.
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This decrease was primarily due to the following: • increased interest expense of $50 million, primarily relating to a higher variable interest rate on the Term Loan Facility in the current period, the full-year impact of interest relating to borrowings under the Series 2022-1 Class A-2 Securitization Senior Notes issued in the fourth quarter of 2022, and increased borrowings on the Revolving Credit Facility; • decreased operating margins within the Car Wash segment; and • increased depreciation expenses of $26 million relating to capital expenditures and new store openings during 2023.
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The decreases were partially offset by: • increases related to same store sales growth, primarily within the Maintenance segment, organic store count growth, and unit growth from acquisitions in the trailing twelve month period.
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Adjusted EBITDA Adjusted EBITDA was $517 million for the year ended December 30, 2023, an increase of $18 million, compared to $499 million for the year ended December 31, 2022.
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The increase in Adjusted EBITDA was primarily due to: • increases related to same store sales growth, primarily within the Maintenance segment, organic store count growth, and unit growth from acquisitions in the trailing twelve month period.
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The increases were partially offset by: • decreased operating margins within the Car Wash segment. 47 To facilitate the review of our results of operations, the following tables set forth our financial results for the periods indicated. All information is derived from the consolidated statements of operations.
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Net Revenue Year Ended (in thousands) December 30, 2023 % of Net Revenues December 31, 2022 % of Net Revenues Franchise royalties and fees $ 190,367 8.3 % $ 171,734 8.5 % Company-operated store sales 1,526,353 66.2 % 1,324,408 65.1 % Independently-operated store sales 196,395 8.5 % 195,157 9.6 % Advertising fund contributions 98,850 4.3 % 87,750 4.3 % Supply and other revenue 292,064 12.7 % 254,145 12.5 % Total net revenue $ 2,304,029 100.0 % $ 2,033,194 100.0 % Franchise Royalties and Fees Franchise royalties and fees increased $19 million, or 11%, primarily due to same store sales growth and net increase of 104 franchised stores.
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Franchised system-wide sales increased $474 million, or 12%. Company-operated Store Sales Company-operated store sales increased $202 million, or 15%, of which approximately $116 million, $82 million, and $5 million related to the Maintenance, Paint, Collision & Glass, and Car Wash segments, respectively.
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The sales increase in the Maintenance segment was primarily due to same store sales growth and 59 net new company-operated stores.
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The sales increase in the Paint, Collision & Glass segment was primarily from new store growth in the current year as well as continued ramp for stores acquired in the prior year, partially offset by a decrease in sales relating to company-operated CARSTAR stores sold in 2022.
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The sales increase in the Car Wash segment was primarily driven by the addition of new company-operated stores through acquisitions and greenfield openings in the current year and continued ramp for stores acquired or opened in the prior year, which was partially offset by a decrease in same store sales and store closures predominately in the fourth quarter of 2023.
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In aggregate, the Company added 83 company-operated stores year-over-year. Independently-Operated Store Sales Independently-operated store sales (comprised entirely of sales from the international car wash locations) increased $1 million, or 1%, primarily due to an increase in same store sales and a positive impact from foreign exchange.
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Advertising Fund Contributions Advertising fund contributions increased by $11 million, or 13%, primarily due to an increase in franchise system-wide sales of approximately $474 million, or 12%, from same store sales growth and an additional 104 net new franchise stores.
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Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of franchisee gross sales.
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Supply and Other Revenue Supply and other revenue increased $38 million, or 15%, primarily due to growth in product and service revenue within the Maintenance and Platform Services segments as a result of an increase in system-wide sales. 48 Operating Expenses Year Ended (in thousands) December 30, 2023 % of Net Revenues December 31, 2022 % of Net Revenues Company-operated store expenses $ 1,004,472 43.6 % $ 812,262 40.0 % Independently-operated store expenses 109,078 4.7 % 107,940 5.3 % Advertising fund expenses 97,290 4.2 % 87,986 4.3 % Supply and other expenses 158,436 6.9 % 145,481 7.2 % Selling, general, and administrative expenses 443,112 19.2 % 383,478 18.9 % Acquisition related costs 13,174 0.6 % 15,304 0.8 % Store opening costs 5,831 0.3 % 2,878 0.1 % Depreciation and amortization 175,296 7.6 % 147,156 7.2 % Goodwill impairment 850,970 850,970 36.9 % — — — % Trade name impairment charges — — % 125,450 6.2 % Asset impairment charges and lease terminations 132,903 5.8 % 5,655 0.3 % Total operating expenses $ 2,990,562 129.8 % $ 1,833,590 90.2 % Company-Operated Store Expenses Company-operated store expenses increased $192 million, or 24%, primarily due to increased operations relating to 83 net company-operated stores added during 2023 as well as increased operating costs primarily relating to increased labor costs and rent expense at properties converted to leases through sale leasebacks in the prior year.
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Independently-Operated Store Expenses Independently-operated store expenses (comprised entirely of expenses from the international car wash locations) increased $1 million, or 1%, primarily due to increased supplies expense. Advertising Fund Expenses Advertising fund expenses increased $9 million, or 11%, which is commensurate with the increase to advertising fund contributions during the period.
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Advertising fund expenses generally trend consistent with advertising fund contributions. Supply and Other Expenses Supply and other expenses increased $13 million, or 9%, due to an increase in supply and other revenue.
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Selling, General and Administrative Expenses Selling, general and administrative expenses increased $60 million, or 16%, primarily due to a loss on sale or disposals of fixed assets of approximately $5 million in the current period compared to a gain of $35 million in the prior year, relating to sale leaseback transactions as well as a gain on the sale of CARSTAR company-operated stores in the prior year.
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In addition, the Company incurred higher marketing expenses and infrastructure costs in the current year. These increases were partially offset by a $15 million charge for change in estimate for the Tax Receivable Agreement in the prior year, as well as reduced employee related benefits and professional fees in the current year.
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Acquisition Related Costs Acquisition related costs decreased $2 million, or 14%, due to decreased acquisition activity in the current year compared to the prior year.
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Store Opening Costs Store opening costs increased by $3 million, or 103%, primarily due to costs associated with converting stores from U.S. glass acquisitions to the AGN brand and costs associated with opening new Take 5 Oil, U.S. glass, and U.S. car wash company-operated stores. 49 Depreciation and Amortization Depreciation and amortization expense increased $28 million, or 19%, due to additional fixed assets and finite-lived intangible assets recognized in conjunction with recent acquisitions and higher capital expenditures, primarily related to oil change and car wash site development, as well as full year depreciation and amortization for stores opened and intangibles acquired during 2022.
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Goodwill Impairment During the year ended December 30, 2023, a goodwill impairment charge of $851 million was recorded directly attributable to our Car Wash segment. For more information, refer to Note 7 in our consolidated financial statements included within this Form 10-K.
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Trade Name Impairment Charges During the year ended December 31, 2022, the Company made the strategic decision to rebrand the majority of its U.S. car wash locations to operate under the name “Take 5 Car Wash”, and therefore discontinuing the use of certain Car Wash trade names that had indefinite lives.
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As a result, the Company recognized a $125 million non-cash impairment charge. For more information, refer to Note 7 in our consolidated financial statements included within this Form 10-K. Asset Impairment Charges and Lease Terminations Asset impairment charges and lease terminations increased by $127 million.
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During the year ended December 30, 2023, the Company recorded impairment charges primarily related to property and equipment and right-of-use assets for the 29 stores management approved for closure, underperforming stores, and impairments relating to assets held for sale or abandoned within the Car Wash segment.
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During the year ended December 31, 2022, the Company recorded impairment charges relating to certain property and equipment and operating lease right-of-use assets at closed locations. For more information, refer to Note 7 in our consolidated financial statements included within this Form 10-K.
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Interest Expense, Net Year Ended (in thousands) December 30, 2023 % of Net Revenues December 31, 2022 % of Net Revenues Interest expense, net $ 164,196 7.1 % $ 114,096 5.6 % Interest expense, net increased $50 million, or 44%, primarily relating to a higher variable interest rate on the Term Loan Facility in the current period, the full-year impact of interest relating to borrowings under the Series 2022-1 Class A-2 Securitization Senior Notes issued in the fourth quarter of 2022, and increased borrowings on the Revolving Credit Facility.
Removed
(Gain) Loss on Foreign Currency Transactions, Net Year Ended (in thousands) December 30, 2023 % of Net Revenues December 31, 2022 % of Net Revenues (Gain) loss on foreign currency transactions, net $ (3,078) (0.1) % $ 17,168 0.8 % The gain on foreign currency transactions for the year ended December 30, 2023 was primarily comprised of transaction gains in our foreign operations of $2 million and a gain on foreign currency hedges of $1 million.
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The loss on foreign currency transactions for the year ended December 31, 2022 was comprised of a $16 million net remeasurement loss on our non U.S. dollar entities, including third party long-term debt and intercompany notes. 50 Income Tax (Benefit) Expense Year Ended (in thousands) December 30, 2023 % of Net Revenues December 31, 2022 % of Net Revenues Income tax (benefit) expense $ (102,689) (4.5 %) $ 25,167 1.2 % Income tax benefit was $103 million for the year ended December 30, 2023 compared to an income tax expense of $25 million for the year ended December 31, 2022.
Removed
The effective income tax rate for the year ended December 30, 2023 was 12.1% compared to 36.8% for the year ended December 31, 2022. The net decrease in income tax expense and effective tax rate was primarily driven by impairments recorded during the year ended December 30, 2023.
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Segment Results of Operations for the Year Ended December 30, 2023 Compared to the Year Ended December 31, 2022 We assess the performance of our segments based on Segment Adjusted EBITDA, which is defined as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition-related costs, store opening and closure costs, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges.
Removed
Shared services costs are not allocated to these segments and are included in Corporate and Other. Segment Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.
Removed
Maintenance Year Ended 2023 2022 (in thousands, unless otherwise noted) December 30, 2023 December 31, 2022 % Net Revenue For Segment % Net Revenue For Segment Franchise royalties and fees $ 56,298 $ 45,046 5.8 % 5.6 % Company-operated store sales 809,356 692,947 84.3 % 86.7 % Supply and other revenue 94,746 61,869 9.9 % 7.7 % Total net revenue $ 960,400 $ 799,862 100.0 % 100.0 % Segment Adjusted EBITDA $ 329,498 $ 258,470 34.3 % 32.3 % System-Wide Sales Change Franchised stores $ 1,090,457 $ 923,153 $ 167,304 18.1 % Company-operated stores 809,356 692,947 116,409 16.8 % Total System-Wide Sales $ 1,899,813 $ 1,616,100 $ 283,713 17.6 % Store Count (in whole numbers) Change Franchised stores 1,134 1,052 82 7.8 % Company-operated stores 652 593 59 9.9 % Total Store Count 1,786 1,645 141 8.6 % Same Store Sales % 9.2 % 16.1 % Maintenance net revenue increased $161 million, or 20%, driven primarily by a $116 million increase in company-operated store sales from same store sales growth and 59 net new company-operated stores.
Removed
Supply and other revenue increased by $33 million, or 53%, primarily due to higher system-wide sales from franchised stores. Franchise royalties and fees increased by $11 million, or 25%, primarily due to the $167 million, or 18%, increase in franchised system-wide sales from same store sales growth and 82 net new franchise stores.
Removed
Maintenance Segment Adjusted EBITDA increased $71 million, or 27%, primarily due to revenue growth, cost management, and operational leverage utilizing our efficient labor model at company-operated locations. 51 Car Wash Year Ended 2023 2022 (in thousands, unless otherwise noted) December 30, 2023 December 31, 2022 % Net Revenue For Segment % Net Revenue For Segment Company-operated store sales 395,357 390,502 66.1 % 65.9 % Independently-operated store sales 196,395 195,157 32.9 % 32.9 % Supply and other revenue 5,992 7,061 1.0 % 1.2 % Total net revenue $ 597,744 $ 592,720 100.0 % 100.0 % Segment Adjusted EBITDA $ 128,996 $ 175,326 21.6 % 29.6 % System-Wide Sales Change Company-operated stores $ 395,357 390,502 $ 4,855 1.2 % Independently-operated stores 196,395 195,157 1,238 0.6 % Total System-Wide Sales $ 591,752 $ 585,659 $ 6,093 1.0 % Store Count (in whole numbers) Change Company-operated stores 391 390 1 0.3 % Independently-operated stores 717 721 (4) (0.6 %) Total Store Count 1,108 1,111 (3) (0.3) % Same Store Sales % (5.6 %) (3.9 %) Car Wash segment net revenue increased $5 million, or 1%, driven primarily by a $5 million increase in company-operated store sales from the addition of 32 new company-operated stores in the current year and continued ramp for stores acquired or opened in the prior year, which was partially offset by a decrease in same store sales and store closures predominately in the fourth quarter of 2023.
Removed
Independently-operated store sales increased $1 million due to an increase in same store sales for independently-operated stores and positive impacts from foreign exchange. Supply and other revenue decreased $1 million due to decreased vending sales.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed9 unchanged
Biggest changeOur consolidated statement of operations and balance sheet accounts are also impacted by the re-measurement of non-functional currency transactions, such as intercompany loans denominated in foreign currency.
Biggest changeOur consolidated statement of operations and balance sheet accounts are also impacted by the re-measurement of non-functional currency transactions, such as intercompany loans denominated in foreign currency. We have attempted to minimize this risk on certain securitization debt with a foreign currency forward contract to hedge our risk to changes between the U.S. Dollar and Canadian Dollar.
See Note 12 to the consolidated financial statements for additional details. Impact of Inflation Inflation did not have a significant overall effect on our annual results of operations during 2023, 2022 or 2021.
See Note 11 to the consolidated financial statements for additional details. Impact of Inflation Inflation did not have a significant overall effect on our annual results of operations during 2024, 2023 or 2022.
A hypothetical rate increase or decrease of 1% for variable debt held as of December 30, 2023, would result in an increase or decrease of interest expense of $7 million. We also have exposure to variable interest rates in the Tax Receivable Agreement. See Note 2 to the consolidated financial statements for additional details.
A hypothetical rate increase or decrease of 1% for variable debt held as of December 28, 2024, would result in an increase or decrease of interest expense of $5 million. We also have exposure to variable interest rates in the Tax Receivable Agreement. See Note 2 to the consolidated financial statements for additional details. As discussed in “Item 1A.
As discussed in “Risk Factors - We are required to make payments under a Tax Receivable Agreement for certain tax benefits, which amounts are expected to be material ” to the extent that we are unable to make payments under the Tax Receivable Agreement because of restrictions under our outstanding indebtedness.
Risk Factors - We are required to make payments under a Tax Receivable Agreement for certain tax benefits, which amounts are expected to be material ” to the extent that we are unable to make payments under the Tax Receivable Agreement because of restrictions under our outstanding indebtedness, we may be subject to interest rate risk.
Removed
We have attempted to minimize this risk on certain securitization debt and inter-company loans with a cross-currency interest rate swap agreement and foreign currency forward contracts to hedge our risk to changes between the U.S. Dollar and Canadian Dollar as well as a forward contract between the British Pound and Euro, respectively.

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