Valvoline Inc., announced last Thursday that it has signed eight new development agreements with seven of its largest Valvoline Instant Oil ChangeSM (VIOC) franchisees for the addition of more than 160 stores by 2023. Valvoline continues to work on additional development agreements that when complete would provide for a combined total of more than 200 new VIOC franchise stores in the next six years.
Two of these agreements are with the company’s largest franchisee, Henley Enterprises, Inc., which opened the first VIOC franchise location in 1989 and currently has more than 200 service centers, primarily in the Northeast and southern California. Pursuant to the agreements, two of Henley’s subsidiaries will add approximately 100 stores in California and the Northeast and Mid-Atlantic regions. Valvoline also announced it has signed a definitive agreement with Henley Bluewater LLC to acquire its 56 stores in Michigan and northern Ohio. The acquisition is expected to be completed in the first quarter of fiscal 2018. Financial terms were not disclosed.
“A core element of Valvoline’s strategy is to accelerate the growth of our industry-leading quick lube model,” said Sam Mitchell, Valvoline’s chief executive officer. “Through these development agreements we are leveraging our strong relationships with our franchisees as they commit capital and resources to drive their store growth. At the same time, we are committing our own capital to grow company-owned stores. Today’s announcements reflect the progress we’ve made in mapping out our deliberate system-wide growth plans and position us well as we move into fiscal 2018.”
“The transactions announced today represent an exciting opportunity across the entire VIOC system. The development agreements enable our franchisees to focus on faster growth in targeted markets, and Valvoline’s acquisition of the 56 stores in Michigan and Northern Ohio allows us to increase the density of our company-owned network of stores in the Midwest,” said Tony Puckett, Valvoline’s president, Quick Lubes. “From this much stronger base in the region, we’ll be well positioned to leverage our resources to enhance operational efficiency and capture further growth opportunities for our company operations.”
“Divesting our Midwest stores allows us to free up capital to focus on aggressive growth in our target markets where we already have strength, namely in California, Mid-Atlantic and the Northeast,” said Don Smith, CEO of Henley Enterprises, Inc. “After nearly 30 years as a franchisee, VIOC’s retail model has never been stronger and the company’s relationship with franchisees have never been healthier. I look forward to adding an additional 100 stores to the VIOC system over the next six years."