Driven Brands franchise division is ‘all about cash;’ company encourages alternative parts use

Driven Brands President and CEO Danny Rivera stated during the company's Q1 earnings call that the Franchise Brands Division is "all about cash" and employs alternative parts to reduce vehicle repair costs.

Revenue and growth

Driven Brands reported an 8% increase in quarterly revenue to $484.4 million compared to Q1 2025. Rivera noted an industry pick-up from Q4 into Q1.

> We continue to outperform the general industry anywhere between 100 to 300 basis points. That really hasn’t changed into Q1, and we don’t expect that to change here anytime soon.

> As we look at the collision industry for the entire year of 2026, what we’re really expecting is a year of stabilization, not so much a year of bounceback. We expect the industry to moderate towards the back half of the year, and in turn, the segment will tend to moderate into the back half of the year. …for us, Franchise Brands is all about cash.

> As we think about the framework of growth and cash, I love it when we post a 1% comp quarter, obviously, but at the end of the day, what I love more is 60% margins, and irrespective of the moderation of the top line into the back half of the year, we continue to expect really strong margins from that segment.

An investor inquired about a potential reprieve from insurance premiums entering "deflationary territory" and how the company plans to handle possible pent-up demand.

> We’re happy it’s a solid start to the quarter; 1% comps is good. As we iterated in our prepared remarks, we’re expecting some moderation for the segment towards the back half of the year. The underlying story, so to speak, really hasn’t changed a whole lot.

Business performance

Rivera elaborated on the performance of the company's core businesses.

> If you look at underlying Franchise Brands, we’ve got three main businesses. Maaco has been soft. It was softtail at the end of last year. That softness has persisted into Q1 of this year, although we are seeing a bit of improvement on the retail side of that business. Meineke has been strong for some time now. That strength was evident in 2025, and that momentum has carried forward into Q1. The change sequentially quarter-over-quarter was really collision.

When asked why Driven Brands anticipates industry moderation in the second half of the year and what actions it might take to increase customer pay opportunities, Rivera stated that the company already captures more customer pay.

> That’s been a growing part of our business here, and we’re uniquely positioned as Driven Brands when you think about the Maaco side of the portfolio. If you have a customer that doesn’t want to go to insurance, let’s say they get into a light fender bender, and they don’t want to pay or risk their premiums going up or something like that, and they may want to come out of pocket — Maaco is a very real alternative there. Maaco features a lot of customer pay, frankly. We’re somewhat uniquely positioned to capture that side of the work.

Rivera attributed the expected moderation to current data trends.

> As far as why do we expect the moderation of the industry, that’s just based on the data that we’re seeing. We saw sequential improvement Q1 over Q4, but as we look at the data that’s available, if we look at just what’s happening with inflation in the country and some of the most recent numbers, our expectation, again, is that 2026 is a year of stabilization over 2025, not so much a bounce back year. We expect a bit of moderation going into the back half of the year.

Cost reduction strategies

An investor then inquired about the company's ability to "push harder on alternative parts in order to lower repair costs and maybe make a dent in that trend."

> We do. One of the really nice things about our business compared to some of our competitors in that space is that we’ve got a franchise model, so we’ve got owner-operators on the ground. Having owners on the ground covers all manner of sin, and those folks are very cognizant of not just delivering an amazing experience for the customers and for our carriers, but also they’re very cognizant of making sure that they’re taking the appropriate steps to maximize profitability.

The company concluded the quarter with a net leverage ratio of 3.2-times Adjusted EBITDA and total liquidity of $804 million. This consisted of $133 million in cash and cash equivalents and $671 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility, excluding an additional $135 million in 2022-1 Securitization Senior Notes. Driven Brands indicated that these notes would expand its variable funding note borrowing capacity if exercised.

Driven Brands previously discussed its reported material errors and restatement during its delayed 2025 Q4 earnings call on May 19, and later disclosed delayed reporting on June 5. A press release issued before the Q1 earnings call stated that Driven Brands "believes that, upon such filing, it will regain compliance."

In Q1, revenue decreased by $400,000, primarily due to the sale of the company’s two remaining company-operated collision locations, as reported by Executive Vice President and Chief Financial Officer Mike Diamond.

> We expect Franchise Brands [division] same-store sales to moderate as compared to the 0.9% growth in Q1, given the uneven nature of recovery for both Maaco and Collision.

Investors were informed that overall system-wide sales increased 6% to $1.6 billion, driven by a 2% increase in same-store sales and a 5% increase in store count year-over-year.