Tri-Cities Fast Lubes

Ran across this interesting press release from Tri-Cities Fast Lubes, a Jiffy Lube franchisee that filed for bankruptcy in January. Appears they’re trying to follow the Heartland Automotive Services model and force Shell/Pennzoil’s hand a little. It’ll be interesting to see Shell’s reaction considering Tri-Cities has 16 shops and Heartland Automotive had 400-plus shops at the time of their bankruptcy.

From the press release:

As previously reported, Tri-Cities Fast Lubes, Inc., one of the nation’s larger Jiffy Lube franchisees with 16 quick-oil change stores in the North West, commenced Chapter 11 proceedings in January 2011for the purpose of restructuring its financial affairs and resolving financial differences with its franchisor and major oil supplier.
Since the commencement of the Chapter 11 case, the business has continued to operate in the ordinary course with no interruptions of any kind. “While the decision to file for Chapter 11 was not an easy one, we ultimately felt it was the best course of action to protect our business while we work toward a resolution of our financial issues with Jiffy Lube International and Pennzoil,” said Sean Porcher, TCFL’s CEO. “While we have been working diligently towards and would prefer to find a solution that would permit us to continue as part of the Jiffy Lube network, we refuse to compromise the recoveries of our stakeholders and employees to do so.”
Dating back to early 2010, the company has been unable to reach agreement on the differences that exist with both Jiffy Lube International and Pennzoil, Shell Oil.  “Our franchisor and oil supplier continue to place overly burdensome demands upon us that will continue to cripple our business for decades to come,” explained Mr. Porcher.  Today the company takes its first step in separation from Pennzoil by announcing plans to reject their oil supply contract dating back to 2008.  While Pennzoil is a leading brand in the motor oil market, the premium installers pay for the brand quickly erodes their bottom line cash flow.  Pennzoil often provides upfront capital to fund business start-up in return for long term purchase agreements.  Once under purchase agreement, companies like TCFL are obligated to purchase exclusively from Pennzoil regardless of price increases or competitive fluctuations.  “The rejection of this supply agreement will provide us the flexibility to explore agreements with competing brands. We are currently fielding offers from other major oil suppliers and franchisors who are interested in forging a strategic partnership with us to grow the quick oil change business in the North West,” explained Mr. Porcher.
For Tri-Cities Fast Lubes, Inc. to emerge from Chapter 11 as anticipated, they need to show a long-term viable business plan.  While the company remains hopeful that the plan can be built around their foundation as a Jiffy Lube franchisee and Pennzoil products customer, Porcher noted: “our number one priority is making TCFL successful for years to come.  I have spent over half of my life in the Jiffy Lube system, but we are really at a crossroads here.  If other oil companies and franchisors are willing to forge an alliance with us and provide us upfront capital to help fund our emergence from Chapter 11, we will have no choice other than to seriously consider those offers.”
While the company has made no announcement regarding lease rejections, Porcher noted that their deadline is quickly approaching for assumption or rejection of leases.  The company is currently making contingency plans regarding lease rejections if their differences cannot be resolved with Shell.
TCFL is owned and operated by Sean Porcher and Rudd McClory.  Both graduated from California Polytechnic State University San Luis Obispo with Master’s Degrees in Business Administration.  The pair acquired the company in 2008 from Allan Englemeyer and Jamie Hall who continue to advise the company on various business matters.  The company operates sixteen Jiffy Lube Centers in Eastern Washington – including Spokane, Tri-Cities and Hermiston, OR.

(This post written while listening to “Dragula” by Rob Zombie. A guilty pleasure.)

About National Oil & Lube News

National Oil & Lube News is the fast oil change industry's oldest and largest trade publication. Started in 1986 by Steve Hurt (a former fast lube owner) and David Arrington, NOLN has grown and evolved right alongside the fast lube industry. Here at NOLN, our aim is to help fast lube operators with every facet of their business, from operations to technical issues. Our monthly magazine and this regularly updated website contain everything from technical tips, recall announcements and service guides to articles on handling customer complaints, building your brand and making your business the best it can be. With tips and advice from experts both inside and outside the industry, you're sure to learn something that can help your fast lube business grow and prosper.
This entry was posted in bankruptcy, Jiffy Lube, Pennzoil, Shell, Tri-Cities Fast Lubes. Bookmark the permalink.

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