Franchise Equity Partners sees plenty of opportunity to expand Valvoline Instant Oil Change in Texas, where it bought 38 locations and plans to develop dozens more.
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Cars are staying on the road longer and tend to travel far in the big state of Texas.
It makes the need for car maintenance more prevalent, and puts a brand like Valvoline Instant Oil Change on the track for growth. Franchise Equity Partners took note of the potential, inking a deal to purchase 38 Valvoline locations in the Lone Star State with the intention to open 75 more.
The deal, signed in July 2024 and finalized in December, expands an already diverse portfolio for FEP, which has about 850 storefronts across several industries including quick-service restaurants, auto dealerships and consumer business services. The Valvoline addition comes under its sub-company, Velocity Auto Care in Austin.
“This move with Valvoline ticked a lot of boxes for us,” said Mike Esposito, FEP managing partner. “The oil change industry is very attractive and we looked at a number of different players in the sector. There were others out there, but we liked Valvoline quite a bit. They have a simple service model about getting people processed through the oil change in under 12 minutes. As a result of that, they’ve been gaining market share over time.”
The timing was right for both parties, as Valvoline has been refranchising many of its company-owned units. In addition to the 38 it put up for sale in Texas, Valvoline committed to refranchising in Denver and Las Vegas.
“They have about 2,000 stores now and nearly 1,000 of those are company-owned,” Esposito said. “They still see a tremendous amount of white space, so I think they’re going to double their store count in the next five years. I think what they saw was, they can sell those 38 stores to a good capital partner who can then accelerate the growth in this footprint.
Mike Esposito is a managing partner of Franchise Equity Partners.
“For every dollar we put in, it’s one less dollar that they have to do at Valvoline, allowing them to focus on something else.”
The money FEP is putting into its Valvoline locations is largely to form an extensive team to lead all facets of the business.
“Each store had a general manager, and obviously employees below them,” Esposito said. “But beyond that, we had to build a whole executive team, which I would say was a heavy lift. But we are proud of the result. We hired a whole C-suite team, as well as new heads of HR and real estate. From there, we’ve built out a whole series of systems and processes.”
By creating such a team, Esposito said it provides the ability to scale and develop quickly. In addition to assembling an executive team, Esposito said FEP worked to improve data software and communicate with existing staff to settle any nerves.
“It’s an important issue,” Esposito said. “To be frank, when people hear ‘private equity is coming here,’ their antennas go up, and we’re sensitive to that. Our message all the time is, at the store level, nothing is changing. We also let them know that, because we’re opening 75 more stores, the opportunity for advancement is dramatically enhanced.”
—Matthew Liedke