What warranty costs are the responsibility of the Big O Tires franchisee?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
However, the Franchise Agreement does contemplate warranties sponsored by Big O and you must honor them (Franchise Agreement Sections 14.01 and 14.04).
We will absorb the franchisee's costs for (i) claims related to replacement due to road hazard and/or workmanship and materials as contemplated in the terms of the applicable Big O Program Products warranty for Big O I Tires (tires that carry the "Big O" label on the sidewall) in accordance with the terms and procedures prescribed in the Manual; and (ii) claims related to the prorated manufacturer's workmanship and material warranty for "Big O II Tires" (those that are (i) Big O exclusive tires that do not carry the "Big O" label on the sidewall, , and (ii) any other tires designated as exclusive to the Big O product screen) and any other tires that are Big O Program Products in accordance with the terms and procedures described in the Manual. (However, the warranty costs absorbed by us will be included in our costs in determining the prices at which we sell Big O Program Products to you).
You must cover all other warranties (Franchise Agreement Section 14.04(b)).
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEM AND TRAINING (FDD pages 55–73)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, franchisees are responsible for covering all warranty costs except for specific instances related to Big O Program Products. Big O Tires will absorb the franchisee's costs for claims related to replacement due to road hazards, workmanship, and materials as contemplated in the terms of the applicable Big O Program Products warranty for Big O I Tires (tires that carry the "Big O" label on the sidewall). Big O Tires also covers claims related to the prorated manufacturer's workmanship and material warranty for "Big O II Tires" (Big O exclusive tires that do not carry the "Big O" label on the sidewall, and any other tires designated as exclusive to the Big O product screen) and any other tires that are Big O Program Products in accordance with the terms and procedures described in the Manual. However, these warranty costs absorbed by Big O Tires will be included in their costs when determining the prices at which they sell Big O Program Products to franchisees.
This means that as a Big O Tires franchisee, you need to be prepared to handle and pay for warranty claims that fall outside the specific coverage provided by Big O Tires for their branded tire products. This could include warranties on other products or services offered at your store, or situations not covered under the Big O I and Big O II tire warranties. Understanding the specifics of what is covered by Big O Tires and what is not is crucial for managing your potential liabilities and customer service effectively.
Prospective franchisees should carefully review the Franchise Agreement and the Franchise Policies & Standards Manual to fully understand the scope of warranty responsibilities. It is also advisable to discuss warranty procedures and potential costs with existing franchisees during the due diligence process to gain practical insights into this aspect of the business. This will help in accurately forecasting potential expenses and ensuring adequate resources are allocated for handling warranty claims.