DRVN Driven Brands Holdings Inc. - 10-K

Item 1A. Risk Factors

Investing in our common stock involves a high degree of risk. These risks include those described below and may include additional risks and uncertainties not currently known to us or that we currently deem immaterial. These risks could adversely affect our results of operations, financial condition, business reputation, or business prospects. You should carefully consider each of the following risk factors in conjunction with other information provided in this Annual Report on Form 10-K and in our other public disclosures before making an investment decision regarding our securities. If any of these risks occur, the trading price of our common stock could decline, and you could lose all or part of your investment.

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties, including those risks discussed at-length below. These risks include, among others, the following:

• Competition may harm our business and results of operations.

• Changes in consumer preferences and perceptions, and in economic, market, and other conditions could adversely affect our business and results of operations.

• Our business is affected by the financial results of our franchisees.

• Increases in operating costs, including labor and commodity costs and interest rates have, and may again in the future, adversely affect our results of operations.

• Our business is affected by advances in automotive technology.

• We depend on key suppliers, including international suppliers, to deliver timely high-quality products at quantities and prices required for our businesses.

• We may not be able to execute on our plans to open additional locations and enter new markets.

• Our business may be adversely impacted by our indebtedness, including additional leverage in connection with acquisitions and other capital expenditure initiatives.

• If franchisees and other licensees do not observe the required quality and trademark usage standards, our brands may suffer reputational damage, which could in turn adversely affect our business.

• We are heavily dependent on information systems and technology, and any significant failure, interruption, or security incident could impair our ability to efficiently operate our business or timely or accurately prepare financial reports.

• Our failure or our franchisees’ failure to comply with health, employment, and other federal, state, local, and provincial laws, rules, and regulations may lead to losses and harm our brands.

• We identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures. If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses or other deficiencies in the future, or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and the price of our common stock may decline.

• Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital, restricts our ability to issue equity securities and could impact our listing on Nasdaq.

• The documents governing our indebtedness have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects.

• The Securitization Senior Notes Indenture governing the securitized debt facility may restrict the cash flow from the entities subject to the securitization to us and our subsidiaries and, upon the occurrence of certain events, cash flow would be further restricted.

• We are a “controlled company” within the meaning of Nasdaq rules and, as a result, qualify for exemptions from certain corporate governance requirements that we have relied on in the past and may do so in the future.

• Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price.

Risks Relating to Our Business

Competition may harm our business and results of operations.

The automotive aftermarket industry is highly competitive, and we are subject to a wide variety of competitors across the “do it for me” (“DIFM”) and “do-it-yourself” (“DIY”) automotive services industries. Competitors include international, national, regional and local repair and maintenance shops, paint and collision repair shops, glass repair and replacement shops, automobile dealerships, oil change shops, and suppliers of automotive parts, including online retailers, wholesale distributors, hardware stores, and discount and mass market merchandise stores. The large number and variety of market participants creates intense competition with respect to the scale, geographic reach, price, service, quality, brand awareness, customer satisfaction, and adherence to various insurance carrier performance indicators. Some of our competitors have consolidated smaller and independent automotive services brands and shops to achieve additional efficiencies and economies of scale.

Certain of our competitors may have greater brand recognition, as well as greater financial, marketing, operating, and other resources, which may give them certain competitive advantages with respect to some or all of these areas of competition. Some of our competitors have opened and may continue to open new locations near our current locations and have engaged and may continue to engage in substantial price discounting in response to economic weakness and uncertainty, each of which may adversely impact our sales and operating results. In addition, advances in technology such as artificial intelligence (“AI”) and machine learning pose competitive risks. We expect competition to continue to intensify as existing competitors continue to expand operations, product offering mixes, and promote aggressive marketing campaigns and new competitors emerge. These increased competitive pressures could have a material adverse effect on our business, financial condition, and operating results.

Changes in consumer preferences and perceptions, and in economic, market, and other conditions could adversely affect our business and results of operations.

Demand for our products and services have been affected in the past, and may be affected in the future, by a number of factors, including:

• The number and age of vehicles in operation, as vehicles of a certain age (typically older than three to five years) may no longer be under the original vehicle manufacturers’ warranties and tend to need more maintenance and repair than newer vehicles. A smaller, younger population of vehicles in operation could lessen demand for our services.

• The used car market, and the average value of used cars, impacts how often cars are deemed a total loss by insurance companies. As the price of used cars decreases, the number of cars being deemed a total loss increases, resulting in less demand for repairs and maintenance.

• Rising energy prices, because increases in energy prices may cause customers to defer certain repairs or purchases because they use a higher percentage of their income to pay for gasoline and other energy costs and drive their vehicles less frequently, resulting in less wear and tear and lower demand for repairs and maintenance.

• Advances and changes in automotive technology and parts design, may result in cars needing repairs and maintenance, such as motor oil changes, less frequently, and parts lasting longer, may make customers more likely to use dealership automotive repair services, may reduce the frequency of accidents, or may increase the cost to our locations to obtain relevant parts or training for employees.

• Economic downturns, such as declining economic conditions may cause customers to defer vehicle maintenance, repairs, oil changes, or other services, obtain credit, or repair and maintain their vehicles themselves. During periods of good economic conditions, consumers may decide to purchase new vehicles rather than having their older vehicles serviced. In addition, economic weaknesses and uncertainty may cause changes in consumer preferences, and if such economic conditions persist for an extended period of time, this may result in consumers making long-lasting changes to their spending behaviors in the automotive aftermarket markets. Economic weakness and uncertainty may disproportionately impact certain of our segments, particularly those that provide more discretionary services.

• Weather, as mild weather conditions may lower the failure rates of automotive parts or result in fewer accidents or slower deterioration of paints and coatings, resulting in the need for fewer automotive repairs and less frequent automotive maintenance services. In addition, inclement weather may cause customers to defer or forego vehicle maintenance, such as oil changes.

• Consumer resistance to changing service providers because they may be unfamiliar with their vehicle’s mechanical operation and, as a result, may select a service provider they have patronized in the past, or may continue to return to the dealership where they bought their vehicle for repairs. Increasing complexity in the systems used in vehicles exacerbates this risk.

• Restrictions on access to diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation, which may limit our ability to perform maintenance and repairs.

• Negative publicity associated with any of our services and products, or regarding the automotive aftermarket industries generally, whether or not factually accurate, could cause consumers to lose confidence in, or could harm the reputation of our brands.

• Changes in travel patterns, which may be exacerbated by weak economic conditions, may cause consumers to rely more heavily on mass transportation or to travel less frequently.

• Payments for automobile repairs, which may be dependent on insurance programs, and insurance companies may require repair technicians to hold certain certifications that the personnel at our locations do not hold.

• Changes in governmental regulations affecting the automotive sector may cause uncertainty, including pollution prevention laws, which may affect demand for automotive repair and maintenance services, or decisions by states or counties to no longer require annual car maintenance, may increase our costs or decrease our revenue in unknown ways.

Other events and factors that could affect our results include:

• changes in consumer preferences, perceptions, and spending patterns;

• demographic trends;

• employment levels and wage rates, and their effects on the disposable income and actual or perceived wealth of potential customers and their consumption habits, which may impact traffic and transaction size;

• variations in the timing and volume of sales at our locations;

• changes in frequency of customer visits;

• changes in driving and traffic patterns;

• type, number, and location of competitors;

• variations in the cost of, availability of and shipping costs of motor oil and automobile supplies, parts, paints, refinish coatings, glass, and chemicals;

• unexpected slowdowns in business or operational support efforts;

• changes in the availability or cost of labor, including health care-related or other costs;

• the timing of expenditures in anticipation of future sales at our locations;

• an inability to purchase sufficient levels of advertising or increases in the cost of advertising;

• increases in national, federal, state, local, and provincial taxes in the countries in which we operate, including income taxes, indirect taxes, non-resident withholding taxes, and other similar taxes, as well as changes in tax guidance and regulations and the impact on our effective tax rate;

• factors associated with operating in foreign locations, including repatriation risks, foreign currency risks, and changes in tax treatment;

• high levels of economic inflation;

• prolonged government shutdowns;

• unreliable or inefficient technology, including point-of-sale and payment systems;

• weather, natural disasters, pandemics, military conflicts and other catastrophic events and terrorist activities;

• changes in the number of renewals of franchise agreements; and

• our ability to maintain direct repair program and other relationships with insurance partners.

Our business is affected by the financial results of our franchisees .

Our business is impacted by the operational and financial success of our franchisees, including the franchisees’ implementation of our strategic plans and their ability to secure adequate financing to execute those plans. Our franchisees may be impacted by weakened economic conditions such as elevated interest rates, inflation, and rising construction costs. If our franchisees are unable to secure adequate sources of financing, they may slow their pace of development and fail to meet the growth targets set forth in their respective area development agreements. If our franchisees are unsuccessful in meeting the requirements of their respective area development agreement, our revenues may decline and our business could be adversely affected. In some circumstances we may offer extended payment terms or make other concessions, which decreases our revenues. In limited circumstances, we also may be required to make lease payments or complete repair or maintenance without being able to collect payments on domestic locations that we lease from landlords and then sublease to the franchisees in the

event franchisees fail to pay rent under the subleases. Additionally, refusal on the part of franchisees to renew or their insistence to restructure their franchise agreements may result in decreased payments from franchisees. Entering into restructured franchise agreements may result in reduced franchisee payment royalty rates in the future. Furthermore, if our franchisees are not able to obtain the financing necessary to complete planned remodel and construction projects, they may be forced to postpone or cancel such projects.

The employees of franchisees are not our employees. We provide training and support to franchisees, but the quality of franchised store operations may be diminished by factors beyond our control. Consequently, franchisees may not successfully operate stores in a manner consistent with our standards and requirements or may not hire and train qualified managers and other store personnel. If they do not, our image and reputation may suffer, and revenues could decline.

Our business is affected by advances in automotive technology .

The demand for our automotive repair and maintenance services and products may be adversely affected by continuing developments in automotive technology, including self-driving and electric vehicles and shared mobility. Some cars produced by certain automotive manufacturers last longer and require service and maintenance at less frequent intervals, or they may require more specialized service and maintenance than we offer at our locations. Quality improvement of manufacturers’ original equipment parts has in the past reduced, and may in the future reduce, demand for our services and products, adversely affecting our sales. For example, manufacturers’ use of stainless steel exhaust components has increased the life of those parts, thereby decreasing the demand for exhaust repairs and replacements. Longer and more comprehensive warranty or service programs offered by automobile manufacturers and other third parties also could adversely affect the demand for our products and services. New automobile owners may also choose to have their cars serviced by a dealer during the period that the car is under warranty. In addition, advances in automotive technology, such as accident-avoidance technology, continue to require us to incur additional costs to update diagnostic capabilities and technical training programs or may make providing such training programs more difficult. Accident-avoidance technology may also decrease the number of collisions that occur, which could decrease demand for our services. These advances could increase our costs and reduce our profits and may materially and adversely affect our business and results of operations.

Certain restrictions may prevent us from providing our services and products to customers .

We may not be able to provide our products and services to certain customers because they have contractual relationships with third parties to service their vehicle, we may not be able to acquire the necessary diagnostic tools and repair information because of restrictions imposed by the original vehicle manufacturers or by governmental regulation may cause vehicle owners to rely on dealers to perform maintenance and repairs, or insurance companies may require repair technicians to hold certain certifications that our locations’ personnel do not hold. Such restrictions could adversely impact our revenues, results of operations, business, and financial conditions.

Increases in operating costs, including labor and commodity costs and interest rates have, and may again in the future, adversely affect our results of operations.

Ongoing increases in employee wages, benefits, and insurance and other operating costs such as commodity costs, legal claims, insurance costs, and costs of borrowing have adversely affected our operations and administrative expenses at our locations and may do so again in the future. Factors beyond our control may cause our operating costs to increase, such as weather conditions, natural disasters, disease outbreaks, global demand, product recalls, inflation, civil unrest, tariffs, and government regulations. For example, increases in gasoline prices could result in the imposition of fuel surcharges by distributors used by us and our franchisees, which would increase the cost of operations. Any increase in such costs for our locations could reduce our and our franchisees’ sales and profit margins if we choose not, or are unable, to pass the increased costs to our customers.

In addition, elevated interest rates may impact land acquisition and construction costs as well as the cost and availability of credit and locations available to lease, thereby adversely affecting our and our franchisees’ ability to finance the development of additional locations and maintenance of existing locations. Inflation can also cause increased commodity, labor, and benefits costs which could reduce the profitability of our locations. Any of the foregoing increases could adversely affect our and our franchisees’ business and results of operations.

High levels of economic inflation may increase our operating costs, influence demand for our products, and impact the profitability of our business.

The U.S. has been experiencing high levels of price inflation across a wide variety of economic sectors. There can be no assurances as to how high such inflation will go and/or how long such elevated levels of inflation may persist. High levels of inflation may influence employee and staffing costs and costs of goods and services required to be purchased by the Company and its Franchisees. Driven Brands and its Franchisees may not be able to offset the negative impact of inflation with increased prices, and increased prices may decrease demand for our products and services. In addition, high levels of inflation may impact consumers and decrease demand for products and services purchased by Driven Brands’ customers. Any of the above could have a material adverse effect on our results of operations.

Our locations may experience difficulty hiring and retaining qualified personnel, resulting in higher labor costs.

The operation of our locations requires both entry-level and skilled employees and trained and experienced automotive field personnel are in high demand and short supply at competitive compensation levels in some areas, which has resulted in increased labor costs. From time to time, our franchisees and we may experience difficulty hiring and retaining such qualified personnel. Competition for employees and wage inflation may also result in difficulties in hiring and retaining key qualified personnel. In addition, the formation of unions may increase the operating expenses of our locations. Any such future difficulties could result in a decline in the sales and operating results of our locations, which could in turn materially and adversely affect our revenues, results of operations, business, and financial condition.

Insurance coverage may not be adequate, and increased self-insurance and other insurance costs could adversely affect our results of operations.

We and our franchisees maintain insurance, and these insurance policies may not be adequate to protect us from liabilities that we incur in our business. Certain extraordinary hazards, for example, may not be covered, and insurance may not be available (or may be available only at prohibitively expensive rates) with respect to many other risks. Moreover, any loss incurred could exceed policy limits, and policy payments made to us and franchisees may not be made on a timely basis. Any such loss or delay in payment could lead to a decline in the sales and operating results of our locations, which could in turn have a material and adverse effect on our revenues, results of operations, business, and financial condition.

In addition, in the future, insurance premiums may increase, and we and our franchisees may not be able to obtain similar levels of insurance on reasonable terms, or at all. Although we seek to manage our claims to prevent increases, such increases can occur unexpectedly and without regard to our efforts to limit them. If such increases occur, our locations may be unable to pass them along to the consumer through product or service price increases, resulting in decreased profitability, which could have a material adverse effect on our business and results of operations.

In the event that liability to third parties arises, such parties could seek to recover their losses from us, whether or not they are legally or contractually entitled to do so, which could increase litigation costs or result in liability for us. Additionally, a substantial unsatisfied judgment could result in the bankruptcy of one or more of our operating entities, which could have a material adverse effect on our results of operations, business, and financial condition.

Increases in supply costs could adversely affect our results of operations.

The operation of our locations requires large quantities of automotive supplies. Our success depends in part on our ability to anticipate and react to changes in supply costs and availability, and we are susceptible to increases in primary and secondary supply costs as a result of factors beyond our control. These factors include general economic conditions, significant variations in supply and demand, tariffs, seasonal fluctuations, fluctuations in the value of currencies in the markets in which we operate, commodity market speculation, government regulations, pandemics, and weather conditions.

Higher supply costs or limited supply availability could reduce our profits, which in turn may materially and adversely affect our business and results of operations. This volatility could also cause our franchisees and us to consider changes to our product delivery strategy and result in adverse adjustments to pricing of our services.

Geopolitical uncertainty, including tariffs imposed by the U.S. and/or other governments could increase our supply costs, which could materially and adversely affect our business and results of operations.

Higher tariffs imposed by the U.S. and elsewhere have increased our supply costs and could adversely impact our profitability if we are unable to pass along those higher costs to our customers. Moreover, new tariffs could make our products increasingly expensive for customers, potentially suppressing customer demand. We may not be able to offset the financial impact of tariffs through price increases to customers. Trade policies of the U.S. and other nations could result in the adoption of additional tariffs and other trade restrictions by various nations, leading to a global trade war and reducing the competitiveness of our products in certain markets. Any of the foregoing could materially and adversely affect our business and results of operations.

Additionally, economic and geopolitical events, such as the conflict between Russia and Ukraine, the U.S. conflict with Iran, and conflict in other parts of the Middle East have, and may continue to, lead to further disruption, instability, and volatility in global markets, including higher oil prices or other costs and negatively impact our business. For example, the U.S. government and other governments in jurisdictions in which we operate have imposed severe sanctions and export controls against Russia and Russian interests, and threatened additional sanctions and controls. In addition, the conflict with Iran could lead to long-term increases in the cost of oil and cause supply chain disruption. This conflict is rapidly developing, and its impact on our business is difficult to predict. The impact of these and other potential measures, as well as potential responses to them, could adversely affect our business, supply chain, partners, or customers.

Decreases in our product sourcing revenue could adversely affect our results of operations.

We supply franchisees and our company-operated locations with certain products required to operate applicable locations, and provide our 1-800 Radiator franchisees with the ability to purchase certain products required to operate applicable locations. We may also supply third parties with certain products. Currently, 1-800 Radiator franchisees may be required by their franchise agreements to purchase products from the 1-800 Radiator electronic network, though they may not be required to do so in the future.

In addition, our Driven Advantage platform allows our company-operated stores and certain partners to purchase many of the products and supplies necessary to operate their locations. Our partners, including certain franchisees, may, but are not required to, purchase products from us, and may in the future decide not to do so. While it is our expectation that we will continue to benefit from product sourcing income and pricing arrangements, there can be no assurance that such income and arrangements will continue to be renewed or replaced. Our failure to maintain our current product sourcing income could have a material adverse effect on our sales and profit margins, which in turn could materially and adversely affect our business and results of operations.

We benefit from negotiated discounts with certain large oil and other suppliers based on our scale and ability to meet volume requirements. Our failure to negotiate beneficial terms in the future or failure to meet volume requirements could have a material adverse effect on our sales and profit margins. A portion of our distribution income is based on the growth and expansion of Take 5 Oil locations as well as beneficial pricing negotiated with suppliers and ability to manage unit labor and shipping costs. Decreases in the volume of purchases by franchisees, company-operated stores, or third parties, or increases in costs of products, labor, or shipping could have a material adverse effect on our sales and profit margins.

We depend on key suppliers, including international suppliers, to deliver timely high-quality products at quantities and prices required for our businesses.

We recommend key suppliers (including our subsidiaries) to our franchisees, and our success is dependent on, among other things, our continuing ability to offer our services and products at prices similar to historical levels. Our suppliers may be adversely impacted by economic weakness and uncertainty, such as increased commodity prices, increased fuel costs, tight credit markets, and various other factors, including geopolitical uncertainty, transportation interruptions, import and export regulations, sanctions, tariffs, and labor shortages. In such an environment, our suppliers may seek to change the terms on which they do business with us to lessen the impact of any current and future economic or regulatory challenges on their businesses or may cease or suspend operations. If we are forced to renegotiate the terms upon which we conduct business with our suppliers or find alternative suppliers to provide key products or services, it could adversely impact the profit margins at our locations, which in turn could materially and adversely affect our business and results of operations.

Economic weakness and uncertainty have previously forced some suppliers to seek financing to stabilize their businesses, and others have been forced to restructure or have ceased operations completely. In addition, some of our key suppliers have significant operations outside of the markets in which we operate, which could expose us to events in the countries of those suppliers’ operations, including government intervention and foreign currency fluctuation. Additionally, the ability of our suppliers to timely deliver products is subject to cyber-related risks. If a key supplier or a large number of other suppliers suspend, decrease, or cease operations, we and our franchisees may have difficulty keeping our respective locations fully supplied. If we and our franchisees were forced to suspend one or more services offered to customers, that could have a significant adverse impact on our sales and profit margins, which in turn could materially and adversely affect our business and results of operations.

Supply chain shortages and interruptions could adversely affect our business.

We and our franchisees are dependent upon frequent deliveries of automobile parts, motor oil, and other supplies that meet our quality specifications. Shortages or interruptions in the supply of automobile products, motor oil, or other supplies caused by unanticipated demand, problems in production or distribution, war, acts of terrorism, cyber attacks, financial or other difficulties of suppliers, labor actions, changes in government regulations, inclement weather, natural disasters, such as floods, drought, and hurricanes, outbreak of disease, including pandemics, or other conditions have adversely affected the availability, quality and cost of supplies for such products, and could do so again in the future, which could lower our revenues, increase operating costs, damage brand reputation, and otherwise harm our business and the businesses of our franchisees. Such shortages or interruptions could reduce our sales and profit margins, which, in turn, may materially and adversely affect our business and results of operations.

Our business depends on the willingness of suppliers, distributors, and service providers to supply our locations with goods and services pursuant to customary credit arrangements which may be available in the future on less favorable terms or not at all.

As is common in the automotive services and parts distribution industries, our locations purchase goods from suppliers, distributors, and service providers pursuant to customary credit arrangements. Changes in our capital structure and our franchisees’ capital structures, or other factors outside our control, may cause our suppliers, distributors and service

providers to change their customary credit arrangements. Any event affecting trade credit from suppliers, distributors, and service providers (including any inability of such suppliers, distributors, and service providers to obtain trade credit or factor their receivables on favorable terms or at all) or our and our franchisees’ available liquidity, could reduce the resources available to support our locations, which in turn could affect our and our franchisees’ ability to execute business plans, develop or enhance products or services, take advantage of business opportunities, or respond to competitive pressures.

Our failure to build and maintain relationships with insurance partners could adversely affect our business.

A significant portion of the profits generated by certain of our brands in the Franchise Brands segment, such as ABRA, CARSTAR, and Fix Auto as well as our Auto Glass Now segment are derived from insurance companies. Many insurance companies have systems, agreements, and minimum service levels that they use to allocate services and repairs. If we or enough of our franchisees fail to perform services for an insurance provider in accordance with the insurance provider’s systems or minimum service levels, we may not receive work from the insurance provider. Further, our ability to continue to grow our business, including opening additional locations to maintain existing business volume and pricing, is related to our ability to maintain and grow our relationships with insurance providers. The inability to establish or build relationships with insurance providers could have a material adverse effect on the operations and business prospects of one or more of our brands.

Substantially all of the assets of the Company are pledged as security under the terms of our Indebtedness.

Substantially all of our revenue-generating assets, including all franchise agreements, material company-operated locations, material product distribution contracts, and material intellectual property are pledged as security under the terms of our Indebtedness. Under certain circumstances, following an event of default, the pledged assets may be foreclosed upon pursuant to the terms of the Indebtedness.

We may not be able to execute on our plans to open additional locations and enter new markets.

Our growth strategy may not succeed if we are unable to successfully enter new markets, including selecting appropriate sites for our locations, and if we and our franchisees are unable to construct new locations, complete remodels of our existing locations, convert non-Driven Brands locations, or if we are unable to maintain and/or deepen our penetration in existing markets.

Our growth strategy includes entering into franchise agreements and development agreements with franchisees who will open additional locations in markets where there are either an insufficient number, relatively few, or no existing locations. We rely heavily on these franchisees and developers to grow our franchise systems, and there can be no assurance that we will be able to successfully expand or acquire critical market presence for our brands. Consumer characteristics and competition in new markets may differ substantially from those in the markets where we currently operate. Additionally, we may be unable to identify qualified franchisees or appropriate locations, develop brand recognition, successfully market our products, or attract new customers in such markets. Further, we may refranchise company-operated locations to franchisees or build new locations to lease to franchisees in the future. The success of these transactions is dependent upon the availability of sellers and buyers, qualified franchisees, the availability of financing, and our ability to negotiate transactions on terms deemed acceptable. In addition, the operations of locations that we acquire may not be integrated successfully, and the intended benefits of such transactions may not be realized.

We and our franchisees face many other challenges in opening additional locations, including:

• availability of financing on acceptable terms;

• negotiation of acceptable lease terms;

• availability of desirable site locations;

• securing required applicable governmental permits and approvals;

• impact of natural disasters and other acts of nature and terrorist acts or political instability;

• availability of franchise territories not prohibited by the territorial exclusivity provisions of existing franchisees;

• diversion of management’s attention to the integration of acquired location operations;

• exposure to liabilities arising out of sellers’ prior operations of acquired locations;

• incurrence or assumption of debt to finance acquisitions or improvements and/or the assumption of long-term, non-cancelable leases; and

• general economic and business conditions.

Should we and our franchisees not succeed in opening additional locations or improving existing locations, there may be adverse impacts to our growth strategy and to our ability to generate additional profits, which in turn could materially and adversely affect our business and results of operations.

A component of our business strategy includes the construction of additional locations and the renovation and build-out of existing locations, and a significant portion of the growth in our sales and profit margins will depend on growth in comparable sales for our locations. We face competition from other operators, retail chains, companies, and developers for desirable site locations, which may adversely affect the cost, implementation, and timing of our expansion plans. We also face the risk that certain geographies we operate in will become saturated, limiting the availability of new desirable site locations. If we experience delays in the construction or remodeling processes, we may be unable to complete such activities at the planned cost, which could adversely affect our business and results of operations. Additionally, we cannot guarantee that such remodeling will increase the revenues generated by these locations or that any such increases will be sustainable. Likewise, we cannot be sure that the sites we select for additional locations will result in locations which meet sales expectations. Our failure to add a significant number of additional locations or grow comparable sales at those locations could materially and adversely affect our business and results of operations.

In particular, because a significant portion of the development of additional locations is likely to be funded by franchisee investment, our growth strategy is dependent on our existing and prospective franchisees’ ability to access funds to finance such development. We do not generally provide our franchisees with direct financing and therefore their ability to access borrowed funds generally depends on their independent relationships with various financial institutions. In addition, labor and material costs expended will vary by geographical location and are subject to general price increases. The timing of these improvements can affect the performance of a location, particularly if the improvements require the relevant location to be closed. If our existing and prospective franchisees are not able to obtain financing at commercially reasonable rates, or at all, they may be unwilling or unable to invest in the development of additional locations. In addition, our growth strategy may take longer to implement and may not be as successful as expected. Both of these factors could reduce our competitiveness and future sales and profit margins, which in turn could materially and adversely affect our business and results of operations.

Our acquisitions, dispositions, and strategic investments involve risks.

We have made and may continue to pursue acquisitions and strategic investments as part of our business strategy, which involve risks and uncertainties. For example, there is no assurance that we will find suitable acquisition or investment candidates or be able to complete these transactions on favorable terms, if at all. We may also discover liabilities or deficiencies associated with any companies acquired that were not identified in advance, which may result in unanticipated costs. The effectiveness of our due diligence review and ability to evaluate the results of such due diligence may depend upon the accuracy and completeness of statements and disclosures made or actions taken by the target companies or their representatives. As a result, we may not be able to accurately forecast the financial impact of an acquisition transaction, including tax and accounting charges. In addition, acquisitions involve risks related to difficulties in the assimilation of operations, systems, controls, technologies, personnel, services, and products of the acquired company, the potential loss of key employees, customers, suppliers, and distributors of the acquired companies, the inability to realize the anticipated benefits and synergies within a reasonable time, and the diversion of our management’s attention from other business matters. Further, we may incur significant costs to integrate and support acquired companies. Any of these factors could adversely affect our business, financial results, and reputation.

In addition, in managing our portfolio of companies, we have made and may in the future pursue dispositions, which involve additional risks and uncertainties. The decision to divest from certain businesses is largely based on our management’s assessment of the business, however, we may not achieve the desired financial or strategic benefit from these transactions. There can be no assurance that we will be able to make such dispositions at satisfactory prices and terms in a timely manner, or at all, and sourcing and negotiating these transactions may divert our management’s attention and resources from continuing businesses. In addition, we may not be able to accurately forecast the financial impact of a disposition, as each transaction may have an unexpected impact to other aspects of our Company, including but not limited to, the loss of network benefits, reduced rebate revenue, disruption to other parts of the businesses, distraction of management, and loss of key employees, suppliers or customers. Dispositions also expose us to ongoing liabilities or obligations related to the business following such disposition, including through financing arrangements, guarantees, indemnities, environmental liabilities, pending or threatened litigation, and transition services. Any of these factors could adversely affect our business and financial results.

Our business may be adversely impacted by our indebtedness, including additional leverage in connection with acquisitions and other capital expenditure initiatives.

We may pursue strategic acquisitions as part of our business strategy. If we are able to identify acquisition candidates, such acquisitions may be financed with a substantial amount of additional indebtedness. Although the use of leverage presents opportunities to increase our profitability, it has the effect of potentially increasing losses as well. If income and appreciation from acquisitions acquired through debt are less than the cost of the debt, our total return will decrease. Accordingly, any event which adversely affects the value of an acquisition will be magnified to the extent we are leveraged and we could experience losses substantially greater than if we did not use leverage.

Increased indebtedness could also make it more difficult for us to satisfy our obligations with respect to any other debt agreements, increase our vulnerability to general adverse economic and industry conditions, and require that a greater portion of our cash flow be used to pay indebtedness, which would reduce the availability of cash available for other purposes, and limit our flexibility in planning for, or reacting to, changes in our business and in the automotive services and parts distribution

industries, which could place us at a disadvantage to competitors that have less debt. In addition, additional indebtedness may require us to agree to financial and other covenants that may limit our ability to make investments, pay dividends or engage in other transactions beneficial to our business, and the leverage may cause potential lenders to be less willing to lend funds or refinance existing indebtedness in the future. Additional leverage and the risks associated with additional leverage could also cause the trading price of our common stock to decrease. Our failure to comply with our covenants under such indebtedness could result in an event of default that, if not cured or waived, could result in an acceleration of repayment of other existing indebtedness.

Leveraged losses could adversely affect our ability to manage and support our locations and our brands, which in turn could materially and adversely affect our business and results of operations.

Guaranties associated with the lease obligations of divested entities could adversely affect our results of operations or financial condition.

Prior to the sale of our U.S. Car Wash business, we guaranteed certain real estate leases entered into by the subsidiaries that operated our U.S. Car Wash business. As a result of the sale of our U.S. Car Wash business, those subsidiaries, the primary obligors under the leases, are now owned by a third party not controlled by us. We remain the guarantor under certain of the leases.

If a primary obligor fails to perform under the terms of a lease, we could be required, under the corresponding guaranty, to satisfy some or all of the guaranteed obligations under such lease, including rent, taxes, insurance, maintenance costs, and other related expenses, which could adversely affect our results of operations and financial condition.

Our business is subject to seasonality.

Seasonal changes may impact the demand for our automotive repair and maintenance services and products. Customers may purchase fewer under car services during the winter months, when miles driven tend to be lower. Conversely, demand for collision repair and services is lower outside of winter months, when collisions are typically less common due to improved driving conditions. Our 1-800 Radiator brand also experiences seasonal fluctuations related to the sale of air conditioning and heating parts. In addition, customers may defer or forego vehicle maintenance, such as oil changes, during periods of inclement weather. In our locations that sell or rotate tires, sales decrease during the period from January through April and in September. Profitability of franchisees is also typically lower during months in which revenue composition is more heavily weighted toward tires, which is a lower margin category. In addition, profitability in certain areas of North America may be lower in the winter months when certain costs, such as utilities and snow plowing, are typically higher. Unusual decreases in demand for automotive repair and maintenance services and products may occur as a result of weak economic conditions, governmental shutdowns, or geopolitical uncertainty. Any such decrease occurring during historically high-demand periods could disproportionately reduce our sales and profit margins, which in turn may materially and adversely affect our business and results of operations.

Our business may be adversely impacted by the geographic concentration of our locations.

Although our franchise agreements provide franchisees with varying degrees of territory exclusivity, these territories may be relatively small, and overall, there is a geographic concentration of our locations in certain countries, states, regions, and provinces. As a result, economic conditions, weather conditions, and natural disasters in particular areas may have a disproportionate impact on our business. As of December 27, 2025, there were locations in 49 states in the U.S. and Canada. In the U.S., our locations were most concentrated in California, Texas, Florida, Illinois, and Ohio, in Canada our locations were most concentrated in Ontario and Quebec. Adverse economic conditions, weather conditions, or natural disasters in the countries, states, regions, or provinces that contain a high concentration of our locations could have a material adverse impact on our sales and profit margins in the future, which in turn could materially and adversely affect our business and results of operations.

Our operations are subject to various risks and uncertainties, including adverse economic conditions or a debt crisis, which could adversely affect our business.

We have international operations in Canada. The financial conditions of our international franchisees may be adversely impacted by political, economic, or other changes in these markets. In addition, payments we receive from our international franchisees may be affected by recessionary or expansive trends, increasing labor costs, changes in applicable tax laws, changes in inflation rates, changes in exchange rates and the imposition of restrictions on currency conversion or the transfer of funds, application of tariffs to supplies and goods, expropriation of private enterprises, political and economic instability, and other external factors in these markets.

Our financial condition and results of operations are impacted by global markets and economic conditions over which neither we nor our franchisees have control. An economic downturn may result in a reduction in the demand for our services and products, longer payment cycles, slower adoption of new technologies, and/or increased price competition. Any

deterioration of economic conditions in, Canada could have a material adverse impact on financial markets and economic conditions in the U.S. and throughout the world.

In addition, we and our current or future franchisees face many risks and uncertainties in opening additional international locations, including differing cultures and consumer preferences, diverse government regulations and tax systems, challenges securing acceptable suppliers, difficulty in collecting payments and longer payment cycles, uncertainty with respect to intellectual property protections, differing laws regarding contract enforcement and legal remedies, uncertain or differing interpretations of rights and obligations in connection with international franchise agreements, development agreements, and agreements related thereto (collectively, the “franchise documents” with respect to franchisees), the selection and availability of suitable sites for our locations, currency regulation, government intervention favoring local competitors, data localization efforts, and other external factors. Further, changing labor conditions may result in difficulties in staffing and training at franchised and company-operated locations. Any of the foregoing may materially and adversely affect our business and results of operations.

Our success depends on the effectiveness of our marketing and advertising programs.

Brand marketing and advertising significantly affect sales at our locations. Our marketing and advertising programs may not be successful, which may prevent us from attracting new customers and retaining existing customers. Also, because many of the franchisees are contractually obligated to pay advertising fees based on a percentage of their gross revenues and because we will deduct a portion of the gross revenues of the company-operated locations to fund their marketing and advertising fees, our advertising budget depends on sales volumes at these locations. If sales decline, we will have fewer funds available for marketing and advertising, which could materially and adversely affect our revenues, business and results of operations.

As part of our marketing efforts, we rely on print, television and radio advertisements, as well as search engine marketing, web advertisements, CRM, social media platforms, and other digital marketing to attract and retain customers. These efforts may not be successful, particularly during times of economic instability, resulting in expenses incurred without the benefit of higher revenues or increased employee or customer engagement. If our marketing efforts fail to meet the expectation of our stockholders, customers, employees, or other stakeholders, it could adversely affect our reputation. Customers are increasingly using internet sites and social media to inform their purchasing decisions and to compare prices, product assortment, and feedback from other customers about quality, responsiveness and customer service before purchasing our services and products. If we are unable to continue to develop successful marketing and advertising strategies, especially for online and social media platforms, or if our competitors develop more effective strategies, we could lose customers and sales could decline. In addition, a variety of risks are associated with the use of social media and digital marketing, including the improper disclosure of proprietary information, negative comments about or discussion of negative incidents regarding us, exposure of personally identifiable information, or fraud, . The inappropriate use of social media and digital marketing vehicles by us, our franchisees, customers, employees, or others could increase our costs, lead to litigation or result in negative publicity that could damage our reputation. Many social media platforms immediately publish the content, videos, and/or photographs created or uploaded by their subscribers and participants, often without filters or checks on accuracy of the content posted. Information posted on such platforms at any time may be adverse to our interests and/or may be inaccurate. The dissemination of negative information related to our brands could harm our business, prospects, financial condition, and results of operations, regardless of the information’s accuracy. The harm may be immediate without affording us an opportunity for redress or correction. The occurrence of any such developments could have an adverse effect on our business results and on our profits.

Our failure or our franchisees’ failure to comply with health, employment, and other federal, state, local, and provincial laws, rules, and regulations may lead to losses and harm our brands.

Our franchisees and we are subject to various federal, state, local, provincial, and foreign laws and are subject to a variety of litigation risks, including, but not limited to, customer claims, TCPA Claims, claims alleging violations of consumer protection laws, product liability claims, personal-injury claims, environmental claims, employee allegations of improper termination, harassment and discrimination, wage and hour claims and claims related to violations of the Americans with Disabilities Act of 1990 (“ADA”), the Family and Medical Leave Act (“FMLA”), and similar foreign, state, local, and provincial laws, the Foreign Corrupt Practices Act and similar anti- bribery and corruption laws and regulations, religious freedom, the Fair Labor Standards Act (“FLSA”), applicable Canadian employment standards legislation, the Dodd-Frank Act, the Health Care Reform Act, the Electronic Funds Transfer Act, the Payment Card Industry Data Security Standards, franchise laws, ERISA and intellectual property claims. The successful development and operation of our locations depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations. Our locations’ operations are also subject to licensing and regulation by state, local, and provincial departments relating to safety standards, motor vehicle repairs, federal, state, and provincial labor and immigration law (including applicable equal pay and minimum wage requirements, overtime pay practices, reimbursement for necessary business expense practices, classification of employees, working and safety conditions and work authorization requirements), federal, state, local, and provincial laws prohibiting discrimination and other laws regulating the design and operation of facilities, such as the ADA, the Health Care Reform Act and applicable human rights and accessibility legislation, and subsequent amendments.

The operation of our franchise system is also subject to franchise laws and regulations enacted by a number of states and provinces along with rules promulgated by the U.S. Federal Trade Commission. In 2025, the American Franchise Act was introduced in the U.S. House of Representatives, a bill that would codify the legal definition of joint employer and decrease the responsibility of franchisors in relation to their franchisees’ labor law compliance. While this legislation could decrease our regulatory compliance burdens, any future legislation regulating franchise relationships may negatively affect our operations, particularly our relationships with our franchisees.

Failure to comply with new or existing franchise laws and regulations in any jurisdiction or to obtain required government approvals could result in a ban or temporary suspension on future sales, which could reduce profits, which in turn could materially and adversely affect our business and results of operations.

In addition to the risk of adverse legislation or regulations being enacted in the future, we cannot predict how existing or future laws or regulations will be administered or interpreted. Further, we cannot predict the amount of future expenditures that may be required to comply with any such laws or regulations.

We are subject to the FLSA, applicable foreign employment standards laws and similar state laws, which govern such matters as time keeping and payroll requirements, minimum wage, overtime, employee and worker classifications and other working conditions, along with the ADA, FMLA, and the Immigration Reform and Control Act of 1986, various family leave, sick leave, or other paid time off mandates and a variety of other laws enacted, or rules, regulations and decisions promulgated or rendered, by federal, state, local, and provincial governmental authorities that govern these and other employment matters, including labor scheduling, meal and rest periods, working conditions, and safety standards.

Companies that operate franchise systems may also be subject to claims for allegedly being a joint employer with a franchisee. The standard for joint employment liability has been in a state of flux over the last several years, and there is currently a high degree of uncertainty on how the standard will be applied to the franchise relationship under federal and state laws, rules, and regulations. Additionally, depending upon the outcome and application of certain legal proceedings pending or concluded in federal and state courts in California involving the wage and hour laws of California in another franchise system, franchisors may be subject to claims that their franchisees should be treated as employees and not as independent contractors under the wage and hour laws of California and, potentially, certain other states with similar wage and hour laws.

We have experienced and expect increases in payroll expenses because of federal, state, and provincial mandated increases in the minimum wage, and although such increases are not expected to be material, there can be no assurance that there will not be material increases in the future. In addition, our vendors may be affected by higher minimum wage standards, which may increase the price of goods and services they supply to our brands. Enactment and enforcement of various federal, state, local, and provincial laws, rules, and regulations on immigration and labor organizations may adversely impact the availability and costs of labor in any of the countries in which we operate. Evolving labor and employment laws, rules, and regulations could also result in increased exposure on our part for labor and employment related liabilities that have historically been borne by franchisees.

Increased health care costs could have a material adverse effect on our business and results of operations. These various laws and regulations could lead and have led to enforcement actions, fines, civil or criminal penalties, or the assertion of litigation claims and damages. In addition, improper conduct by our franchisees, employees, or agents could damage our reputation and lead to litigation claims, enforcement actions and regulatory actions, and investigations, including, but not limited to, those arising from personal injury, loss or damage to personal property, or business interruption losses, which could result in significant awards or settlements to plaintiffs and civil or criminal penalties, including substantial monetary fines. Such events could lead to an adverse impact on our financial condition, even if the monetary damage is mitigated by insurance coverage.

Noncompliance by us or our franchisees with any of the foregoing laws and regulations could lead to various claims and reduced profits as set forth in more detail below under “ Risk Factors—Complaints or litigation may adversely affect our business and reputation. ”

Our locations are subject to certain environmental laws and regulations.

Certain activities of our locations involve the handling, storage, transportation, import/export, recycling, or disposing of various new and used products and generate solid and hazardous wastes. These business activities are subject to stringent foreign, federal, regional, state, local, and provincial laws, by-laws and regulations governing the storage and disposal of these products and wastes, the release of materials into the environment, or otherwise relating to environmental protection. These laws and regulations may impose numerous obligations upon our locations’ operations, including the acquisition of permits to conduct regulated activities, the imposition of restrictions on where or how to store and how to handle new products and to manage or dispose of used products and wastes, the incurrence of capital expenditures to limit or prevent releases of such material, the imposition of substantial liabilities for pollution resulting from our locations’ operations, and costs associated with workers’ compensation and similar health claims from employees.

In addition, environmental laws and regulations have generally imposed further restrictions on our operations over time, which may result in significant additional costs to our business. Failure to comply with these laws, regulations, and

permits may result in the assessment of administrative, civil, and criminal penalties, the imposition of remedial and corrective action obligations, and the issuance of injunctions limiting or preventing operation of our locations. Any adverse environmental impact on our locations, including, without limitation, the imposition of a penalty or injunction, or increased claims from employees, could materially and adversely affect our business and results of operations.

Environmental laws also impose liability for damages from and the costs of investigating and cleaning up sites of spills, disposals, or other releases of hazardous materials. Such liability may be imposed, jointly and severally, on the current or former owners or operators of properties or parties that sent wastes to third-party disposal facilities, in each case without regard to fault or whether such persons knew of or caused the release. Although we are not presently aware of any such material liability related to our current or former locations or business operations, such liability could arise in the future and could materially and adversely affect our business and results of operations.

Complaints or litigation may adversely affect our business and reputation.

We and our franchisees are currently, have been and may in the future be subject to claims, including class action lawsuits, filed by customers, franchisees, independent operators, employees, stockholders, suppliers, landlords, governmental authorities, and others, including as a result of violations of the laws set forth above under “ Risk Factors — Our failure or our franchisees’ failure to comply with health, employment, and other federal, state, local, and provincial laws, rules, and regulations may lead to losses and harm our brands. ” and “ Risk Factors —Our locations are subject to certain environmental laws and regulations ” Significant claims may be expensive to defend and may divert time and resources away from our operations, causing adverse impacts to our operating results. In addition, adverse publicity related to litigation could, even if such litigation is not valid, or a substantial judgment against us could negatively impact the reputation of our brands, resulting in further adverse impacts to results of operations.

In the ordinary course of business, we will be, from time to time, the subject of complaints or litigation from franchisees and independent operators, which could relate to alleged breaches of contract or wrongful termination under the franchise documents and independent operator documents. These claims may also reduce the ability or willingness of franchisees to enter into new franchise agreements with us. In addition, litigation against a franchisee, independent operator, or their affiliates or against a company-operated location by third parties, whether in the ordinary course of business or otherwise, may include claims against us by virtue of our relationship with the franchisee, independent operator or company-operated location. Litigation may lead to a decline in the sales and operating results of our locations and divert our management resources regardless of whether the allegations in such litigation are valid or whether we are liable. See Item 3 and Note 17 included elsewhere within this Form 10-K for additional information on matters in dispute.

Further, we may be subject to employee, franchisee, independent operator, and other claims in the future based on, among other things, discrimination, harassment, retaliation, wrongful termination, and wage, rest break, and meal break issues, including those relating to overtime compensation. We have been subject to these types of claims in the past, and if one or more of these claims were to be successful or if there is a significant increase in the number of these claims, our business, financial condition, and operating results could be harmed.

Certain governmental authorities and private litigants have asserted claims against franchisors for provisions in their franchise agreements which restrict franchisees from soliciting and/or hiring the employees of other franchisees or the applicable franchisor. Claims against franchisors for such “no-poaching” clauses include allegations that these clauses violate state and federal antitrust and unfair practices laws by restricting the free movement of employees of franchisees or franchisors (including both corporate employees and the employees of company-operated locations), thereby depressing the wages of those employees. All of our brands operating in the U.S. have had no-poaching clauses in their franchise agreements. No-poaching clauses were removed from our franchise agreements in the U.S. in 2019, and we have notified franchisees that we do not intend to enforce the no-poaching clauses in their existing franchise agreements. Brands operating outside of the U.S. also have deleted the no-poaching clauses, if any, contained in new franchise agreements. Our brands may be subject to claims arising out of their prior inclusion of no-poaching clauses in their franchise agreements that may have restricted the employment opportunities of employees of our brands. Any adverse results in any cases or proceedings that may be brought against our brands by any governmental authorities or private litigants may materially and adversely affect our business and results of operations.

We may have product liability exposure that adversely affects our results of operations.

Our locations and franchisees may receive or produce defective products, which may adversely impact the relevant brand’s equity, and financial results. There can be no assurance that the insurance held by us, our vendors, or franchisees will be adequate to cover the associated risks of the sale of defective products, or that, we or our franchisees will be able to continue to procure the same amount of insurance or to secure an increase in its insurance coverage. Accordingly, in cases in which a franchisee experiences increased insurance premiums or must pay claims out of pocket, the franchisee may not have the funds necessary to make franchisee payments owed to us. In cases in which insurance premiums increase or claims are required to be paid by us, the profitability of our business may decrease. Each of these outcomes could, in turn, materially and adversely affect our business and results of operations. In the event that product liability arises, to the extent such liability is either not covered by our or the franchisees’ insurance or exceeds the policy limits of our or the franchisees’ insurance, the aggrieved parties could

seek to recover their losses from us, whether or not we are legally or contractually entitled to do so, which could increase litigation costs or result in liability for us.

We are subject to payment-related risks.

For our sales to our customers, we accept a variety of payment methods, including credit cards, debit cards, electronic funds transfers, and electronic payment systems. Accordingly, we are, and will continue to be, subject to significant and evolving regulations and compliance requirements, including obligations to implement enhanced authentication processes that could result in increased costs and liability, and reduce the ease of use of certain payment methods. For certain payment methods, including credit and debit cards, as well as electronic payment systems, we pay interchange and other fees, which may increase over time. We rely on independent service providers for payment processing, including credit and debit cards. If these independent service providers become unwilling or unable to provide these services to us or if the cost of using these providers increases, our business could be harmed. We are also subject to payment card association operating rules and agreements, including data security rules and agreements, certification requirements, and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, or if our data security systems are breached or compromised, we may be liable for losses incurred by card issuing banks or customers, subject to fines and higher transaction fees, lose our ability to accept credit or debit card payments from our customers, or process electronic fund transfers or facilitate other types of payments. Any failure, or failure of our independent service providers, to comply with the foregoing rules or requirements could harm our brand, reputation, business, and results of operations.

Catastrophic events may disrupt our business in a manner that adversely affects our business.

Unforeseen events, including war, terrorism and other international, regional or local instability, or conflicts (including current or future civil unrest and labor issues), embargoes, public health issues, and natural disasters such as hurricanes, earthquakes, wildfires, tornadoes, or other adverse weather and climate conditions, whether occurring in the U.S. or abroad, could disrupt our operations, disrupt the operations of franchisees, distributors, suppliers, or customers, or result in political or economic instability. These events could reduce demand for our products or make it difficult or impossible to receive products from our distributors or suppliers, which could have a material adverse effect on our business and results of operations.

Instability, disruption, or destruction caused by civil insurrection, social unrest, or government actions may affect the markets in which we operate, our suppliers, customers, sales of products, and customer service.

Our business, and the business of our suppliers, may be adversely affected by instability, disruption, or destruction caused by riots, civil insurrection, social unrest, man-made disasters, or criminal activity. In recent years, there have been significant demonstrations and protests in cities throughout the U.S. Though these demonstrations have been generally peaceful, in some instances they were accompanied by damage and loss of merchandise. Similar protests could result in closures of some of our locations, declines in customer traffic, and/or property damage and loss. Further, governmental authorities in affected cities and regions may take action in an effort to protect people and property while permitting lawful and non- violent protest, including curfews and restrictions on business operations, which could potentially be disruptive to our operations or harm consumer confidence. [Heightened immigration enforcement activities and increased military presence in certain U.S. cities may also reduce customer traffic to our locations.] In addition, consumer reaction to any statements our franchisees or we make in response to any protests, or to matters directly or indirectly related to protests, could be perceived in a way that negatively impacts our reputation, value and image. All of the foregoing, may negatively affect our sales, which could have a material adverse effect on our business and results of operations.

We and our franchisees lease or sublease the land and buildings where a number of our locations are situated, which could expose us to possible liabilities and losses.

We and our franchisees lease the land and buildings where a significant number of our locations are located. The terms of the leases and subleases vary in length, with primary terms (i.e., before consideration of option periods) expiring on various dates. In addition, franchisees’ obligations or the company-operated location’s obligations to pay rent are generally non-cancelable, even if the location operated at the leased or subleased location is closed. In the case of subleased locations, in the event the applicable franchisee fails to make required payments, we may not be able to recover those amounts. As leases expire, the franchisees or the company-operated locations may be unable to negotiate renewals on commercially acceptable terms or at all, which could cause the franchisees or the company-operated locations to close locations in desirable locations or otherwise negatively affect profits, which in turn could negatively affect our business and results of operations.

Our current locations may become unattractive, and attractive new locations may not be available for a reasonable price, if at all, which could adversely affect our business.

The success of any of our locations depends in substantial part on its location. There can be no assurance that our current locations will continue to be attractive as demographic patterns and trade areas change. For example, neighborhood or economic conditions where our locations are located could decline in the future, thus resulting in potentially reduced sales. In

addition, rising real estate prices in some areas may restrict our ability or our franchisees’ ability to purchase or lease new desirable locations. If desirable locations cannot be obtained at reasonable prices, our ability to execute our growth strategies could be adversely affected, and we may be affected by declines in sales as a result of the deterioration of certain locations, each of which could materially and adversely affect our business and results of operations.

Our financial performance could be materially adversely affected if we fail to retain, or effectively respond to a loss of, key executives.

The success of our business depends on the contributions of key executives and senior management, including our chief executive officer and chief financial officer. The departure of key executives or senior management could have a material adverse effect on our business and long- term strategic plan. We have a succession plan that includes short-term and long-term planning elements intended to allow us to successfully continue operations should any of our key executives or senior management become unavailable to serve in their respective roles. However, there is a risk that we may not be able to implement the succession plan successfully or in a timely manner or that the succession plan will not result in the same financial performance we currently achieve under the guidance of our existing executive team. Any lack of management continuity could adversely affect our ability to successfully manage our business and execute our growth strategy, cause a loss of institutional knowledge, increase demands on other employees, result in operational and administrative inefficiencies and added costs, and may make recruiting for future management positions more difficult.

Risks Related to Intellectual Property and Technology

We depend on our intellectual property to protect our brands, we may fail to establish trademark rights in the countries we operate and litigation to enforce or defend our intellectual property rights may be costly.

Our intellectual property is material to the conduct of our business. Our success depends on our and our franchisees’ continued ability to use our intellectual property and on the adequate protection and enforcement of such intellectual property. We rely on a combination of trademarks, service marks, copyrights, trade secrets, and similar intellectual property rights to protect our brands. The success of our business strategy depends, in part, on our continued ability to use our existing trademarks and service marks to increase brand awareness and further develop our branded services and products in both existing and new markets.

We have registered certain trademarks and have other trademark applications pending in the U.S. and certain foreign jurisdictions. Registrations for “Fix Auto” are owned and maintained by a third-party licensor. We have not registered all of the trademarks that we use in all of the countries in which we do business or may do business in the future, and some trademarks may never be registered in all of these countries. Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third parties (other than Mondofix in the case of “Fix Auto”) may have filed for marks in countries where we have not registered the brands as trademarks. Rights in trademarks are generally national in character and are obtained on a country-by-country basis by the first person to obtain protection through use or registration in that country in connection with specified products and services. Accordingly, we may not be able to adequately protect our brands everywhere in the world and use of our brands may result in liability for trademark infringement, trademark dilution, or unfair competition. In addition, the laws of some countries do not protect intellectual property to the same extent as the laws of the U.S. and Canada. All of the steps we have taken to protect our intellectual property in the U.S., Canada and in the foreign countries in which we operate may not be adequate.

There can be no assurance that the steps we have taken and may take in the future to protect and maintain our rights in our intellectual property will be adequate, or that third parties will not infringe, misappropriate, or violate our intellectual property. If any of our efforts to protect our intellectual property are not adequate, or if any third party infringes, misappropriates or violates our intellectual property, the value of our brands may be harmed. As a result, if we are unable to successfully protect, maintain, or enforce our rights in our intellectual property, there could be a material adverse effect on our business and results of operations. Such a material adverse effect could result from, among other things, consumer confusion, dilution of the distinctiveness of our brands, or increased competition from unauthorized users of our brands, each of which may result in decreased revenues and a corresponding decline in profits. In addition, to the extent that we do, from time to time, institute litigation to enforce our intellectual property rights, such litigation could result in substantial costs and diversion of resources and could negatively affect profits, regardless of whether we are able to successfully enforce such rights.

If franchisees and other licensees do not observe the required quality and trademark usage standards, our brands may suffer reputational damage, which could in turn adversely affect our business.

We license certain intellectual property to franchisees, advertisers, and other third parties. The franchise agreements and other license agreements require that each franchisee or other licensee use our trademarks in accordance with established or approved quality control guidelines and, in addition to supply agreements, subject the franchisees, other licensees, and suppliers that provide products to our brands, as applicable, to specified product quality standards and other requirements in order to protect the reputation of our brands and to optimize the performance of our locations. We contractually require that our franchisees and licensees maintain the quality of our brand, however, there can be no assurance that the permitted licensees, including franchisees, advertisers, and other third parties, will follow such standards and guidelines, and accordingly their acts

or omissions may negatively impact the value of our intellectual property or the reputation of our brands. Noncompliance by these entities with the terms and conditions of the applicable governing franchise or other agreement that pertains to servicing and repairs, health and safety standards, quality control, product consistency, timeliness or proper marketing, or other business practices, may adversely impact the goodwill of our brands. Although we monitor and restrict franchisee activities through our franchise agreements, franchisees, or third parties may refer to or make statements about our brands that do not make proper use of trademarks or required designations, that improperly alter trademarks or branding, or that are critical of our brands or place our brands in a context that may tarnish their reputation. There can be no assurance that the franchisees or other licensees will not take actions that could have a material adverse effect on our intellectual property.

We may become subject to third-party infringement claims or challenges to intellectual property validity.

We may in the future become the subject of claims asserted by third parties for infringement, misappropriation, or other violation of their intellectual property rights in areas where we or our franchisees operate or where we intend to conduct operations, including in foreign jurisdictions. Such claims, whether or not they have merit, could be time-consuming, cause delays in introducing new products or services, harm our image, our brands, our competitive position, or our ability to expand our operations into other jurisdictions and lead to significant costs related to defense or settlement. As a result, any such claim could harm our business and cause a decline in our results of operations and financial condition, which in turn may materially and adversely affect our business and results of operations.

If such claims were decided against us, then we could be required to pay damages, cease offering infringing products or services on short notice, develop or adopt non-infringing products or services, rebrand our products, services or even our businesses, and we could be required to make costly modifications to advertising and promotional materials or acquire a license to the intellectual property that is the subject of the asserted claim, which license may not be available on acceptable terms or at all. The attendant expenses that we bear could require the expenditure of additional capital, and there would be expenses associated with the defense of any infringement, misappropriation, or other third- party claims, and there could be attendant negative publicity, even if ultimately decided in our favor. In addition, third parties may assert that our intellectual property is invalid or unenforceable. If our rights in any of our intellectual property were invalidated or deemed unenforceable, then third parties could be permitted to engage in competing uses of such intellectual property which, in turn, could lead to a decline in location revenues and sales, and thereby negatively affect our business and results of operations.

We do not own certain software that is used in operating our business and our proprietary platforms and tools incorporate open-source software.

We utilize both commercially available third-party software and proprietary software to run point-of-sale, diagnostics, pricing, inventory, and various other key functions. While such software can be replaced, the delay, additional costs, and possible business interruptions associated with obtaining, renewing or extending software licenses or integrating a large number of substitute software programs contemporaneously could adversely impact the operation of our locations, thereby reducing profits and materially and adversely impacting our business and results of operations.

In addition, we use open-source software in connection with our proprietary software and expect to continue to use open-source software in the future. Some open-source licenses require licensors to provide source code to licensees upon request or prohibit licensors from charging a fee to licensees. While we try to insulate our proprietary code from the effects of such open-source license provisions, we cannot guarantee we will be successful. Accordingly, we may face claims from others claiming ownership of or seeking to enforce the license terms applicable to such open-source software, including by demanding release of the open source software, derivative works, or our proprietary source code that was developed or distributed with such software. These claims could also result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our software, any of which would have a negative effect on our business and results of operations. In addition, if the license terms for the open source code change, we may be forced to re-engineer our software or incur additional costs. We cannot assure you that we have not incorporated open source software into our proprietary software in a manner that may subject our proprietary software to an open source license that requires disclosure, to customers or the public, of the source code to such proprietary software. Any such disclosure would have a negative effect on our business and the value of our proprietary software.

We are heavily dependent on information systems and technology, and any significant failure, interruption, or security incident could impair our ability to efficiently operate our business or timely or accurately prepare financial reports.

We are dependent upon our information systems, including software and platforms provided by third parties, certain of our own proprietary software, and other information technology to properly conduct our business, including, but not limited to, point-of-sale processing in our locations, management of our supply chain, collection of cash, payment of obligations, and various other processes and procedures. See “ Risk Factors — We do not own certain software that is used in operating our business and our proprietary platforms and tools incorporate open-source software. ” herein. Our ability to efficiently manage our business depends significantly on the reliability and capacity of these information technology systems. The failure of these systems to operate effectively, an interruption, problems with maintenance, upgrading or transitioning to replacement systems, fraudulent manipulation of sales reporting from our locations, or a breach in security of any of these systems could result in loss of sales and franchise royalty payments, cause delays in customer service, result in the loss of data, create exposure to litigation,

reduce efficiency, cause delays in operations, or otherwise harm our business or reputation. Significant capital investments might be required to remediate any problems. Any security breach involving any of our point-of- sale or other systems could result in a loss of consumer confidence and potential costs associated with fraud or breaches of data security laws. Also, despite our considerable efforts to secure our computer systems and information technology, security breaches, such as unauthorized access and computer viruses, may occur, resulting in system disruptions, shutdowns or unauthorized disclosure of confidential information. A security breach of our computer systems or information technology could require us to notify customers, employees, or other groups, result in adverse publicity, loss of sales and profits, and could result in penalties or other costs that could adversely affect the operation of our business and results of operations.

As a part of our ongoing technology and process improvements, we have implemented, and expect to continue to implement, new accounting and finance systems, including, for example, an enterprise resource planning (“ERP”) system, the first stage of which went live in 2024. The ERP system and supporting systems are designed to provide a standardized method of accounting for the enterprise and enhance our ability to implement strategic initiatives. Any complications resulting from the implementations of any systems, including our ERP system, could result in unexpected costs, diversion of our management’s attention and resources, or interruptions to our business operations. Complications resulting from system implementations could also cause challenges with maintaining and achieving effective internal controls, and adversely affect our ability to timely and accurately report financial information, including the filing of our quarterly or annual reports with the SEC. In the time following any implementation of an ERP system and supporting systems, we may experience disruption of our financial functions, potential loss or corruption of data, and technical challenges with migration from legacy systems. If we experience unforeseen problems with the ERP system and any supporting system, we may need to implement additional systems or transition to other systems that would require further expenditures to function effectively as a public company, such problems could adversely affect business operations and result in financial loss and reputational harm. If we are unable to continue implementing new systems and improving our process and technological capabilities to support our operations, we may not be able to take advantage of market opportunities, manage our costs and transactional data effectively, satisfy customer requirements, execute our business plan or respond to competitive pressures.

The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise, corruption, or loss of data, and/or damage to our employee and business relationships, all of which could lead to loss and harm our business.

As our reliance on technology has increased, so have the cybersecurity risks posed to the confidentiality, integrity, and availability of our information technology networks and systems, both internal and those managed by third-party service providers. We rely on these networks and systems to process, transmit, and store electronic information that is important to the operation of our business and the services we offer, as well as to manage and support our core business operations. Despite our security measures, the company has experienced cybersecurity incidents in the past and may continue to be subject to such threats in the future. Although we and our service providers continually implement processes, procedures, and controls designed to reduce and mitigate the risk of a cyber incident, such preventative measures may not be sufficient in all circumstances to prevent, mitigate, or timely detect all potential risks. A successful cyber threat or other cyber incident experienced by us, our service providers, or a company we have acquired could cause an interruption of our operations, damage our relationship with franchisees, or result in the exposure of private or confidential data, potentially triggering governmental notice requirements or resulting in litigation, and adversely impact our reputation and financial results. Additionally, if a company that we have recently acquired or a third-party service provider on which we rely experiences a cybersecurity incident, we may not learn of such incident in a timely manner, or at all, which may inhibit our ability to mitigate its impacts, and can exacerbate the risks described in this risk factor.

Because our locations accept electronic forms of payment from our customers, our business requires the collection and retention of customer data, including credit and debit card numbers and other personally-identifiable information (“PII”) in various information systems that we and our franchisees maintain in conjunction with third parties with whom we contract to provide credit card processing services. We also maintain important internal company data, such as PII about our employees and franchisees and information relating to our operations. Due to the evolving sophistication of technology and techniques employed by third parties and threat actors, such as through the use of AI and other technologies, we are increasingly vulnerable to a compromise of our customer transaction, PII or other sensitive data. A cybersecurity incident resulting in the unauthorized use, disclosure or loss of customer and other sensitive data could put individuals at risk of identity theft and financial or other harm and result in additional costs to us to investigate an incident, implement measures to remediate the impacts of such incident, and in liability to parties who are financially harmed. While we have implemented cybersecurity measures aimed at protecting such data, our information technology systems or those used by our third-party service providers may still be vulnerable to such a breach, and our security measures may not prevent or timely detect physical security or cybersecurity breaches. Such an occurrence may cause financial loss to our business or harm to our reputation.

Our use of PII is regulated by foreign, federal, state, and provincial laws, as well as by certain third-party agreements. As privacy and information security laws and regulations change, we may incur additional costs to ensure that we remain in compliance with those laws and regulations. If our security and information systems are compromised or if our employees or franchisees fail to comply with these laws, regulations, or contract terms, and this information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation and could disrupt our operations and result in costly

litigation, judgments, or penalties resulting from violation of federal, state, and provincial laws and payment card industry regulations. A cyber incident could also require us to notify law enforcement agencies, customers, employees, or other groups, result in fines or require us to incur expenditures in connection with remediation, require us to pay increased fees to third parties, result in adverse publicity, loss of sales and profits, or require us to incur other costs, any of which could adversely affect the operation of our business and results of our operations.

Although we maintain insurance coverage for various cybersecurity and business continuity risks, there can be no guarantee that all costs or losses incurred will be fully insured.

Changing regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information, and harm our brands in a manner that adversely affects our business.

The U.S., Canada, and other jurisdictions in which we operate have adopted, and continue to revise, privacy, information security and data protection laws and regulations (“Privacy and Data Protection Laws”) that could have a significant impact on our current and planned privacy, data protection and information security related practices, including our collection, use, sharing, retention, and safeguarding of consumer and/or employee information, and some of our current or planned business activities.

In the U.S., for example, this includes increased privacy related enforcement activity at both the federal level and the state level, including the implementation of the amended version of the California Consumer Protection Act (the “CCPA”) and its implementing regulations, which are currently in effect. Other states have followed California’s lead, passing their own comprehensive Privacy and Data Protection Laws, although California remains the strictest of these in most respects. As each state develops their own privacy law, it becomes increasingly challenging to conform to this patchwork of requirements and restrictions. As of December 2025, twenty U.S. states will have passed separate privacy laws, all of which are effective as of the end of 2025. With no Federal standard likely to be voted on in the coming legislative year, we are required to observe and satisfy each of the differing requirements.

The Privacy and Data Protection Laws include, the federal Personal Information Protection and Electronic Documents Act and similar laws in several Canadian provinces, the General Data Protection Regulation (the “GDPR”) in the European Union, the U.K.-GDPR, and the U.K. Data Protection Act of 2018 (the “UK Laws”) in the U.K. We, our affiliated entities, and our service providers may need to take measures to ensure compliance with new, evolving and existing requirements contained in the GDPR, the CCPA, the U.K. Laws and other Privacy and Data Protection Laws and to address customer concerns related to their rights under any such Privacy and Data Protection Laws.

We also may need to continue to make adjustments to our compliance efforts as more clarification and guidance on the requirements of the GDPR, the CCPA, the U.K. Laws and other Privacy and Data Protection Laws becomes available. Our ongoing efforts to ensure our and our affiliated entities’ compliance with the CCPA, GDPR, and U.K. Laws and other existing or future Privacy and Data Protection Laws affecting customer or employee data to which we are subject could result in additional costs and operational disruptions. Our and our affiliated entities and or services providers’ failure to comply with such laws could result in potentially significant regulatory investigations or government actions, litigation, operational disruptions, penalties or remediation, and other costs, as well as adverse publicity, reputational harm, loss of sales and profits, and an increase in fees payable to third parties. These implications could adversely affect our revenues, results of operations, business and financial condition.

Risks Relating to the Franchisees

A majority of our locations are owned and operated by franchisees and, as a result, we are highly dependent upon our franchisees.

While the franchise agreements are designed to maintain brand consistency, the high percentage of our locations owned by franchisees may expose us to risks not otherwise encountered if we had owned and controlled the locations. In particular, we are exposed to the risk of defaults or late payments by franchisees. Other risks include limitations on enforcement of franchise obligations due to bankruptcy or insolvency proceedings; unwillingness of franchisees to support marketing programs and strategic initiatives; inability to participate in business strategy changes due to financial constraints; inability to meet rent obligations on subleases; failure to operate the locations in accordance with required standards; failure or delay in opening new locations; failure to report sales information accurately; efforts by one or more large franchisees or an organized franchise association to cause poor franchise relations; and failure to comply with quality and safety requirements that result in potential losses even when we are not legally liable for a franchisee’s actions or failure to act. In addition, in certain of our brands, franchise ownership is concentrated among a small number of franchisees. As a result, the realization of any of the aforementioned risks by these franchisees may have a disproportionate impact on our business. Although we believe that our current relationships with many of our franchisees are generally good, there can be no assurance that we will maintain these strong franchise relationships. Our dependence on franchisees could adversely affect our business and financial condition, our reputation, and our brands.

Franchisee changes in control may adversely impact franchisee operations.

The franchise documents prohibit “changes in control” of a franchisee without the consent of its “franchisor.” In the event we provide such consent, there is no assurance that a successor franchisee would be able to perform the former franchisee’s obligations under such franchise documents or successfully operate its franchise. In the event of the death or disability of a franchisee or the principal of a franchisee entity, the personal representative of the franchisee or principal of a franchisee entity may not find an acceptable transferee. If a successor franchisee is not found, or a successor franchisee that is approved is not as successful in operating the location as the former franchisee or franchisee principal, the franchisee’s right to operate its franchise could be terminated, sales of the location could be impacted and could adversely impact our business and results of operations.

Franchise documents are subject to termination and non-renewal.

The franchise documents are subject to termination by the franchisor under the franchise documents in the event of a default generally after expiration of applicable cure periods. Under certain circumstances, including abandonment of the franchised business, unauthorized transfer or assignment of the franchise, breach of the confidentiality provisions, or health and safety violations, a franchise document may be terminated by the franchisor under the franchise document upon notice without an opportunity to cure. Generally, the default provisions under the franchise documents are drafted broadly and include, among other things, any failure to meet operating standards and actions that may threaten our intellectual property.

In addition, certain of the franchise documents have terms that will expire over the next 12 months. In such cases, the franchisees may renew the franchise document and receive a “successor” franchise document for an additional term. Such option, however, is contingent on the franchisee’s execution of the then-current form of franchise document (which may include increased franchise royalty rates, advertising fees, and other costs or requirements), the satisfaction of certain conditions (including modernization of the location and related operations) and the payment of a renewal fee. If a franchisee is unable or unwilling to satisfy any of the foregoing conditions, such franchisee’s expiring franchise document and the related franchisee payments will terminate upon expiration of the term of the franchise document unless we decide to restructure the franchise documents to induce such franchisee to renew the franchise document. In certain instances, the relationship may continue on a month-to-month basis (or are subject to termination by the franchisee upon notice) and are therefore subject to termination at the end of any given month (or the period following notice of termination).

Terminations or restructurings of franchise documents could reduce franchise payments or require us to incur expenses to solicit and qualify new franchises, which in turn may materially and adversely affect our business and results of operations.

We may not be able to retain franchisees or maintain the quality of existing franchisees.

Each franchised location is heavily reliant on its franchisee. However, we cannot guarantee the retention of any, including the top-performing franchisees in the future, or that we will maintain the ability to attract, retain, and motivate sufficient numbers of franchisees of the same caliber, and the failure to do so could materially and adversely affect our business and results of operations. In the event a franchisee leaves our franchise and a successor franchisee is not found, or a successor franchisee that is approved is not as successful in operating the location as the former franchisee or franchisee principal, the sales of the location may be impacted.

The quality of existing franchisee operations may be diminished by factors beyond our control, including franchisees’ failure or inability to hire or retain qualified managers, mechanics, and other personnel or franchisees experiencing financial difficulty, including those franchisees that become over leveraged. Training of managers, mechanics, and other personnel may be inadequate, especially due to advances and changes in automotive technology. These and other such negative factors could reduce the franchisees’ revenues, could impact payments under the franchise documents, and could have a material adverse effect on our business and results of operations.

Our location development plans under development agreements may not be implemented effectively by franchisees.

We rely heavily on franchisees to develop our locations. Development involves substantial risks, including the following:

• the availability of suitable locations and terms for potential development sites;

• the ability of franchisees to fulfill their commitments to build new locations in the numbers and the time frames specified in their development agreements;

• the availability of financing, at acceptable rates and terms, to both franchisees and third-party landlords, for locations development;

• delays in obtaining construction permits and in completion of construction;

• elevated interest rates, rising inflation, and increasing cost of construction materials;

• developed properties not achieving desired revenue or cash flow levels once opened;

• competition for suitable development sites;

• changes in governmental rules, regulations, and interpretations (including interpretations of the requirements of the ADA); and

• general economic and business conditions.

There is no assurance that franchisees’ development and construction of locations will be completed, or that any such development will be completed in a timely manner . There is no assurance that present or future development plans will perform in accordance with expectations.

The opening and success of our locations depend on various factors, including the demand for our locations and the selection of appropriate franchisee candidates, the availability of suitable sites, the negotiation of acceptable lease or purchase terms for new locations, costs of construction, permit issuance and regulatory compliance, the ability to meet construction schedules, the availability of financing, and other capabilities of franchisees. There is no assurance that franchisees planning the opening of locations will have the ability or sufficient access to financial resources necessary to open and operate the locations required by their agreements. It cannot be assured that franchisees will successfully participate in our strategic initiatives or operate locations in a manner consistent with our concepts and standards.

If our franchisees do not comply with their franchise agreements and policies or participate in the implementation of our business model, our business could be harmed.

Our franchisees are an integral part of our business. Franchisees will be subject to specified product and/or service quality standards and other requirements pursuant to the related franchise agreements to protect our brands and to optimize their performance. However, franchisees may provide substandard services or receive through the supply chain or produce defective products, which may adversely impact the goodwill of our brands. Franchisees may also breach the standards set forth in their respective franchise documents. We may be unable to successfully implement our business model, company policies, or brand development strategies if our franchisees do not actively participate in such implementation. The failure of our franchisees to focus on the fundamentals of each business’ operations, such as quality and service (even if such failures do not rise to the level of breaching the franchise documents), could materially and adversely affect our business and results of operations. It may be more difficult to monitor our international franchisees’ implementation of our brand strategies due to our lack of personnel in the markets served by such franchisees.

Risks Related to our Indebtedness

Our substantial indebtedness could adversely affect our financial condition.

We have a significant amount of indebtedness. We had six series of securitization term notes, approximately $2 billion of which were outstanding as of December 27, 2025, and two series of variable funding notes, which had no outstanding balance as of December 27, 2025, pursuant to the Securitization Senior Notes Indenture. We also have a $300 million revolving credit facility, which had an outstanding balance of $140 million as of December 27, 2025.

Our obligations under the Securitized Term Notes are secured by substantially all of our and our subsidiaries’ North American revenue-generating assets other than the assets in our Auto Glass Now segment, ATI, and select other assets. All obligations under the Revolving Credit Facility are unconditionally guaranteed by Driven Brands Parent LLC, a wholly-owned subsidiary of the Company, which wholly-owns Driven Holdings, LLC (the “Borrower”) and each of the Borrower’s existing and future direct and indirect, wholly-owned material domestic subsidiaries, subject to certain customary exclusions and exceptions. The obligations are secured by a perfected first priority security interest in, and mortgages on, substantially all of the Borrower’s assets and those of Driven Brands Parent LLC and each guarantor, including a pledge of the capital stock of all entities directly held by the Borrower or the guarantors (which pledge will be limited to 65% of the voting capital stock of first tier foreign subsidiaries in certain circumstances), in each case subject to customary exclusions and exceptions.

Subject to the limits contained in the documents governing our indebtedness, we may be able to incur substantial additional debt from time to time to finance capital expenditures, investments, acquisitions, or for other purposes. If we do incur substantial additional debt, the risks related to our high level of debt could intensify. Specifically, our high level of indebtedness could have important consequences, including:

• limiting our ability to obtain additional financing to fund capital expenditures, investments, acquisitions, or other general corporate requirements;

• requiring a substantial portion of our cash flow to be dedicated to payments to service our indebtedness instead of other purposes, thereby reducing the amount of cash flow available for capital expenditures, investments, acquisitions, and other general corporate purposes;

• increasing our vulnerability to and the potential impact of adverse changes in general economic, industry, and competitive conditions;

• limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

• placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt at more favorable interest rates; and

• increasing our costs of borrowing.

In addition, the financial and other covenants we agreed to in our debt agreements may limit our ability to incur additional indebtedness, make investments, and engage in other transactions, and the leverage may cause potential lenders to be less willing to loan funds to us in the future.

If our business does not generate sufficient cash flow from operations, in the amounts projected or at all, or if future borrowings are not available to us under our securitized notes, or revolving credit facility or otherwise in amounts sufficient to fund our other liquidity needs, our financial condition and results of operations may be adversely affected. If we cannot generate sufficient cash flow from operations to make scheduled principal amortization and interest payments on our debt obligations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures, or seek additional equity investments. If we are unable to refinance any of our indebtedness on commercially reasonable terms or at all or to affect any other action relating to our indebtedness on satisfactory terms or at all, our business may be harmed.

The documents governing our indebtedness have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects.

Unless and until we repay all outstanding borrowings under our securitized debt facility and credit agreement, we will remain subject to the restrictive terms of these borrowings. The documents governing our indebtedness contain a number of covenants, with the most significant financial covenant being a debt service coverage calculation and a springing financial maintenance covenant. These covenants limit the ability of certain of our subsidiaries to, among other things:

• sell assets;

• engage in mergers, acquisitions, and other business combinations;

• declare dividends or redeem or repurchase capital stock;

• incur, assume, or permit to exist additional indebtedness or guarantees;

• make loans and investments;

• incur liens; and

• enter into transactions with affiliates.

In certain circumstances, the documents governing our indebtedness also require us to maintain specified financial ratios. Our ability to meet these financial ratios can be affected by events beyond our control, and we may not satisfy such a test. A breach of these covenants could result in a rapid amortization event, as described in the next paragraph, or default under the applicable debt facility. If amounts owed are accelerated because of a default and we are unable to pay such amounts, the investors may have the right to assume control of substantially all of the assets securing the applicable debt facility.

If we are unable to refinance or repay amounts under our debt agreements prior to the expiration of the applicable term or upon rapid amortization occurring as a result of a default, our cash flow would be directed to the repayment of our debt and, other than management fees sufficient to cover minimal selling, general and administrative expenses, would not be available for operating our business.

No assurance can be given that any refinancing or additional financing will be possible when needed or that we will be able to negotiate acceptable terms. In addition, our access to capital is affected by prevailing conditions in the financial and capital markets and other factors beyond our control. There can be no assurance that market conditions will be favorable at the times that we require new or additional financing.

The Securitization Senior Notes Indenture governing the securitized debt facility may restrict the cash flow from the entities subject to the securitization to us and our subsidiaries and, upon the occurrence of certain events, cash flow would be further restricted.

The Securitization Senior Notes Indenture governing the securitized debt facility requires that cash from the entities subject to the securitization be allocated in accordance with a specified priority of payments. In the ordinary course, this means that funds available to us are paid at the end of the priority of payments, after expenses and debt service for the securitized debt. In addition, in the event that a rapid amortization event occurs under the indenture governing the securitized debt (including, without limitation, upon an event of default under the indenture, failure to maintain specified financial ratios or the failure to repay the securitized debt at the end of the applicable term), the funds available to us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business.

Risks Related to Ownership of Our Common Stock

Our stock price may fluctuate significantly.

The market price of our common stock could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our common stock, you could lose a substantial part or all of your investment in our common stock. The following factors could affect our stock price:

• our operating and financial performance and prospects;

• quarterly variations in the rate of growth (if any) of our financial indicators, such as net income per share, net income, and revenues;

• the public reaction to our press releases, our other public announcements, and our filings with the SEC;

• strategic actions by our competitors;

• changes in operating performance and the stock market valuations of other companies;

• overall conditions in our industry and the markets in which we operate;

• announcements related to litigation;

• our failure to meet revenue or earnings estimates made by research analysts or other investors;

• changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;

• speculation in the press or investment community;

• issuance of new or updated research or reports by securities analysts;

• sales of our common stock by us or our stockholders, or the perception that such sales may occur;

• changes in accounting principles, policies, guidance, interpretations, or standards;

• additions or departures of key management personnel;

• actions by our stockholders, including our Principal Stockholders;

• general market conditions;

• domestic and international economic, legal, and regulatory factors unrelated to our performance;

• announcement by us or our competitors of significant acquisitions, divestitures, strategic partnerships, joint ventures, or capital commitments;

• security breaches impacting us or other similar companies;

• material weaknesses in our internal control over financial reporting and disclosure controls and procedures; and

• the realization of any risks described under this “Risk Factors” section, or other risks that may materialize in the future.

The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. Securities class action litigation has been instituted against us in the past and has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us in the future, could result in very substantial costs, divert our management’s attention and resources, and harm our business, financial condition, and results of operations.

Our ability to raise capital in the future may be limited.

Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt, or a combination of both. Additional financing may not be available on favorable terms or at all. If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements. If we issue new debt securities, the debt holders would have rights senior to holders of our common stock to make claims on our assets and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity securities or securities convertible into equity securities, existing stockholders will experience dilution and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings and their impact on the market price of our common stock.

We are a holding company and rely on dividends, distributions, and other payments, advances, and transfers of funds from our subsidiaries to meet our obligations.

We are a holding company that does not conduct any business operations of our own. As a result, we are largely dependent upon cash dividends and distributions and other transfers, including for payments in respect of our indebtedness, from our subsidiaries to meet our obligations. The ability of our subsidiaries to pay cash dividends and/or make loans or advances to us will be dependent upon their respective abilities to achieve sufficient cash flows after satisfying their respective cash requirements, including the securitized financing facility and other debt agreements, to enable the payment of such dividends or the making of such loans or advances. The agreements governing the indebtedness of our subsidiaries impose restrictions on our subsidiaries’ ability to pay dividends or other distributions to us. See the “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources ” section in this Annual Report. Each of our subsidiaries is a distinct legal entity, and under certain circumstances legal and contractual restrictions may limit our ability to obtain cash from them. Although the Restatement may cause certain of our subsidiaries to restate their respective financial statements at the subsidiary level, any subsidiary-level restatement is not expected to have a significant impact on our ability to obtain cash from the relevant subsidiaries. The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could also limit or impair their ability to pay dividends or other distributions to us.

We are required to make payments under a Tax Receivable Agreement for certain tax benefits, which amounts are expected to be material.

On January 16, 2021, we entered into a tax receivable agreement (the “Tax Receivable Agreement”), pursuant to which certain current or prior stockholders, including our Principal Stockholders, and our senior management team, have the right to receive payment by us of 85% of the amount of cash savings, if any, in U.S. and Canadian federal, state, local, and provincial income tax that we and our subsidiaries actually realize as a result of the realization of certain tax benefits associated with tax attributes existing as of the effective date of the Company’s initial public offering. These tax benefits, which we refer to as the Pre-IPO and IPO-Related Tax Benefits, include: (i) all depreciation and amortization deductions, and any offset to taxable income and gain or increase to taxable loss, resulting from the tax basis that we have in our and our subsidiaries’ intangible assets, (ii) the utilization of certain of our and our subsidiaries’ U.S. federal and Canadian federal and provincial net operating losses, capital losses, non-capital losses, disallowed interest expense carryforwards and tax credits, if any, attributable to periods prior to the effective date of the Company’s initial public offering, (iii) deductions in respect of debt issuance costs associated with certain of our and our subsidiaries’ financing arrangements, and (iv) deductions with respect to our and our subsidiaries’ initial public offering-related expenses.

These payment obligations are our obligations and not obligations of any of our subsidiaries. The actual utilization of the Pre-IPO and IPO- Related Tax Benefits as well as the timing of any payments under the Tax Receivable Agreement will vary depending upon a number of factors, including the amount, character and timing of our and our subsidiaries’ taxable income in the future.

For purposes of the Tax Receivable Agreement, cash savings in income tax will be computed by reference to the reduction in the liability for income taxes resulting from the Pre-IPO and IPO-Related Tax Benefits. The term of the Tax Receivable Agreement commenced upon consummation of our initial public offering and will continue until all relevant Pre-IPO and IPO-Related Tax Benefits have been utilized, accelerated, or expired.

Our counterparties under the Tax Receivable Agreement will not reimburse us for any payments previously made if such Pre-IPO and IPO-Related Tax Benefits are subsequently disallowed (although future payments would be adjusted to the extent possible to reflect the result of such disallowance). As a result, in such circumstances we could make payments under the Tax Receivable Agreement that are greater than our and our subsidiaries’ actual cash tax savings.

The payments we make under the Tax Receivable Agreement could be material. No payments were made during the year ended December 27, 2025. We made payments in the aggregate amount of $38 million under the Tax Receivable Agreement in 2024. Subsequent to the end of the 2025 fiscal year, we made payments of approximately $21 million. Assuming there are no material changes in the relevant tax law, and that we and our subsidiaries earn sufficient income to realize the full Pre-IPO and IPO-Related Tax Benefits, we expect that future payments under the Tax Receivable Agreement will aggregate to between $100 million and $115 million. Any future changes in the realizability of the Pre-IPO and IPO-Related Tax Benefits will impact the amount of the liability under the Tax Receivable Agreement. Based on our current taxable income estimates, we expect to repay the majority of this obligation by the end of our 2034 fiscal year.

If we undergo a change of control payments under the Tax Receivable Agreement for each taxable year after such event would be based on certain valuation assumptions, including the assumption that we and our subsidiaries have sufficient taxable income to fully utilize the Pre-IPO and IPO-Related Tax Benefits. Additionally, if we sell or otherwise dispose of any of our subsidiaries in a transaction that is not a change of control, we will be required to make a payment equal to the present value of future payments under the Tax Receivable Agreement attributable to the Pre-IPO and IPO-Related Tax Benefits of such subsidiary that is sold or disposed of, applying assumptions similar to those described above.

The Tax Receivable Agreement provides that in the event that we breach any of our material obligations, whether as a result of our failure to make any payment when due (subject to a specified cure period), failure to honor any other material obligation under it or by operation of law as a result of the rejection of it in a case commenced under the U.S. Bankruptcy Code or otherwise, then all of our payment and other obligations under the Tax Receivable Agreement will be accelerated and will become due and payable, and we will be required to make a payment equal to the present value of future payments under the Tax Receivable Agreement, applying assumptions similar to those described above. Such payments could be substantial and could exceed our and our subsidiaries actual cash tax savings from the Pre-IPO and IPO-Related Tax Benefits.

Because we are a holding company with no operations of our own, our ability to make payments under the Tax Receivable Agreement is dependent on the ability of our subsidiaries to make distributions to us. The securitized debt facility may restrict the ability of our subsidiaries to make distributions to us, which could affect our ability to make payments under the Tax Receivable Agreement. To the extent that we are unable to make payments under the Tax Receivable Agreement because of restrictions under our outstanding indebtedness, such payments will be deferred and will generally accrue interest. As of July 1, 2023, interest accrues at the Base Rate plus an applicable margin or Secured Overnight Financing Rate (“SOFR”) plus an applicable term adjustment plus 1%. To the extent that we are unable to make payments under the Tax Receivable Agreement for any other reason, such payments will generally accrue interest at a rate of SOFR plus an applicable term adjustment plus 5% per annum until paid.

For additional information related to the Tax Receivable Agreement, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures. If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses or other deficiencies in the future, or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and the price of our common stock may decline.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). As a public company, we are required to comply with the Sarbanes-Oxley Act and other rules that govern public companies. In particular, we are required to certify our compliance with Section 404 of the Sarbanes-Oxley Act, which requires us to furnish annually a report by management on the effectiveness of our internal control over financial reporting. In addition, our independent registered public accounting firm is required to report on the effectiveness of our internal control over financial reporting.

As more fully described in Item 9A in this Form 10-K, in connection with our most recent year-end assessment of internal control over financial reporting, we determined that, as of December 27, 2025, we did not maintain effective internal control over financial reporting or disclosure controls and procedures because of material weaknesses in our control environment. Management determined that controls at the entity-level to prevent or detect material misstatements to the consolidated financial statements were not effective. Specifically, the Company lacked a sufficient complement of resources with (i) an appropriate level of accounting knowledge, training and experience to appropriately analyze and record, and disclose accounting matters timely and accurately and (ii) an appropriate level of knowledge and experience to establish effective processes and controls. The material weaknesses in our internal control environment also contributed to material weaknesses arising from a failure to design and maintain effective (i) controls related to account reconciliations , (ii) controls over leases, (iii) controls related to intercompany and consolidation transactions, and (iv) controls over manual journal entries.

Remediation efforts place a significant burden on management and add increased pressure to our financial resources and processes. As a result, we may not be successful in making the improvements necessary to remediate the material weaknesses identified by management, be able to do so in a timely manner, or be able to identify and remediate additional control deficiencies, including material weaknesses, in the future. Additionally, these remediation efforts may divert management’s time, attention and resources from strategic matters.

We may experience future material weaknesses or other deficiencies in our internal control over financial reporting. If we are unable to successfully remediate our existing or any future material weaknesses or other deficiencies in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected; our liquidity, our access to capital markets, the perceptions of our creditworthiness, and our ability to complete acquisitions may be adversely affected; we may be unable to maintain or regain compliance with applicable securities laws, The Nasdaq Global Select Market (“Nasdaq”) listing requirements, and the covenants under our debt instruments or obligations under our derivative arrangements regarding the timely filing of periodic reports; we may be subject to civil or criminal sanctions, litigation, regulatory investigations and penalties; we may potentially be delisted from Nasdaq; investors may lose confidence in our financial reporting; we may suffer defaults, accelerations, or cross-accelerations under our debt instruments to the extent we are unable to obtain waivers from the required creditors or counterparties or are unable to cure any breaches; and our stock price may decline, any of which could have a material adverse effect on our business, results of operations, and financial condition.

Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital, restricts our ability to issue equity securities and could impact our listing on Nasdaq.

We did not file our Annual Report on Form 10-K for fiscal year 2025 within the timeframe required by the SEC, meaning we have not remained current in our reporting requirements with the SEC. This limits our ability to access the public markets to raise debt or equity capital, which could prevent us from pursuing transactions or implementing business strategies that we might otherwise believe are beneficial to our business. We are not currently eligible to use a registration statement on Form S-3 that would allow us to continuously incorporate by reference our SEC reports into the registration statement, or to use “shelf” registration statements to conduct offerings, until approximately one year from the date we regain and maintain status as a current filer. If we wish to pursue a public debt or equity offering now, we would be required to file a registration statement on Form S-1 and have it reviewed and declared effective by the SEC. Doing so would likely take significantly longer than using a registration statement on Form S-3 and increase our transaction costs, and the necessity of using a Form S-1 for a public offering of registered securities could, to the extent we are not able to conduct offerings using alternative methods, adversely impact our ability to raise capital or complete acquisitions of other companies in a timely manner.

As previously disclosed, on April 15, 2026, we received notice from Nasdaq regarding our noncompliance with Nasdaq Listing Rule 5250(c)(1), which requires listed companies to timely file all required periodic financial reports with the SEC. If we are not able to regain compliance with Nasdaq, our common stock may be subject to delisting by Nasdaq.

We reached a determination to restate certain of our previously issued consolidated financial statements, which resulted in unanticipated costs and may affect investor confidence and raise reputational issues.

As discussed in the Explanatory Note , in Note 3 - Restatement of Previously Issued Consolidated Financial Statements , and in Note 19 - Restatement and Recast of Quarterly Financial Information (Unaudited) , in this Annual Report on Form 10-K, we reached a determination to restate our consolidated financial statements and related disclosures for fiscal years 2024 and 2023 and to restate each of the quarterly periods for fiscal years 2024 and 2025, following the identification of misstatements as a result of the Company’s accounting review. The restatement also included corrections for other previously identified immaterial errors. As a result, we have incurred unanticipated costs for accounting and legal fees in connection with or related to the restatement, and have become subject to a number of additional risks and uncertainties, which may affect investor confidence in the accuracy of our financial disclosures and may raise reputational issues for our business.

Our Principal Stockholders collectively have significant influence over us, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote.

As of May 15, 2026, our Principal Stockholders hold approximately 62% of the outstanding shares of our common stock. As long as affiliates of our Principal Stockholders own or control a majority of our outstanding voting power, our Principal Stockholders and their affiliates will have the ability to exercise substantial control over all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including:

• the election and removal of directors and the size of our Board of Directors;

• any amendment of our articles of incorporation or bylaws; or

• the approval of mergers and other significant corporate transactions, including a sale of substantially all of our assets.

Moreover, ownership of our shares by affiliates of our Principal Stockholders may also adversely affect the trading price for our common stock to the extent investors perceive disadvantages in owning shares of a company with a controlling shareholder. For example, the concentration of ownership held by our Principal Stockholders could delay, defer, or prevent a change in control of our company or impede a merger, takeover, or other business combination which may otherwise be favorable for us. In addition, our Principal Stockholders are in the business of making investments in companies and may, from time to time, acquire interests in businesses that directly or indirectly compete with our business, as well as businesses that are significant existing or potential customers. Many of the companies in which our Principal Stockholders invest are franchisors and may compete with us for access to suitable locations, experienced management and qualified and well-capitalized franchisees. Our Principal Stockholders may acquire or seek to acquire assets complementary to our business that we seek to acquire and, as a result, those acquisition opportunities may not be available to us or may be more expensive for us to pursue, and as a result, the interests of our Principal Stockholders may not coincide with the interests of our other stockholders. So long as our Principal Stockholders continue to directly or indirectly own a significant amount of our equity, even if such amount is less than 50%, our Principal Stockholders will continue to be able to substantially influence or effectively control our ability to enter into corporate transactions, and as long as our Principal Stockholders maintain ownership of at least 25% of our outstanding common stock, they will have special governance rights under the Stockholders Agreement.

We are a “controlled company” within the meaning of Nasdaq rules and, as a result, qualify for exemptions from certain corporate governance requirements that we have relied on in the past and may do so in the future.

Our Principal Stockholders control a majority of the voting power of our outstanding voting stock, and as a result we are a controlled company within the meaning of Nasdaq corporate governance standards. Under Nasdaq rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirements that:

• a majority of the Board of Directors consist of independent directors;

• the nominating and corporate governance committee be composed entirely of independent directors with written charter addressing the committee’s purpose and responsibilities;

• the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

• there be an annual performance evaluation of the nominating and corporate governance and compensation committees.

We may utilize these exemptions as long as we remain a controlled company. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. After we cease to be a “controlled company,” we will be required to comply with the above referenced requirements within one year.

Our organizational documents and Delaware law may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium on their shares.

Provisions of our certificate of incorporation and bylaws may make it more difficult for, or prevent a third party from, acquiring control of us without the approval of our Board of Directors. These provisions include:

• providing that our Board of Directors will be divided into three classes, with each class of directors serving staggered three-year terms;

• providing for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders;

• empowering only the board to fill any vacancy on our Board of Directors (other than in respect of our Principal Stockholders’ directors (as defined below)), whether such vacancy occurs as a result of an increase in the number of directors or otherwise, if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders;

• authorizing the issuance of “blank check” preferred stock without any need for action by stockholders;

• prohibiting stockholders from acting by written consent if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders;

• to the extent permitted by law, prohibiting stockholders from calling a special meeting of stockholders if less than 40% of the voting power of our outstanding common stock is beneficially owned by our Principal Stockholders; and

• establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

Additionally, our certificate of incorporation provides that we are not governed by Section 203 of the Delaware General Corporation Law (the “DGCL”), which, in the absence of such provisions, would have imposed additional requirements regarding mergers and other business combinations. However, our certificate of incorporation includes a provision that restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder, but such restrictions do not apply to any business combination between our Principal Stockholders and any affiliate thereof or their direct and indirect transferees, on the one hand, and us, on the other.

Any issuance by us of preferred stock could delay or prevent a change in control of us. Our Board of Directors has the authority to cause us to issue, without any further vote or action by the stockholders, shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges, and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices, and liquidation preferences of such series. The issuance of shares of our preferred stock may have the effect of delaying, deferring, or preventing a change in control without further action by the stockholders, even where stockholders are offered a premium for their shares.

In addition, as long as our Principal Stockholders beneficially own at least 40% of the voting power of our outstanding common stock, our Principal Stockholders will be able to control all matters requiring stockholder approval, including the

election of directors, amendment of our certificate of incorporation, and certain corporate transactions. Together, these certificate of incorporation, bylaw and statutory provisions could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the existence of the foregoing provisions, as well as the significant common stock beneficially owned by our Principal Stockholders and their right to nominate a specified number of directors in certain circumstances, could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of us, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

Our certificate of incorporation provides that certain courts in the State of Delaware or the federal district courts of the U.S. for certain types of lawsuits is the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, creditors, or other constituents (iii) any action asserting a claim arising pursuant to any provision of the DGCL or of our certificate of incorporation or our bylaws, or (iv) any action asserting a claim related to or involving the Company that is governed by the internal affairs doctrine. The exclusive forum provision provides that it does not apply to claims arising under the Securities Act of 1933, as amended, (the “Securities Act”), the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction. Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and, to the fullest extent permitted by law, to have consented to the provisions of our certificate of incorporation described above. Although we believe this exclusive forum provision benefits us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, other employees or stockholders, which may discourage such lawsuits against us and our directors, officers, other employees, or stockholders. However, the enforceability of similar forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings. If a court were to find the exclusive choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and results of operations.

Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities.

Under our certificate of incorporation, none of our Principal Stockholders, any affiliates of our Principal Stockholders, or any of their respective officers, directors, agents, stockholders, members, or partners, have any duty to refrain from engaging, directly or indirectly, in the same business activities, similar business activities, or lines of business in which we operate. In addition, our certificate of incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, managing director, or other affiliate of our Principal Stockholders will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to any Principal Stockholder, instead of us, or does not communicate information regarding a corporate opportunity to us that the officer, director, employee, managing director, or other affiliate has directed to a Principal Stockholder. For instance, a director of our company who also serves as a director, officer, or employee of one of our Principal Stockholders or any of their portfolio companies, funds, or other affiliates may pursue certain acquisitions or other opportunities that may be complementary to our business and, as a result, such acquisition or other opportunities may not be available to us. Our Board of Directors consists of twelve members, three of whom are our Principal Stockholders’ directors. These potential conflicts of interest could restrict us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder, but such restrictions do not apply to any business combination between our Principal Stockholders and any affiliate thereof or their direct and indirect transferees, on the one hand, and us, on the other.

Any issuance by us of preferred stock could delay or prevent a change in control. Our Board of Directors has the authority to cause us to issue, without any further vote or action by the stockholders, shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges, and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices, and liquidation preferences of such series. The issuance of shares of our preferred stock may have the effect of delaying,

deferring, or preventing a change in control without further action by the stockholders, even where stockholders are offered a premium for their shares.

Our certificate of incorporation provides that certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits is the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, creditors, or other constituents, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws, or (iv) any action asserting a claim related to or involving the Company that is governed by the internal affairs doctrine. The exclusive forum provision provides that it does not apply to claims arising under the Securities Act, the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction. Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and, to the fullest extent permitted by law, to have consented to the provisions our of certificate of incorporation described above. Although we believe this exclusive forum provision benefits us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, other employees or stockholders, which may discourage such lawsuits against us and our directors, officers, other employees, or stockholders. However, the enforceability of similar forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings. If a court were to find the exclusive choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and results of operations.

Our business could be negatively impacted as a result of shareholder activism.

Publicly traded companies are increasingly subject to campaigns by activist shareholders advocating corporate actions such as operational, governance or management changes, or sales of assets or entire segments. The Company is and may again be subject to shareholder activism, and the corporate actions advocated by such shareholder activists may not align with the Company’s current business strategies or attempt to advance the best interests of all of the Company’s shareholders. The actions of activist shareholders may cause fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals or prospects of our business. In addition, responding to the actions of activist shareholders can be costly and time-consuming, disrupting our business and diverting the attention of our Board of Directors and management from pursuing our business strategies.

Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price.

Our common stock began trading on The Nasdaq Global Select Market on January 15, 2021. The number of outstanding shares of common stock includes shares beneficially owned by our Principal Stockholders and certain of our employees, that are “restricted securities,” as defined under Rule 144 under the Securities Act, and eligible for sale in the public market subject to the requirements of Rule 144. In addition, our Principal Stockholders have certain rights to require us to register the sale of common stock held by our Principal Stockholders, including in connection with underwritten offerings. Sales of significant amounts of stock in the public market or the perception that such sales may occur could adversely affect prevailing market prices of our common stock or make it more difficult for our stockholders to sell your shares of common stock at a time and price that they deem appropriate.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis for Driven Brands Holdings Inc. and Subsidiaries (“Driven Brands,” “the Company,” “we,” “us,” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this Annual Report. We operate on a 52- or 53-week fiscal year, which ends on the last Saturday in December. The twelve months ended December 27, 2025, December 28, 2024, and December 30, 2023 were all 52 week periods.

Overview

Description of Business

Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of over 4,200 locations across 49 states in the U.S. and Canada. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including oil change, paint, collision, glass, and repair services. We have continued to consistently grow our revenue through same store sales growth and adding new franchised and company-operated stores. Driven Brands generated net revenue of approximately $1.9 billion during the year ended December 27, 2025, an increase of 6% compared to the prior year, and system-wide sales of approximately $6.1 billion during the year ended December 27, 2025, an increase of 3% from the prior year.

The broader operating environment in which we conduct our business is subject to a number of macroeconomic and industry-specific factors that may affect our performance. We have experienced softening demand within certain businesses, primarily as a result of inflationary pressures, increased competition, industry and macroeconomic dynamics, possible future tariffs, global conflicts, and negative weather patterns. We believe the impact of inflation on consumer demand and our cost structure could be significant in 2026.

Restatement of Previously Issued Consolidated Financial Statements

We have restated our previously issued audited consolidated financial statements for fiscal years 2024 and 2023 contained in the 2024 Form 10-K. Refer to the Explanatory Note preceding Item 1, Business , Note 3 , Restatement of Previously Issued Consolidated Financial Statements and Note 19 , Restatement and Recast of Quarterly Financial Information (Unaudited) , included in Item 8 for background on the restatement, the fiscal periods impacted, control considerations, and other information.

In addition, we have restated certain previously reported financial information for fiscal years 2024 and 2023 in this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations as well as the Company’s unaudited interim financial statements for each of the quarterly and year-to-date periods for the periods ended September 27, 2025, June 28, 2025 and March 29, 2025, and the respective comparative periods.

In connection with the preparation of our financial statements for the fiscal year ended December 27, 2025, we identified multiple material weaknesses in our internal control over financial reporting as further described in Item 9A. As a result, we have concluded that our internal controls were not effective as of December 27, 2025. We are taking steps to remediate these weaknesses, including enhancing our control environment and implementing additional review procedures.

Adjustments made as a result of the Restatement impacted financial results for fiscal years 2023 and 2024 and the first three quarters of fiscal year 2025. The impact of the Restatement on net income in 2023, 2024, and through the end of the third quarter of 2025 were reductions of $54 million, $5 million, and $5 million, respectively and reductions of $57 million, $12 million, and $8 million on Adjusted EBITDA in 2023, 2024 and through the end of the third quarter of 2025, respectively. An overview of the primary impacts from the restatement adjustments on the financial results is set forth below.

• Cash adjustments : The impact of the errors relating to cash adjustments to the consolidated statement of operations for fiscal year 2024 is an increase to selling, general, and administrative expenses of $4 million. The impact of the errors to the consolidated statement of operations for fiscal year 2023 is a decrease to company-operated store sales of $6 million and a $1 million increase to selling, general, and administrative expenses. The impact of the errors to the consolidated balance sheet as of December 28, 2024 is a decrease to cash and cash equivalents of $28 million. The errors further affect the opening and closing cash balances and operating cash flows in the consolidated statements of cash flows for fiscal years 2024 and 2023.

• Accounts payable adjustments : The impact of the errors caused by incorrect journal entries associated with the roll-out of the Company's DrivenAdvantage business resulted in $7 million of accounts payable adjustments to the

consolidated balance sheet as of December 28, 2024, with a corresponding increase to company-operated store expenses for fiscal year 2023 (collectively, these errors are referred to herein as the “Accounts Payable Adjustments”).

• Accounts receivable adjustments: The impact of the errors relating to accounts receivable adjustments to the consolidated statement of operations for fiscal year 2023 is a $9 million increase to selling, general, and administrative expenses and a $3 million decrease to supply and other revenue. The impact of the errors to the consolidated statement of operations for fiscal year 2024 is a $2 million decrease to company-operated store sales, a $2 million decrease to supply and other revenue, and a $1 million increase to selling, general and administrative expenses. The impact of the errors to the consolidated balance sheet as of December 28, 2024 is a decrease to accounts receivable of $26 million.

• Other adjustments : The Company has also identified certain other errors, which have been reflected in the tables in Note 3 .

Errors associated with the restatement impacted certain financial information on a year-over-year basis, however, unless otherwise noted, the discussion below will not address the financial statement impacts of the Restatement errors.

Details of the impact of the restatement on the Company's consolidated financial statements are provided in Note 3 and details of the impact of the restatement on the Company's unaudited interim condensed consolidated financial statements are provided in Note 19 within the Notes to Financial Statements included in Item 8 of this Form 10-K.

Resegmentation

In the first quarter of 2025, the Company reorganized its operating segments to simplify its reporting structure, align with the Company’s current business model, and increase transparency for our investors, which resulted in a change to our reportable segments. As a result, the Company had the following reportable segments: Take 5, Franchise Brands, and Car Wash. Then, in the fourth quarter of 2025, as a result of the announcement of the sale of our International Car Wash (“ICW”) business and the related results reflected within our discontinued operations, the Company re-evaluated its operating segments, which resulted in another change to the reportable segments. As of the fourth quarter of 2025, the Company now has the following reportable segments: Take 5, Franchise Brands, and Auto Glass Now. Prior period information has been recast to reflect the current reportable segments.

Discontinued Operations

As previously disclosed in the Company’s 2024 Form 10-K, on February 24, 2025, the Company entered into a definitive agreement to sell its U.S. Car Wash business to Express Wash Operations, LLC dba Whistle Express Car Wash (the “Buyer”) for an aggregate purchase price of $385 million, subject to customary adjustments. Under the terms of the agreement, the Buyer agreed to pay the Company $255 million in cash and deliver to the Company an interest-bearing seller note (“Seller Note”) evidencing a loan of $130 million. The transaction was completed on April 10, 2025. In July 2025, the Company sold the Seller Note for $113 million.

On November 27, 2025, the Company entered into a definitive agreement to sell its ICW business to Neptune Acquisition Bidco Limited. On January 27, 2026, the Company completed the sale of ICW for an aggregate purchase price of € 411 million, or $490 million.

The net assets and operations of these disposal groups each met the criteria to be classified as discontinued operations and are reported as such in all periods presented. Unless otherwise noted, the discussion throughout Part II Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K, including the various metrics cited, excludes the U.S. Car Wash and ICW businesses and pertains only to our continuing operations. Certain financial activity related to the U.S. Car Wash business, including results from stores closed in 2023 and 2024 and certain assets held for sale, is included in continuing operations within Corporate and Other results. For information on discontinued operations, refer to Note 2 and Note 18 to our consolidated financial statements.

2025 Highlights and Key Performance Indicators

(as compared to same period in the prior year, unless otherwise noted)

Net Revenue

Net revenue was $1.9 billion for the year ended December 27, 2025 compared to $1.8 billion for the year ended December 28, 2024. The increase of $110 million was primarily due to the following:

• same store sales growth of 7.9% and 6.2% within the Auto Glass Now and Take 5 segments, respectively; and

• 175 net store growth, primarily within the Take 5 segment.

These factors were partially offset by:

• the absence of $45 million of revenue in 2025 from our Canadian distribution business, which we sold in the third quarter of 2024; and

• decline in same store sales of 1.1% within the Franchise Brands segment.

Net Income From Continuing Operations

We recognized net income from continuing operations of $132 million, or $0.80 per diluted share, for the year ended December 27, 2025, compared to less than $1 million, or $— per diluted share, for the year ended December 28, 2024. The increase of approximately $132 million was primarily due to the following:

• same store sales growth of 7.9% and 6.2% within the Auto Glass Now and Take 5 segments, respectively;

• 175 net store growth, primarily within the Take 5 segment;

• decreased interest expense of $36 million, primarily relating to the full repayment of the Term Loan Facility and decreased borrowings on the Revolving Credit Facility;

• the net release of a valuation allowance for deferred tax assets which includes the release of a valuation allowance of $37 million that incorporates the impact from the enactment of the One Big Beautiful Bill Act (“OBBBA”);

• a positive impact from foreign exchange of $32 million;

• decreased asset impairment charges of $28 million; and

• reduced share-based compensation expense of $19 million, primarily associated with pre-IPO awards that fully vested in the second quarter of fiscal year 2025.

These factors were partially offset by:

• the absence of net income in 2025 from our Canadian distribution business, which we sold in the third quarter of 2024;

• decline in same store sales of 1.1% within the Franchise Brands segment;

• increased costs directly associated with sales growth in the period;

• increased expenses related to new store openings and repair and maintenance charges;

• legal expenses primarily associated with legal matters disclosed in Note 17 ;

• increased net losses on the sale or disposal of assets;

• a $17 million loss on fair value of Seller Note assumed from the sale of the U.S. Car Wash business;

• increased allowance for credit losses of $10 million relating to aged accounts receivables;

• increased professional fees of $4 million associated with transactions in 2025;

• increased project costs associated with efforts to improve operational efficiencies across finance;

• increased cloud computing amortization of $8 million associated with the Company’s growth and technological investments; and

• a $5 million loss on debt extinguishment.

Adjusted Net Income

Adjusted Net Income was $199 million for the year ended December 27, 2025 compared to $175 million for the year ended December 28, 2024. The reconciliation of net income from continuing operations to adjusted net income, showing various impacts and adjustments, is below. This increase of approximately $24 million was also impacted by the following:

• same store sales growth of 7.9% and 6.2% within the Auto Glass Now and Take 5 segments, respectively;

• 175 net store growth, primarily within the Take 5 segment; and

• decreased interest expense of $36 million, primarily relating to the full repayment of the Term Loan Facility and decreased borrowings on the Revolving Credit Facility.

These factors were partially offset by:

• the absence of adjusted net income in 2025 from our Canadian distribution business, which we sold in the third quarter of 2024;

• increased costs directly associated with sales growth in the period;

• increased expenses related to new store openings and repair and maintenance charges;

• decline in same store sales of 1.1% within the Franchise Brands segment;

• increased allowance for credit losses of $10 million relating to aged accounts receivables; and

• increased professional and IT costs, including a reduction of capitalized labor.

Adjusted EBITDA

Adjusted EBITDA was $449 million for the year ended December 27, 2025 compared to $443 million for the year ended December 28, 2024. The reconciliation of net income from continuing operations to adjusted EBITDA, showing various impacts and adjustments, is below. The increase of approximately $6 million was also impacted by the following:

• same store sales growth of 7.9% and 6.2% within the Auto Glass Now and Take 5 segments, respectively; and

• 175 net store growth, primarily within the Take 5 segment.

These factors were partially offset by:

• the absence of $10 million of adjusted EBITDA in 2025 from our Canadian distribution business, which we sold in the third quarter of 2024;

• increased costs directly associated with sales growth in the period;

• increased expenses related to new store openings and repair and maintenance charges;

• decline in same store sales of 1.1% within the Franchise Brands segment;

• increased allowance for credit losses of $10 million relating to aged accounts receivables; and

• increased professional and IT costs, including a reduction of capitalized labor.

Key Performance Indicators

• Consolidated same store sales increased by 1.0%.

• Consolidated system-wide sales increased $162 million.

• The Company added 175 net new stores during the year.

2024 Highlights and Key Performance Indicators

(as compared to same period in the prior year, unless otherwise noted)

Net Revenue

Net revenue was $1.8 billion for the year ended December 28, 2024 compared to $1.7 billion for the year ended December 30, 2023. The increase of $42 million was primarily due to the following:

• same store sales growth of 6.7% and 0.9% within the Take 5 and Franchise Brands segments, respectively; and

• 197 net store growth, primarily within the Take 5 segment.

These factors were partially offset by:

• decreased revenue of $36 million associated with nine company-operated stores that were sold to a franchisee in January 2024;

• decreased revenue of $19 million from our Canadian distribution business, which we sold in the third quarter of 2024;

• the absence of revenue associated with U.S. Car Wash stores that were closed during 2023 and not included in the U.S. Car Wash disposal group; and

• decline in same store sales of 11.6% within the Auto Glass Now segment.

Net Income From Continuing Operations

We recognized net income from continuing operations of less than $1 million, or $0.00 per diluted share, for the year ended December 28, 2024, compared to a net loss of $47 million, or $0.29 loss per diluted share, for the year ended December 30, 2023. The increase of approximately $47 million was primarily due to the following:

• same store sales growth of 6.7% and 0.9% within the Take 5 and Franchise Brands segments, respectively;

• 197 net store growth, primarily within the Take 5 segment;

• lapping the impact of the Accounts Payable Adjustments in 2023; and

• decreased asset impairments and asset disposals of $67 million, primarily associated with U.S. Car Wash sites closed during 2023 of $105 million, partially offset by impairments for sites held for sale that were not included in the disposal group of the U.S. Car Wash divestiture.

These factors were partially offset by:

• decreased net income associated with nine company-operated stores that were sold to a franchisee in January 2024;

• decreased net income in the second half of 2024 from our Canadian distribution business, which we sold in the third quarter of 2024;

• costs directly associated with sales growth in the period;

• decline in same store sales of 11.6% within the Auto Glass Now segment;

• increased employee related benefit costs, primarily related to $31 million of share-based compensation expense relating to the modification of pre-IPO awards in the fourth quarter of 2023;

• a negative impact from foreign exchange of $22 million; and

• increased professional services costs, IT expenses, and cloud computing amortization reflective of the Company’s growth and technological investments.

Adjusted Net Income

Adjusted Net Income was $175 million for the year ended December 28, 2024 compared to $93 million for the year ended December 30, 2023. The reconciliation of Net Income from Continuing Operations to Adjusted Net Income, showing various impacts and adjustments, is below. This increase of approximately $81 million was also impacted by the following:

• same store sales growth of 6.7% and 0.9% within the Take 5 and Franchise Brands segments, respectively;

• 197 net store growth, primarily within the Take 5 segment; and

• lapping the impact of the Accounts Payable Adjustments in 2023.

These factors were partially offset by:

• decreased adjusted net income associated with nine company-operated stores that were sold to a franchisee in January 2024;

• decreased adjusted net income in the second half of 2024 from our Canadian distribution business, which we sold in the third quarter of 2024;

• costs directly associated with sales growth in the period;

• decline in same store sales of 11.6% within the Auto Glass Now segment;

• increased employee related benefit costs; and

• increased professional services costs and IT expenses reflective of the Company’s growth and technological investments.

Adjusted EBITDA

Adjusted EBITDA was $443 million for the year ended December 28, 2024 compared to $352 million for the year ended December 30, 2023. The reconciliation of Net Income from Continuing Operations to Adjusted EBITDA, showing various impacts and adjustments, is below. The increase of approximately $91 million was also impacted by the following:

• same store sales growth of 6.7% and 0.9% within the Take 5 and Franchise Brands segments, respectively;

• 197 net store growth, primarily within the Take 5 segment; and

• lapping the impact of the Accounts Payable Adjustments in 2023.

These factors were partially offset by:

• decreased adjusted EBITDA associated with nine company-operated stores that were sold to a franchisee in January 2024;

• decreased adjusted EBITDA in the second half of 2024 from our Canadian distribution business, which we sold in the third quarter of 2024;

• costs directly associated with sales growth in the period;

• decline in same store sales of 11.6% within the Auto Glass Now segment;

• increased employee related benefit costs; and

• increased professional services costs and IT expenses, reflective of the Company’s growth and technological investments.

Key Performance Indicators

• Consolidated same store sales increased by 1.5%.

• Consolidated system-wide sales increased $230 million.

• The Company added 197 net new stores during the year.

Key Performance Indicators

Key measures that we use in assessing our business and evaluating our segments include the following:

System-wide sales — System-wide sales represent the total of net sales for our franchised and company-operated stores. This measure allows management to better assess the total size and health of each segment, our overall store performance, and the strength of our market position relative to competitors. Sales at franchised stores are not included as revenue in our results from continuing operations, but rather, we include franchise royalties and fees that are derived from sales at franchised stores.

Store count — Store count reflects the number of franchised and company-operated stores open at the end of the reporting period. Management reviews the number of new, closed, acquired, and divested stores to assess net unit growth and drivers of trends in system-wide sales, franchise royalties and fees revenue and company-operated store sales.

Same store sales — Same store sales reflect the change in sales year-over-year for the same store base. We define the same store base to include all franchised and company-operated stores open for comparable weeks during the given fiscal period in both the current and prior year, which may be different from how others define similar terms. This measure highlights the performance of existing stores, while excluding the impact of new store openings and closures and acquisitions and divestitures.

Adjusted EBITDA — We define Adjusted EBITDA as earnings from continuing operations before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, cloud computing amortization, share-based compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, and certain non-recurring and non-core, infrequent or unusual charges. Adjusted EBITDA is a supplemental measure of operating performance of our segments and may not be comparable to similar measures reported by other companies. Adjusted EBITDA is a performance metric utilized by our Chief Operating Decision Maker to allocate resources to and assess performance of our segments. Refer to Note 10 in our consolidated financial statements for a reconciliation of reportable segment Adjusted EBITDA to income from continuing operations before taxes for the years ended December 27, 2025, December 28, 2024, and December 30, 2023.

The following table sets forth our key performance indicators for the years ended December 27, 2025, December 28, 2024, and December 30, 2023:

Year Ended

(in thousands, except store count or as otherwise noted)

December 27, 2025

December 28, 2024

December 30, 2023

As Restated

As Restated

System-Wide Sales

System-Wide Sales:

Take 5

Franchise Brands

Auto Glass Now

Corporate and Other

Total

System-Wide Sales by Business Model:

Franchised Stores

Company-Operated Stores

Total

Store Count

Store Count:

Take 5

Franchise Brands

Auto Glass Now

Total

Store Count by Business Model:

Franchised Stores

Company-Operated Stores

Total

Same Store Sales % by segment

Take 5

Franchise Brands

Auto Glass Now

Total consolidated

Adjusted EBITDA by segment

Take 5

Franchise Brands

Auto Glass Now

Adjusted EBITDA margin by segment

Take 5

Franchise Brands

Auto Glass Now

Total consolidated

Reconciliation of Non-GAAP Financial Information

To supplement our consolidated financial statements prepared and presented in accordance with U.S. GAAP, we use certain non-GAAP financial measures throughout this Annual Report, as described further below, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making.

Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by U.S. GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our consolidated financial statements prepared and presented in accordance with U.S. GAAP.

Adjusted Net Income/Adjusted Earnings per Share — We define Adjusted Net Income as net income from continuing operations calculated in accordance with U.S. GAAP, adjusted for acquisition related costs, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges, amortization related to acquired intangible assets, and the tax effect of the adjustments. Adjusted Earnings Per Share is calculated by dividing Adjusted Net Income by the weighted average shares outstanding. Management believes this non-GAAP financial measure is useful because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions.

The following table provides a reconciliation of net income from continuing operations to Adjusted Net Income and Adjusted Earnings per Share:

Year Ended

(in thousands, except per share data)

December 27, 2025

December 28, 2024

December 30, 2023

As Restated

As Restated

Net income (loss) from continuing operations

Adjustments:

Acquisition related costs (a)

Non-core items and project costs, net (b)

Cloud computing amortization (c)

Share-based compensation expense (d)

Foreign currency transaction (gain) loss, net (e)

Impairment, notes receivable loss, (gain) loss on sale of assets, net, and closed store expenses (f)

Loss on debt extinguishment (g)

Amortization related to acquired intangible assets (h)

Acceleration of interest rate hedge (i)

Provision for uncertain tax positions (j)

Valuation allowance (reversal) for deferred tax asset (k)

Adjusted net income before tax impact of adjustments

Tax impact of adjustments (l)

Adjusted net income from continuing operations

Basic earnings (loss) per share from continuing operations

Diluted earnings (loss) per share from continuing operations

Adjusted basic earnings per share from continuing operations

Adjusted diluted earnings per share from continuing operations

Weighted average shares outstanding

Basic

Diluted

Weighted average shares outstanding for Adjusted Net Income

Basic

Diluted

Adjusted EBITDA — We define Adjusted EBITDA as earnings from continuing operations before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, cloud computing amortization, share-based compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, and certain non-recurring and non-core, infrequent or unusual charges. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation. Management believes this non-GAAP financial measure is useful because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions.

The following table provides a reconciliation of net income from continuing operations to Adjusted EBITDA:

Adjusted EBITDA

Year Ended

(in thousands)

December 27, 2025

December 28, 2024

December 30, 2023

As Restated

As Restated

Net income (loss) from continuing operations

Income tax (benefit) expense

Interest expense, net

Depreciation and amortization

EBITDA

Acquisition related costs (a)

Non-core items and project costs, net (b)

Cloud computing amortization (c)

Share-based compensation expense (d)

Foreign currency transaction (gain) loss, net (e)

Impairment, notes receivable loss, (gain) loss on sale of assets, net, and closed store expenses (f)

Loss on debt extinguishment (g)

Adjusted EBITDA

(a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. As acquisitions occur in the future, we expect to incur similar costs and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized.

(b) Consists of discrete items and project costs, including third-party professional costs associated with strategic transformation initiatives as well as non-recurring payroll-related costs and non-ordinary course legal settlements.

(c) Includes non-cash amortization expenses relating to cloud computing arrangements.

(d) Represents non-cash share-based compensation expense.

(e) Represents foreign currency transaction (gains) losses, net that primarily related to the remeasurement of our intercompany loans as well as gains and losses on cross-currency swaps.

(f) Consists of the following items (i) asset impairments, (ii) (gains) losses, net on sale leasebacks, disposal of assets, including assets held for sale, or sale of business; and (iii) loss on fair value of the Seller Note.

(g) Represents charges incurred related to the Company’s full repayment of the Term Loan Facility in conjunction with the sale of the U.S. Car Wash business and the issuance of the Series 2025-1 Senior Notes in the current year and charges incurred related to the Company’s partial repayment of Senior Secured Notes in conjunction with the sale of its Canadian distribution business in the prior year.

(h) Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statements of operations.

(i) Consists of the accelerated amortization of an interest rate hedge associated with the Series 2022-1 Senior Securitization Notes, which was refinanced in October 2025.

(j) Represents amounts recorded for uncertain tax positions, inclusive of interest and penalties.

(k) Represents valuation allowances on income tax carryforwards in certain jurisdictions that are not more likely than not to be realized.

(l) Represents the tax impact of adjustments associated with the reconciling items between net income from continuing operations and Adjusted Net Income, excluding the provision for uncertain tax positions and valuation allowance for certain deferred tax assets. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction.

Results of Operations for the Year Ended December 27, 2025 Compared to the Year Ended December 28, 2024

To facilitate the review of our results of operations, the following tables set forth our financial results for the periods indicated. All information is derived from the consolidated statements of operations. Certain percentages presented have been rounded to the nearest number, therefore, totals may not equal the sum of the line items in the tables below.

Net Revenue

Year Ended

(in thousands)

December 27, 2025

% of Net Revenues

December 28, 2024

% of Net Revenues

As Restated

Franchise royalties and fees

Company-operated store sales

Advertising fund contributions

Supply and other revenue

Total net revenue

Franchise Royalties and Fees

Franchise royalties and fees increased by $1 million, or 1% primarily due to increased franchise system-wide sales of $46 million, which was related to 87 net new franchised stores as well as Take 5 same store sales growth, partially offset by lower average royalty rates driven by varying performances among our franchised brands and negative same store sales within Franchise Brands.

Company-Operated Store Sales

Company-operated store sales increased $116 million, or 10%, which primarily related to 88 net new company-operated store openings as well as Take 5 and Auto Glass Now same store sales growth.

Advertising Fund Contribution

Advertising fund contributions increased by $5 million, or 5%, primarily due to increased franchise system-wide sales of $46 million and 87 net new franchised stores. Our franchise agreements typically require franchisees to pay continuing advertising fund fees based on a percentage of gross sales or a stated fee.

Supply and Other Revenue

Supply and other revenue decreased $13 million, or 5%, primarily due to the absence of $45 million of supply and other revenue in 2025 from our Canadian distribution business, which was sold in the third quarter of 2024, partially offset by increased supply sales of $35 million within the Take 5 segment.

Operating Expenses

Year Ended

(in thousands)

December 27, 2025

% of Net Revenues

December 28, 2024

% of Net Revenues

As Restated

Company-operated store expenses

Advertising fund expenses

Supply and other expenses

Selling, general, and administrative expenses

Depreciation and amortization

Asset impairment charges and lease terminations

Total operating expenses

Company-Operated Store Expenses

Company-operated store expenses increased $82 million, or 12%, corresponding to store-related costs associated with 88 net new company-operated stores in the current year compared to the prior year, as well as variable costs associated with increased Take 5 and Auto Glass Now company-operated store sales during the year.

Advertising Fund Expenses

Advertising fund expenses increased by $5 million, or 5%, which is commensurate with the increase to advertising fund contributions during the period. Advertising fund expenses generally trend in proportion to advertising fund contributions.

Supply and Other Expenses

Supply and other expenses decreased $14 million, or 8%, primarily due to the absence of supply and other expenses in 2025 from our Canadian distribution business, which was sold in the third quarter of 2024, partially offset by costs associated with the increased Take 5 supply revenue.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased $31 million, or 7%, primarily due to loss on fair value of the Seller Note of $17 million, increased allowance for credit losses of $10 million relating to aged accounts receivables, increased cloud computing amortization of $8 million as well as increased professional services costs and payroll-related expenses and reduced capitalized labor, offset by reduced share-based compensation expenses of $19 million.

Depreciation and Amortization

Depreciation and amortization expense increased $3 million, or 4%, primarily due to 88 net new company-operated stores in the current year compared to the prior year.

Asset Impairment Charges and Lease Terminations

Asset impairment charges and lease terminations decreased $28 million, or 50%, primarily due to reduced impairment charges associated with assets held for sale and U.S. Car Wash assets not included in the U.S. Car Wash disposal group.

Other Expenses, Net

Year Ended

(in thousands)

December 27, 2025

% of Net Revenues

December 28, 2024

% of Net Revenues

As Restated

Interest expense, net

Foreign currency transaction (gain) loss, net

Loss on debt extinguishment

Other expenses, net

Interest Expense, Net

Interest expense, net decreased $36 million, or 23%, primarily related to decreased borrowings on the Revolving Credit Facility and the full repayment of the Term Loan Facility in the current year, as well as accelerated amortization relating to the interest rate hedge associated with the 2022-1 Class A-2 Securitization Senior Notes.

Foreign Currency Transaction (Gain) Loss, Net

The foreign currency transaction gain for the year ended December 27, 2025 was primarily comprised of transaction gains of $23 million in our foreign operations, partially offset by a loss on the foreign currency swap of $8 million. The foreign currency transaction loss for the year ended December 28, 2024 was primarily comprised of transaction losses in our foreign operations of $25 million, partially offset by a gain on foreign currency swaps of $7 million.

Loss on Debt Extinguishment

Loss on debt extinguishment for the year ended December 27, 2025 related to charges incurred for the Company’s full repayment of the Term Loan Facility as well as charges incurred associated with the issuance of the Company’s 2025-1 Senior Notes. Loss on debt extinguishment for the year ended December 28, 2024 related to the Company’s partial repayment of Series 2022-1 Senior Notes.

Income Tax (Benefit) Expense

Year Ended

(in thousands)

December 27, 2025

% of Net Revenues

December 28, 2024

% of Net Revenues

As Restated

Income tax (benefit) expense

Income tax benefit for the year ended December 27, 2025 was primarily driven by the release of a valuation allowance, which incorporated the impact from the enactment of OBBBA, which increased the Company’s interest expense limitation under Section 163(j), partially offset by tax at the U.S. federal statutory tax rate, non-deductible share-based compensation, and state income taxes. Income tax expense for the year ended December 28, 2024 was driven by tax at the U.S. federal statutory tax rate, income tax expense from recording of valuation allowances on net operating loss and interest expense limitation carryforwards, and state income taxes.

Results of Operations for the Year Ended December 28, 2024 Compared to the Year Ended December 30, 2023

To facilitate the review of our results of operations, the following tables set forth our financial results for the periods indicated. All information is derived from the consolidated statements of operations. Certain percentages presented in this section have been rounded, therefore, totals may not equal the sum of the line items in the tables below.

Net Revenue

Year Ended

(in thousands)

December 28, 2024

% of Net Revenues

December 30, 2023

% of Net Revenues

As Restated

As Restated

Franchise royalties and fees

Company-operated store sales

Advertising fund contributions

Supply and other revenue

Total net revenue

Franchise Royalties and Fees

Franchise royalties and fees decreased by $2 million, or 1%, primarily due to a decrease in average royalty rates within the Franchise Brands segment, partially offset by an increase in franchise system-wide sales of $191 million, driven by franchise same store sales growth within the Franchise Brands and Take 5 segments and the addition of 143 net new franchised stores.

Company-Operated Store Sales

Company-operated store sales increased $39 million, or 3%, which primarily related to 54 net new company-operated store openings and Take 5 same store sales growth. These increases were partially offset by the decrease of company-operated revenue associated with the sale of nine company-operated stores to a franchisee in 2024 within the Franchise Brands segment, negative Auto Glass Now same store sales growth, and sales associated with U.S. Car Wash locations that closed during 2023 and were not included in the U.S. Car Wash disposal group.

Advertising Fund Contributions

Advertising fund contributions increased $4 million, or 4%, due to increased franchise system-wide sales of $191 million and 143 net new franchised stores. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of franchisee gross sales or a stated fee.

Supply and Other Revenue

Supply and other revenue remained relatively flat primarily due to increased supply sales within the Take 5 and Franchise Brands segments, offset by decreased revenue following the sale of our Canadian distribution business in the third quarter of 2024.

Operating Expenses

Year Ended

(in thousands)

December 28, 2024

% of Net Revenues

December 30, 2023

% of Net Revenues

As Restated

As Restated

Company-operated store expenses

Advertising fund expenses

Supply and other expenses

Selling, general, and administrative expenses

Depreciation and amortization

Asset impairment charges and lease terminations

Total operating expenses

Company-Operated Store Expenses

Company-operated store expenses decreased $43 million, or 6%, primarily due to the Accounts Payable Adjustments, a decrease in costs associated with the sale of nine company-operated stores to a franchisee in 2024, and increased labor efficiency, partially offset by store-related costs associated with 54 net new company-operated stores.

Advertising Fund Expenses

Advertising fund expenses remained flat, which is largely commensurate to advertising fund contributions during the period, partially offset by increased advertising expenditures in 2023 for certain brands. Advertising fund expenses generally trend in proportion with advertising fund contributions.

Supply and Other Expenses

Supply and other expenses decreased $10 million, or 5%, primarily related to the sale of our Canadian distribution business in 2024, partially offset by costs associated with increased supply sales within the Take 5 segment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $75 million, or 19%, due to increased employee related benefit costs, primarily related to $32 million of share-based compensation expense relating to the modification of pre-IPO awards in the fourth quarter of 2023 and increased professional services costs, IT expenses, and cloud computing amortization.

Depreciation and Amortization

Depreciation and amortization expense increased $2 million, or 3%, primarily relating to 54 net new company-operated stores in the year ended December 28, 2024 compared to the prior year.

Asset Impairment Charges and Lease Terminations

Asset impairment charges and lease terminations decreased $67 million, or 54%, primarily due to reduced impairment charges associated with U.S. Car Wash fixed assets and right-of-use assets not included in the U.S. Car Wash disposal group relating to store closures in 2023.

Other Expenses, Net

Year Ended

(in thousands)

December 28, 2024

% of Net Revenues

December 30, 2023

% of Net Revenues

As Restated

As Restated

Interest expense, net

Foreign currency transaction (gain) loss, net

Loss on debt extinguishment

Other expenses, net

Interest Expense, Net

Interest expense, net decreased $3 million, or 2%, primarily due to debt reduction in the year ended December 28, 2024, primarily due to reduced Term Loan Facility interest and increased interest income, primarily offset by increased borrowings on the Revolving Credit Facility.

Foreign Currency Transaction (Gain) Loss, Net

The foreign currency transaction loss for the year ended December 28, 2024 was primarily comprised of $25 million in transaction losses in our foreign operations, offset by a gain on foreign currency swaps of $7 million. The foreign currency transaction gain for the year ended December 30, 2023 was primarily comprised of $3 million in transaction gains in our foreign operations and a gain on foreign currency hedges of $1 million.

Loss on Debt Extinguishment

Loss on debt extinguishment for the year ended December 28, 2024 represents charges incurred related to the Company’s partial repayment of Series 2022-1 Senior Notes in conjunction with the sale of its Canadian distribution business.

Income Tax Expense

Year Ended

(in thousands)

December 28, 2024

% of Net Revenues

December 30, 2023

% of Net Revenues

As Restated

As Restated

Income tax expense

Income tax expense for the years ended December 28, 2024 and December 30, 2023 was driven by tax at the U.S. federal statutory tax rate, income tax expense from recording of valuation allowances on net operating loss and interest expense limitation carryforwards, and state income taxes.

Segment Results of Operations for the Year Ended December 27, 2025 Compared to the Year Ended December 28, 2024

We assess the performance of our segments based on Adjusted EBITDA, which is defined as earnings from continuing operations before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, equity compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, cloud computing amortization, and certain non-recurring and non-core, infrequent or unusual charges. Shared services costs are not allocated to these segments and are included in Corporate and Other. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.

Take 5

Year Ended

(in thousands, unless otherwise noted)

December 27, 2025

December 28, 2024

% Net Revenue For Segment

% Net Revenue For Segment

As Restated

Net revenue

Franchise royalties and fees

Company-operated store sales

Supply and other revenue

Total net revenue

Adjusted EBITDA

System-Wide Sales

Change

Franchised stores

Company-operated stores

Total system-wide sales

Store Count (in whole numbers)

Change

Franchised stores

Company-operated stores

Total store count

Same Store Sales %

Take 5 net revenue increased $145 million, or 14%, driven primarily by a $100 million increase in company-operated store sales from same store sales growth and 94 net new company-operated stores. In addition, supply and other revenue increased by $35 million, or 28%, primarily due to higher system-wide sales. Franchise royalties and fees increased by $11 million, or 42%, primarily due to a $132 million, or 28%, increase in franchise system-wide sales from same store sales growth and 67 net new franchised stores.

Take 5 Adjusted EBITDA increased $39 million, or 10%, corresponding with net store growth and same store sales growth, partially offset by variable costs associated with the increased company-operated store sales and supply and other revenue in the current year compared to the prior year.

Franchise Brands

Year Ended

(in thousands, unless otherwise noted)

December 27, 2025

December 28, 2024

% Net Revenue For Segment

% Net Revenue For Segment

As Restated

Net revenue

Franchise royalties and fees

Company-operated store sales

Supply and other revenue

Total net revenue

Adjusted EBITDA

System-Wide Sales

Change

Franchised stores

Company-operated stores

Total system-wide sales

Store Count (in whole numbers)

Change

Franchised stores

Company-operated stores

Total store count

Same Store Sales %

Franchise Brands net revenue decreased $10 million, or 3%, driven by a change in the composition of franchised brands’ system-wide sales resulting in a lower average royalty rate and a decrease in franchise system-wide sales of $86 million, or 2%.

Franchise Brands Adjusted EBITDA decreased $12 million, or 6%, primarily due to decreased net revenue and increased general and administrative charges.

Auto Glass Now

Year Ended

(in thousands, unless otherwise noted)

December 27, 2025

December 28, 2024

% Net Revenue For Segment

% Net Revenue For Segment

As Restated

Net revenue

Company-operated store sales

Supply and other revenue

Total net revenue

Adjusted EBITDA

System-Wide Sales

Change

Company-operated stores

Total system-wide sales

Store Count (in whole numbers)

Change

Company-operated stores

Total store count

Same Store Sales %

Auto Glass Now net revenue increased $20 million, or 9%, driven primarily by same store sales growth as a result of increased volume and average ticket.

Auto Glass Now Adjusted EBITDA increased by $13 million, or 105%, driven primarily by same store sales growth, partially offset by variable costs associated with increased sales, including marketing expenditures.

Segment Results of Operations for the Year Ended December 28, 2024 Compared to the Year Ended December 30, 2023

We assess the performance of our segments based on Adjusted EBITDA, which is defined as earnings from continuing operations before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, cloud computing amortization, share-based compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, and certain non-recurring and non-core, infrequent or unusual charges. Shared services costs are not allocated to these segments and are included in Corporate and Other. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.

Take 5

Year Ended

(in thousands, unless otherwise noted)

December 28, 2024

December 30, 2023

% Net Revenue For Segment

% Net Revenue For Segment

As Restated

As Restated

Net revenue

Franchise royalties and fees

Company-operated store sales

Supply and other revenue

Total net revenue

Adjusted EBITDA

System-Wide Sales

Change

Franchised stores

Company-operated stores

Total system-wide sales

Store Count (in whole numbers)

Change

Franchised stores

Company-operated stores

Total store count

Same Store Sales %

Take 5 net revenue increased $147 million, or 16%, driven primarily by an $111 million increase in company-operated store sales from same store sales growth and 66 net new company-operated stores. In addition, supply and other revenue increased by $28 million, or 29%, primarily due to higher system-wide sales. Franchise royalties and fees increased by $8 million, or 41%, primarily due to an $112 million, or 32%, increase in franchise system-wide sales driven by same store sales growth and 108 net new franchised stores.

Take 5 Adjusted EBITDA increased $99 million, or 35%, driven primarily by net store growth and same store sales growth, as well as the Accounts Payable Adjustments. Take 5 Adjusted EBITDA was partially offset by costs associated with the increased company-operated store sales and store-related costs associated with 66 net new company-operated stores in the year ended December 28, 2024 compared to the prior year.

Franchise Brands

Year Ended

(in thousands, unless otherwise noted)

December 28, 2024

December 30, 2023

% Net Revenue For Segment

% Net Revenue For Segment

As Restated

As Restated

Net revenue

Franchise royalties and fees

Company-operated store sales

Supply and other revenue

Total net revenue

Adjusted EBITDA

System-Wide Sales

Change

Franchised stores

Company-operated stores

Total system-wide sales

Store Count (in whole numbers)

Change

Franchised stores

Company-operated stores

Total store count

Same Store Sales %

Franchise Brands net revenue decreased $55 million, or 16%, primarily driven by a decrease in company-operated store sales of $44 million related to the sale of nine company-operated stores to a franchisee in 2024. Franchise royalties and fees decreased $9 million, or 5%, due to a change in the composition of franchised brands’ system-wide sales mix resulting in a lower average royalty rate, partially offset by an increase of $79 million, or 2%, relating to franchise system-wide sales driven by same store sales growth and 35 net new franchised stores.

Franchise Brands Adjusted EBITDA decreased $10 million, or 5%, primarily due to Adjusted EBITDA associated with nine company-operated stores sold to a franchisee in 2024 and decreased franchise royalties and fees, partially offset by an improvement in operating margin.

Auto Glass Now

Year Ended

(in thousands, unless otherwise noted)

December 28, 2024

December 30, 2023

% Net Revenue For Segment

% Net Revenue For Segment

As Restated

As Restated

Net revenue

Company-operated store sales

Supply and other revenue

Total net revenue

Adjusted EBITDA

System-Wide Sales

Change

Company-operated stores

Total system-wide sales

Store Count (in whole numbers)

Change

Company-operated stores

Total store count

Same Store Sales %

Auto Glass Now net revenue decreased by $17 million, or 7%, driven by decreased same store sales as a result of decreased volume.

Auto Glass Now Adjusted EBITDA increased by $3 million, or 26%, primarily due to lower variable costs associated with decreased volume and operational efficiencies, including reduced payroll related costs.

Financial Condition, Liquidity and Capital Resources

Sources of Liquidity and Capital Resources

Cash flow from operations, supplemented with our long-term borrowings and Revolving Credit Facility, has been sufficient to fund our operations while allowing us to make strategic investments to grow our business. We believe that our sources of liquidity and capital resources will be adequate to fund our operations, acquisitions, company-operated store development, other general corporate needs, and the additional expenses we expect to incur for at least the next twelve months. We expect to continue to have access to the capital markets at acceptable terms. However, this could be adversely affected by many factors including macroeconomic factors, a downgrade of our credit rating, or a deterioration of certain financial ratios.

Driven Brands Funding, LLC (the “Issuer”), a wholly-owned subsidiary of the Company, and Driven Brands Canada Funding Corporation (along with the Issuer, the “Co-Issuers”) are subject to certain customary qualitative and quantitative covenants related to debt service coverage in connection with our securitization senior notes. Our Revolving Credit Facility also has certain customary qualitative and quantitative covenants. As of the date hereof, the Co-Issuers and Driven Holdings, LLC are in material compliance with all such covenants under their respective credit agreements.

In February 2025, Driven Holdings, LLC entered into an amendment extending the maturity date of the Revolving Credit Facility to February 2030, subject to certain terms and conditions. See Note 9 to our consolidated financial statements for additional information.

On February 24, 2025, the Company entered into a definitive agreement to sell its U.S. Car Wash business to the Buyer for an aggregate purchase price of $385 million, subject to customary adjustments. Under the terms of the agreement, the Buyer agreed to pay the Company $255 million in cash and deliver to the Company an interest-bearing seller note evidencing a loan in the initial principal amount of $130 million. The transaction was completed on April 10, 2025. In July 2025, the Company sold the Seller Note for $113 million. Net proceeds were utilized to repay the outstanding balance of $46 million on the Term Loan Facility and $65 million on the Revolving Credit Facility.

In October 2025, the Company issued $500 million of Series 2025-1 Class A-2 Securitization Senior Notes (the “2025-1 Senior Notes”) and used the proceeds in combination with approximately $130 million of the Company’s Revolving Credit Facility to fully repay the Company’s Series 2019-1 and 2022-1 Class A-2 Securitization Senior Notes. The utilization of the Revolving Credit Facility to repay a portion of the debt provides the Company additional flexibility regarding the timing of future debt repayments.

At December 27, 2025, the Company had total liquidity of $634 million consisting of $103 million in cash and cash equivalents and $531 million of undrawn capacity on its variable funding securitization senior notes and Revolving Credit Facility. This does not include the additional $135 million Series 2022 Class A-1 Notes that would expand the Company’s variable funding note borrowing capacity if the Company elects to exercise them, assuming certain conditions continue to be met.

On November 27, 2025, the Company entered into a definitive agreement to sell its ICW business. On January 27, 2026, the Company completed the sale of ICW for an aggregate purchase price of $490 million. The Company used the proceeds to fully repay the outstanding balance of $252 million for the 2019-2 Senior Notes, make a partial repayment of $80 million for the 2020-1 Senior Notes, and make a repayment of $140 million for the Revolving Credit facility.

Certain of the senior notes contain provisions that provide that when the Company achieves a certain leverage ratio, such notes do not amortize, although the Company may still elect to make such amortization payments. If such notes were subject to amortization, $25 million in debt commitments would be due in 2026. As of December 27, 2025, the Company is below the certain leverage ratio threshold. See Note 9 to our consolidated financial statements for additional information.

In connection with the issuance of the 2025-1 Senior Notes, the Co-Issuers entered into the Second Amended and Restated Base Indenture (the “Base Indenture”). In March 2026, the Co-Issuers entered into Amendment No. 1 to the Base Indenture (“Amendment No. 1”), dated as of October 20, 2025. Amendment No. 1 amended the Base Indenture to extend the deadlines for certain deliverables and to clarify certain other requirements following the occurrence of a re-issuance restatement of the Co-Issuers’ financial statements. On April 22, 2026, the Co-Issuers received a waiver under the Base Indenture, extending Driven Brands Holdings Inc.’s deadline to deliver Driven Brands Holdings Inc.’s annual financial statements for fiscal year 2025 to June 10, 2026, and the deadline for the quarterly financial statements for the period ended March 28, 2026 to 45 days following the delivery of the annual financial statements for fiscal year 2025.

In April 2026, the Company entered into an amendment that also provides for a limited waiver to the Revolving Credit Facility. See Note 9 to our consolidated financial statements for additional information.

In addition to our liquidity and capital resources, we have significant contractual obligations and commitments as of December 27, 2025 relating to the following:

• Long-term debt and interest obligations - As of December 27, 2025, our outstanding debt balance was $2.2 billion. See Note 9 to our consolidated financial statements for additional details regarding the timing of expected future principal payments. Interest on long-term debt is calculated based on debt outstanding and interest rates in effect on December 27, 2025, taking into account scheduled maturities and amortization payments. As of December 27, 2025, we estimate cash interest payments of $93 million due in 2026 and $239 million due in 2027 and thereafter. Following repayment of debt from the proceeds of the ICW sale, the Company now expects cash interest payments of $76 million due in 2026 and $224 million due in 2027 and thereafter.

• Operating lease commitments - The Company and its subsidiaries have operating lease agreements for the rental of office space, company-operated stores, and office equipment. As of December 27, 2025, our remaining contractual commitments for operating leases were $813 million. See Note 11 to our consolidated financial statements regarding the timing of expected future payments.

• Sublease rental - The Company’s subsidiaries enter into certain lease agreements with owners of real property to sublet the leased premises to its franchisees. As of December 27, 2025, our remaining contractual commitments for sublease rentals were $12 million. See Note 11 to our consolidated financial statements regarding the timing of expected future lease related payments.

• Lease guarantees - Historically, the Company guaranteed certain payment and performance obligations under real estate leases related to the U.S. Car Wash business, which was sold in April 2025. Certain of these guarantees (the “Guarantees”) remain in effect following the sale. See Note 17 to our consolidated financial statements for additional information.

The following table illustrates the main components of our cash flows for the year ended December 27, 2025, December 28, 2024, and December 30, 2023:

Year Ended

(in thousands)

December 27, 2025

December 28, 2024

December 30, 2023

As Restated

As Restated

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash

Net change in cash, cash equivalents, restricted cash, and restricted cash included in advertising fund assets

Cash flow information is inclusive of cash flows from discontinued operations.

Operating Activities

Net cash provided by operating activities was $331 million for the year ended December 27, 2025 compared to $244 million for the year ended December 28, 2024. The increase in cash provided by operating activities was primarily due to increased operating income, decreased interest expense, and working capital improvements, during the year ended December 27, 2025.

Net cash provided by operating activities was $244 million for the year ended December 28, 2024 compared to $229 million for the year ended December 30, 2023. The increase was primarily due to increased operating income, decreased interest expense, net working capital improvements, partially offset by costs associated with improvements to our IT infrastructure during the year ended December 28, 2024.

Investing Activities

Net cash provided by investing activities was $233 million for the year ended December 27, 2025 compared to $50 million for the year ended December 28, 2024. The increase in cash provided by investing activities was primarily due to increased proceeds from the sale of businesses and fixed assets, including sale leaseback transactions, assets held for sale, the sale of the U.S. Car Wash business, as well as the sale of the Seller Note, of $125 million, and a $66 million decrease in capital expenditures.

Net cash provided by investing activities was $50 million for the year ended December 28, 2024 compared to $451 million used in investing activities for the year ended December 30, 2023. The increase was primarily due to a $308 million decrease in capital expenditures, a $280 million increase in proceeds from the sale or disposal of businesses and fixed assets, of which $205 million related to assets held for sale, $78 million from the sale of our Canadian distribution business, $18 million from the sale of nine company-operated collision stores to a franchisee, and a $57 million decrease in net cash paid for acquisitions, partially offset by a $143 million decrease in proceeds from sale leaseback transactions.

Financing Activities

Net cash used in financing activities was $565 million for the year ended December 27, 2025 compared to $304 million for the year ended December 28, 2024. The increase in cash used in financing activities was primarily related to an increase in net repayments of debt, including finance leases, of $522 million, primarily associated with repayments of the Company’s Term Loan Facility, the 2019-1 and 2022-1 Class A-2 Securitization Senior Notes, and net repayments on the Revolving Credit Facility in the current year. This was partially offset by an increase of $225 million from the proceeds of the issuance of senior notes in the current year and a reduction in Tax Receivable Agreement payments of $38 million compared to the prior year. See Note 9 to our consolidated financial statements for additional information regarding the Company’s debt.

Net cash used in financing activities was $304 million for the year ended December 28, 2024 compared to $170 million provided by the year ended December 30, 2023. The increase in cash used by financing activities was primarily related to an increase in net repayments of long-term debt, including finance leases, of $437 million, Tax Receivable Agreement payments of $38 million during the year ended December 28, 2024, net repayments on the Revolving Credit facility of $58 million in the year ended December 28, 2024 compared to net borrowings on the Revolving Credit Facility of $248 million in the prior year, debt issuance costs of $10 million in the year ended December 28, 2024, and proceeds from the exercise of stock options of $6 million in the prior year. The increase is partially offset by the 2024-1 Senior Notes issuance of $275 million in the year ended December 28, 2024 and share repurchases of $50 million in the prior year. See Note 9 to our consolidated financial statements for additional information regarding the Company’s debt.

Tax Receivable Agreement

The Company expects to be able to utilize certain tax benefits which are related to periods prior to the effective date of the Company’s IPO and are attributed to our pre-IPO shareholders. The Company previously entered into a Tax Receivable Agreement, which provides our pre-IPO shareholders with the right to receive payment of 85% of the amount of cash savings, if any, in U.S. and Canadian federal, state, local, and provincial income tax that the Company will actually realize or divests. The Tax Receivable Agreement was effective as of the date of the Company’s IPO. The Company recorded a current tax receivable agreement payable of $56 million and $23 million as of December 27, 2025 and December 28, 2024, respectively, and a non-current tax receivable agreement payable of $73 million and $111 million as of December 27, 2025 and December 28, 2024, respectively, on the consolidated balance sheets. We made payments of approximately $38 million under the Tax Receivable Agreement in the year ended December 28, 2024. No payments were made during the year ended December 27, 2025. During the first quarter of fiscal year 2026, we made payments of approximately $21 million.

For purposes of the Tax Receivable Agreement, cash savings in income tax will be computed by reference to the reduction in the liability for income taxes resulting from the utilization of the Pre-IPO and IPO-Related Tax Benefits. The term of the Tax Receivable Agreement commenced upon the effective date of the Company’s initial public offering and will continue until the Pre-IPO and IPO-Related Tax Benefits have been utilized, accelerated, or expired.

Because we are a holding company with no operations of our own, our ability to make payments under the Tax Receivable Agreement is dependent on the ability of our subsidiaries to make distributions to us. The securitized debt facility may restrict the ability of our subsidiaries to make distributions to us, which could affect our ability to make payments under the Tax Receivable Agreement. To the extent that we are unable to make payments under the Tax Receivable Agreement because of restrictions under our outstanding indebtedness, such payments will be deferred and will generally accrue interest. As of July 1, 2023, interest accrues at the Base Rate plus an applicable margin or SOFR plus an applicable term adjustment plus 1.0%. To the extent that we are unable to make payments under the Tax Receivable Agreement for any other reason, such payments will generally accrue interest at a rate of SOFR plus an applicable term adjustment plus 5.0% per annum until paid.

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in Note 2 of the consolidated financial statements. However, we believe the accounting policies described below are particularly important to the portrayal and understanding of our financial position and results of operations and require application of significant judgment by our management. In applying these policies, management uses its judgment in making certain assumptions and estimates.

These judgments involve estimations of the effect of matters that are inherently uncertain and may have a significant impact on our quarterly and annual results of operations or financial condition. Changes in estimates and judgments could significantly affect our result of operations, financial condition, and cash flow in future years. The following is a description of what we consider to be our most critical accounting policies.

Impairment of goodwill and other indefinite-lived intangible assets

Goodwill and intangible assets considered to have an indefinite life are evaluated throughout the year to determine if indicators of impairment exist. Such indicators include, but are not limited to, events or circumstances such as a significant adverse change in our business, in the overall business climate, unanticipated competition, a loss of key personnel, adverse legal or regulatory developments, or a significant decline in the market price of our common stock.

If no indicators of impairment have been noted during these preliminary assessments, we perform an assessment of goodwill and indefinite-lived intangible assets annually as of the first day of our fourth fiscal quarter. We first assess qualitatively whether it is more-likely-than-not that an impairment does not exist. Significant factors considered in this assessment include, but are not limited to, macro-economic conditions, market and industry conditions, cost considerations, the competitive environment, overall financial performance, and results of past impairment tests. If we do not qualitatively determine that it is more-likely-than-not that an impairment does not exist, we perform a quantitative impairment test.

In performing a quantitative test for impairment of goodwill, we primarily use the income approach method of valuation that includes the discounted cash flow method and the market approach that includes the guideline public company method to determine the fair value of goodwill and indefinite-lived intangible assets. Significant assumptions used by management in estimating fair value under the discounted cash flow model include discount rates, revenue growth rates, long-term revenue growth rates, EBITDA margins, capital expenditures, and tax rates. Other assumptions include operating expenses and overhead expenses. Assumptions used to determine fair value under the guideline public company method include the selection of guideline companies and the valuation multiples applied.

In the process of performing a quantitative test of our trade name intangible assets, we primarily use the relief of royalty method under the income approach method of valuation. Significant assumptions used to determine fair value under the relief of royalty method include future trends in sales, a royalty rate, and a discount rate to be applied to the forecast revenue stream.

There is an inherent degree of uncertainty in preparing any forecast of future results. Future trends in system-wide sales are dependent to a significant extent on national, regional, and local economic conditions. Any decreases in customer traffic or average repair order due to these or other reasons could reduce gross sales at franchise locations, resulting in lower royalty and other payments from franchisees, as well as lower sales at company-operated locations. This could reduce the profitability of franchise locations, potentially impacting the ability of franchisees to make royalty payments owed to us when due, which could adversely impact our current cash flow from franchise operations, and company-operated sites.

Long-lived assets

On a regular basis, we assess whether events or changes in circumstances have occurred that potentially indicate the carrying value of long-lived assets may not be recoverable. We test impairment at the individual store asset group level, which includes property and equipment and operating lease assets. We test impairment using historical cash flows and other relevant facts and circumstances as the primary basis for our estimates of future cash flows. Significant factors considered include, but are not limited to, current and forecast sales, current and forecast cash flows, the number of years the site has been in operation, remaining lease life (if applicable), and other factors which apply on a case-by-case basis. The analysis is performed at the individual site level for indicators of permanent impairment. Recoverability of the Company's assets is measured by comparing the assets' carrying value to the undiscounted cash flows expected to be generated over the assets' remaining useful life or remaining lease term, whichever is less. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment. If these assumptions change in the future, we may be required to record impairment charges for these assets.

On a regular basis, we assess whether events or changes in circumstances have occurred that potentially indicate the carrying value of intangible assets with finite lives, primarily assets related to franchise and license agreements, may not be recoverable. Recoverability of the asset is measured by comparing the assets' carrying value to the undiscounted future cash flows expected to be generated over the asset's remaining useful life. Significant factors considered include, but are not limited to, current and forecast sales, current and forecast cash flows, and a discount rate to be applied to the forecast revenue stream.

Income taxes

We estimate certain components of our provision for income taxes. Our estimates and judgments include, among other items, the calculations used to determine the deferred tax asset and liability balances, effective tax rates for state and local income taxes, uncertain tax positions, amounts deductible for tax purposes, and related reserves. We adjust our annual effective income

tax rate as additional information on outcomes or events becomes available. Further, our assessment of uncertain tax positions requires judgments relating to the amounts, timing, and likelihood of resolution.

We account for income taxes under the liability method whereby deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effects on deferred tax assets and liabilities of subsequent changes in the tax laws and rates are recognized in income during the year the changes are enacted.

In assessing the realizability of deferred tax assets, we consider whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

We follow the applicable authoritative guidance with respect to the accounting for uncertainty in income taxes recognized in our consolidated financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. We record any interest and penalties associated as additional income tax expense in the consolidated statements of operations.

Leases

The Company is the lessee in a significant real estate portfolio, primarily through ground leases (the Company leases the land and generally owns the building) and through leases of land and buildings. The Company records a right of use (“ROU”) asset and lease liability based on the present value of the Company’s estimated future minimum lease payments over the lease term.

In determining the initial lease term, the Company generally does not include periods covered by renewal options, as the Company does not believe these renewal options are reasonably assured of being exercised. These judgments may produce materially different amounts of depreciation, amortization, and rent expense than would be reported if different assumed lease terms were used.

If a lease does not provide enough information to determine the implicit interest rate in the agreements, the Company uses its incremental borrowing rate in calculating the lease liability. The Company determines its incremental borrowing rate for each lease by reference to yield rates on collateralized debt issuances, which approximates borrowings on a collateralized basis, by companies of a similar credit rating as the Company, with adjustments for differences in years to maturity and implied company-specific credit spreads.

Application of New Accounting Standards

See Note 2 of the consolidated financial statements for a discussion of recently issued accounting standards applicable to the Company.