How to Finance a Midas Franchise: Shops, Conversions and SBA
By Anthony Cornella
A Midas franchise loan can look very different depending on how a buyer enters the system. Some buyers take over an existing Midas shop with customers already in the bays, some convert an independent repair shop to the Midas name, and some build a new shop from the ground up. Each path has its own cost, collateral and underwriting story, and Midas’s lease arrangements add a layer that lenders and the SBA treat with care.
This article explains what Midas says about the capital needed to own a shop, how its conversion and veteran incentives affect the amount you finance, what the brand’s SBA Franchise Directory notes mean, and how lenders evaluate Midas purchases and start-ups.
US Professional Funding is not affiliated with, sponsored by or endorsed by Midas; the name is used only to describe the business. Figures from the franchisor’s disclosure document and materials can change, so always review the current Franchise Disclosure Document (FDD). Loan programs and terms vary by lender and borrower, every loan is subject to approval, and nothing here is legal, tax or investment advice.
Midas Franchise Loan at a Glance
- Capital needed: Midas’s franchise materials put the minimum capital at approximately $75,000 for an existing six-bay shop, and the investment at up to $459,000 for a new eight-bay shop.
- Conversion incentive: Midas advertises a 0% royalty on a converting shop’s current book of business for 10 years.
- Veteran incentive: 100% off the initial franchise fee for qualified U.S. veterans.
- System size: nearly 2,100 franchised and licensed locations in 20 countries, with about 1,200 in the United States and Canada, according to the company’s franchise materials.
- History: founded in 1956 and franchising since 1958.
- Royalty, advertising and franchise fee: set out in Items 5 and 6 of the current FDD; we could not verify current figures from the franchisor’s own materials.
- SBA Franchise Directory: listed as Midas (code S1110), with three notes covering lease documents, the Option Shop Lease Agreement and lien positions.
What Is Midas?
Midas launched on April 20, 1956, according to a company press release, with its first store in Macon, Georgia, under founder Nate H. Sherman. The brand began franchising in 1958 and is headquartered in Palm Beach Gardens, Florida. Its franchise materials describe nearly 2,100 franchised and licensed locations in 20 countries, about 1,200 of them in the United States and Canada.
Midas started with mufflers and exhaust and grew into a full-service auto care brand. Today its shops offer brakes, maintenance, tires, exhaust, and steering and suspension work, with oil changes and other routine service. The company’s materials describe shops by bay count, referring to six-bay existing shops and eight-bay new builds, which gives a sense of the facility a buyer is financing.
Why lenders view Midas the way they do. Lenders financing an auto repair franchise look for steady demand, and brakes, tires and maintenance are needs drivers eventually have to address. Midas brings about seven decades of operating history, national name recognition and a large network of existing shops, which means buyers can often acquire a location with a sales history rather than starting from zero. At the same time, repair shops depend on skilled technicians, and Midas’s real estate and lease arrangements must be reviewed carefully because they affect collateral.
Midas Franchise Costs
Initial franchise fee. Midas’s current initial fee is disclosed in Item 5 of the FDD, which we were not able to review. What the company does advertise is a full waiver of the initial franchise fee for qualified U.S. veterans, which reduces both the cash needed at signing and the amount financed.
Buying an existing shop. According to Midas’s franchise materials, the minimum capital for an existing six-bay shop is approximately $75,000. An existing shop already has lifts, equipment, signage and a customer base, so financing focuses on the purchase price, inventory, any needed upgrades and working capital.
Building a new shop. A new eight-bay Midas shop can require an investment of up to $459,000, according to the company’s materials. A new build typically involves a much larger build-out, a full equipment package, signage, opening inventory and pre-opening costs.
Converting an independent shop. Owners of independent repair shops can convert to Midas. The company advertises a 0% royalty on the shop’s current book of business for 10 years, which means royalties apply to growth above the existing business rather than to the sales the owner already had. Conversion costs typically include signage, image updates, technology and any equipment needed to meet brand standards.
Equipment. Lifts, alignment systems, tire changers and balancers, brake lathes, diagnostic scan tools, compressors, oil change equipment and shop management technology are core costs for a new shop and replacement items for an existing one.
Working capital. Payroll for technicians and service advisors, parts inventory, rent and marketing need to be funded before cash flow stabilizes, especially for a new build or a turnaround. Midas’s materials note that additional capital and an ability to secure financing may be required in some situations.
Total investment. Because the total depends so heavily on whether you buy, convert or build, review Item 7 of the current FDD for the full range and line items. A complete Midas budget generally includes:
- Initial franchise fee (waived for qualified veterans)
- Purchase price of an existing shop, or construction and leasehold improvements for a new one
- Shop equipment, lifts and diagnostic tools
- Signage and image elements
- Opening inventory of parts, tires and supplies
- Training travel, insurance, licenses and professional fees
- Grand opening marketing
- Additional funds for the initial operating period
Ongoing Fees and How They Affect Your Loan
Royalty and advertising. Midas’s royalty and advertising contributions are disclosed in Item 6 of the FDD. In auto service franchising, these fees are typically calculated as a percentage of sales, so they rise and fall with revenue. Confirm the current rates, any minimums and how they apply to different products and services.
The conversion royalty incentive. For a converting shop, the advertised 0% royalty on the current book of business for 10 years has a meaningful effect on cash flow. Projections should separate existing sales from new growth so the lender can see which revenue carries royalties.
Lease payments. The SBA Franchise Directory refers to a Midas Option Shop Lease Agreement, which indicates that some shops are leased under franchisor-related arrangements. Rent paid under any lease is a fixed cost lenders will include in debt service calculations.
Technology and remodels. Shop management systems, diagnostic subscriptions and periodic image updates are recurring costs. Check the FDD for any required upgrades and when they apply.
How lenders factor these costs in. Lenders start from the shop’s sales, subtract cost of parts, technician payroll, rent, royalty and advertising, and then measure what remains for debt service. For a Midas franchise loan on an existing shop, lenders use actual history; for a new build, they use projections and stress-test them.
Franchisor Requirements for New Owners
Midas’s franchise materials describe the minimum capital as approximately $75,000 for an existing six-bay shop, while a new eight-bay shop requires a much larger investment. The company does not publish a net worth requirement in the materials we reviewed, so ask the franchise development team for current financial qualifications.
Training. New franchisees attend new franchisee orientation at the Midas training center at the corporate headquarters and receive ongoing training resources afterward.
Experience. Automotive experience is valuable, but lenders and franchisors also look for management, customer service and financial skills. An owner who will not work on vehicles needs a plan for recruiting a qualified shop manager and technicians.
The approval process. Candidates submit an inquiry, review the FDD, complete a waiting period required by federal franchise rules, talk with existing franchisees, identify an available shop or site, and receive approval before signing. Financing should be arranged in parallel so the lender’s timeline matches the franchise and lease documents.
Ways to Own a Midas
Buying an existing shop. This is the path Midas highlights with its approximately $75,000 minimum capital figure for a six-bay shop. Buyers acquire a running business with equipment and customers, and lenders underwrite actual sales history. Our guide to buying an auto repair shop walks through the deal steps, and our auto care acquisition financing page explains purchase loans.
Converting an independent shop. An independent owner keeps the location, staff and customers but gains the Midas name, systems and marketing. The 10-year royalty incentive on existing business can make conversion financing easier to support. Read more about financing a conversion franchise.
Building a new shop. New shops require the largest investment, up to $459,000 for an eight-bay shop according to Midas, and lenders underwrite them on projections, the site and the owner’s experience.
Multi-shop ownership. Some operators grow by acquiring several shops in a market. See the multi-unit section below.
Financing Options for a Midas Franchise
SBA 7(a) loans. Because Midas is on the SBA Franchise Directory, the SBA 7(a) loan program is often a strong option for existing-shop purchases, conversions and new builds. A 7(a) loan can finance goodwill, equipment, inventory, working capital and, where applicable, real estate.
SBA 504 loans. When a buyer purchases the shop building, the SBA 504 program can finance owner-occupied real estate and long-lived equipment. The SBA notes for Midas, explained below, become especially important in these deals.
Conventional term loans. Experienced operators adding shops may use a conventional business loan, which can be faster to arrange for borrowers with strong financials and existing locations.
Equipment financing. Alignment systems, lifts, tire equipment, diagnostic tools and oil service equipment can be financed separately, either at purchase or when upgrading an existing shop. Learn more about auto care equipment financing and leasing.
Working capital and lines of credit. Tire inventory, seasonal swings in brake and battery work, technician payroll and fleet receivables all create timing gaps. A line of credit helps owners manage them. See our franchise working capital options.
Seller financing on resales. When buying an existing Midas shop, the seller may agree to carry part of the price. A seller note is typically subordinate to the senior loan, and SBA rules can limit how it is structured, so terms should be agreed with the lender first. Our article on auto repair shop seller financing and earnouts explains the options.
SBA Loans for Midas Franchisees
The SBA Franchise Directory lists franchise brands whose agreements have been reviewed for SBA eligibility. SBA lenders generally require a brand to appear on the directory before they can make an SBA-guaranteed loan to one of its franchisees. A listing does not approve a borrower; it clears the franchise relationship for review.
Midas’s listing. Midas appears on the SBA Franchise Directory under code S1110, with three notes:
- When the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Collateral Assignment of Lease may not be executed.
- The Option Shop Lease Agreement may not be executed during the term of the SBA loan.
- The lender or certified development company must ensure it obtains the correct lien position on all collateral, as required by the SBA’s lending rules.
What those notes mean in plain English. The first note works like the lease addenda in many franchise systems: Midas’s documents can let the franchisor step into a franchisee’s lease if the franchise ends, but if the franchisee owns the real estate and pledges it to secure an SBA loan, that assignment is not signed so it cannot compete with the lender’s lien. The second note addresses Midas’s option shop lease structure, a franchisor-related lease arrangement; while the SBA loan is outstanding, that agreement may not be signed, so buyers using SBA financing need a lease or ownership structure that does not rely on it. The third note is a reminder to the lender to secure its lien position correctly on every piece of collateral, which matters when equipment, leasehold interests and real estate may each be subject to different documents.
Practical impact. Before you sign a lease or purchase agreement for a Midas shop, ask the franchisor which lease documents apply and share them with your lender. If the shop is currently under an option shop lease, the lender and the franchisor need to agree on an alternative structure before an SBA loan can close.
SBA program size. The SBA 7(a) program maximum is currently $5 million, though program rules can change, which covers most single-shop purchases and many multi-shop acquisitions.
Application tips. Before applying for an SBA-backed Midas franchise loan, confirm the directory listing with your lender, provide the full FDD and all lease documents early, document your equity injection and prepare projections based on the shop’s history or a realistic ramp-up. Our article on SBA loans for auto repair shops covers the process in more detail.
How Lenders Evaluate a Midas Deal
Personal credit and financial history. Lenders review credit, tax returns and a personal financial statement, and typically require personal guarantees from significant owners.
Net worth and liquidity. Lenders want the equity injection plus reserves. Midas’s minimum capital figure is a starting point, not the full picture of what a lender will want to see.
Industry and management experience. Shop management, service advisor or multi-site retail experience strengthens an application. Lenders want to know who will manage technicians and how the owner will handle recruiting.
Business plan and projections. For an existing shop, start with actual car counts, average repair order and gross margin, then adjust for the buyer’s rent, royalty and staffing. For a conversion, separate existing sales from new growth to reflect the royalty incentive. For a new build, show a realistic ramp-up.
The FDD and franchise agreement. Lenders review Items 5, 6, 7, 10, 17 and 19, the term and renewal provisions, transfer conditions and every lease document. Check Item 19 to see whether the FDD includes financial performance representations.
Site, lease or real estate. Lenders review the lease, any franchisor-related lease or option arrangement, environmental history and zoning. Auto service sites can carry environmental questions from fluids and older equipment, so an environmental review may be required when real estate is collateral.
Historical financials for an existing shop. Expect to provide several years of profit and loss statements, shop management reports and tax returns, along with an equipment list and its condition.
Equipment and Shop Condition
Many Midas shops have operated for years, so equipment condition is a central part of any purchase. A buyer should inspect lifts, alignment systems, tire changers and balancers, brake lathes, air compressors and diagnostic tools, and ask which items will need replacement or upgrade soon. Building those costs into the purchase financing, or planning a separate equipment loan, avoids draining working capital after closing.
For a new eight-bay shop, the equipment package is a large part of the total investment. Financing equipment separately can preserve cash for payroll and marketing during the ramp-up.
Multi-Unit Growth
Midas’s large network of existing shops creates opportunities to buy several locations in one market, either at once or over time. Owning several shops lets an operator share management, purchasing and marketing.
Financing additional shops. Once the first shop has a track record, lenders can underwrite combined cash flow. Owners often finance each acquisition separately, then consider consolidating debt as the group grows. Each new shop needs franchisor approval and its own review of lease documents under the SBA notes.
Real-World Scenarios
A first-time owner buying a six-bay shop. A former service manager buys an existing Midas shop. He brings his capital injection, uses an SBA 7(a) loan for the balance and keeps a working capital reserve. The lender confirms that the shop’s lease documents comply with the SBA directory notes.
An independent owner converting. An independent shop owner converts to Midas and benefits from the 0% royalty on the existing book of business. A modest term loan covers signage, technology and equipment upgrades, and the shop’s existing cash flow supports repayment.
A veteran opening a new shop. A U.S. veteran qualifies for the waived initial franchise fee and builds a new eight-bay shop. The loan covers construction, equipment and working capital, and the lender relies on projections and the veteran’s management background.
An operator buying the building. A multi-shop owner buys the building under one of his shops using an SBA 504 loan. Because the real estate secures the loan, the Collateral Assignment of Lease is not executed, and the lender confirms its lien position on all collateral.
Common Mistakes to Avoid
- Signing a lease or option shop agreement before your lender reviews it against the SBA notes
- Treating the $75,000 minimum capital figure as the total cost of an existing shop
- Overlooking equipment replacement needs in an older shop
- Failing to separate existing and new sales in a conversion projection
- Underestimating technician recruiting and payroll
- Leaving too little working capital for tire inventory and seasonal swings
For more pitfalls, read the auto repair shop loan mistakes that cost owners the most.
Next Steps to Finance Your Midas Franchise
Step 1: Review the FDD. Request the current FDD and read Items 5, 6, 7, 10, 17, 19 and 20 with a franchise attorney and accountant.
Step 2: Choose your path. Decide whether you will buy an existing shop, convert your own shop or build a new one.
Step 3: Gather the lease documents. Ask Midas which lease structure applies to your shop and share the documents with your lender.
Step 4: Estimate payments. Our SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
Step 5: Build your projections. Use actual shop history or a realistic ramp-up, and model royalty, advertising, rent and payroll.
Step 6: Apply for financing. Submit tax returns, a personal financial statement, a resume, the franchise and lease documents and your projections.
Step 7: Close and transition. Coordinate closing with Midas’s approval, complete orientation, and keep working capital in reserve.
Midas Franchise Loan FAQs
How much does it cost to own a Midas franchise?
Midas’s franchise materials put the minimum capital at approximately $75,000 for an existing six-bay shop and the investment at up to $459,000 for a new eight-bay shop. Item 7 of the current FDD gives the full range.
What is the Midas franchise fee?
The fee is disclosed in Item 5 of the current FDD. Midas waives the initial franchise fee entirely for qualified U.S. veterans.
What royalty does Midas charge?
Royalty and advertising rates are disclosed in Item 6 of the FDD. For conversions, Midas advertises a 0% royalty on the shop’s current book of business for 10 years.
Can I get an SBA loan for a Midas franchise?
Yes, subject to lender approval. Midas is listed on the SBA Franchise Directory under code S1110, with notes about lease documents and lien positions.
What is the Option Shop Lease Agreement note?
The SBA directory says the Option Shop Lease Agreement may not be executed during the term of an SBA loan, so buyers using SBA financing need a lease or ownership structure that does not rely on it.
Can I convert my independent shop to a Midas?
Yes. Midas recruits conversions and advertises a 0% royalty on the existing book of business for 10 years.
Is there a veteran discount?
Yes. Midas offers 100% off the initial franchise fee for qualified U.S. veterans.
Can I buy an existing Midas shop?
Yes. Buying an existing shop is one way into the system, and lenders underwrite the purchase on actual sales history, subject to franchisor approval.
Can I finance equipment separately?
Yes. Lifts, alignment systems, tire equipment and diagnostic tools can be financed or leased separately from the main loan.
Does Midas offer financing?
Check Item 10 of the current FDD. Midas’s materials note that additional capital and an ability to secure financing may be required in some situations.
How long is a Midas franchise agreement?
The term and renewal provisions are in Item 17 of the current FDD. Lenders generally want the remaining term to support the loan’s repayment period.
Does the Midas FDD include financial performance information?
Review Item 19 of the current FDD to see what financial performance representations it includes, and rely on actual financial statements when buying an existing shop.
Final Thoughts
Midas offers several ways in, from buying an established shop to converting an independent business or building new. The right Midas franchise loan depends on which path you take, how the shop is leased or owned, and how carefully the deal follows the SBA directory notes. Buyers who review lease documents early, inspect equipment and keep reserves give themselves the best chance at a smooth closing.
US Professional Funding helps franchise buyers and owners finance acquisitions, conversions, equipment and working capital. Learn more about our franchise financing and automotive care financing solutions.
