Driven Brands Holdings Inc. is the largest automotive services company in North America. Through its portfolio of brands, Driven Brands provides customers with a range of automotive needs, including paint, collision, glass, oil change, maintenance, and car wash. Those brands include, among others: Take 5 Oil Change®, Take 5 Car Wash®, Meineke Car Care Centers®, MAACO®, CARSTAR ®, 1-800-Radiator & A/C ®, and Auto Glass Now®. The Company operates through four reportable business segments: Maintenance; Car Wash; Paint, Collision and Glass; and Platform Services.

Driven Brands’ acquisition of existing businesses in the automotive services industry, and its integration of those businesses, has been a core component of the Company’s growth strategy. To that end, over the last several years, Driven Brands expanded its operations to offer car washes and auto glass. Specifically, In August 2020, Driven Brands acquired International Car Wash Group, the world’s largest car wash company by location count. In late December 2021, Driven Brands acquired Auto Glass Now, through which Driven expanded its auto glass business into the U.S. market. Through a series of subsequent acquisitions, Driven Brands quickly became the second-largest auto glass repair business in North America.

A recently filed securities fraud class action complaint alleges that Driven Brands (NASDAQ: DRVN), through certain of its officers and directors, made numerous materially false and misleading statements and omissions pertaining to: (i) statements concerning Driven Brands’ ability to efficiently and effectively integrate a high volume of acquired businesses, including statements related to the status of integrating its U.S. auto glass businesses; and (ii) statements concerning the performance and competitive position of Driven Brands’ car wash business segment. Specifically, the Company repeatedly touted Driven Brands’ ability to execute and integrate acquisitions as a “core strength,” and assured investors that it had made “significant progress” integrating the auto glass businesses it had acquired. Further, Driven Brands also represented that the large scale of its car wash business served as a “competitive moat” that would preserve Driven Brands’ competitive position. The Company downplayed softness in demand for its car wash business and pointed investors to the growth of its car wash subscriptions, which Driven labeled as the “Holy Grail” in the car wash business.

In truth, Driven Brands was several quarters behind on integrating its auto glass businesses, and the Company’s car wash business was faltering and more exposed to a decline in demand from retail customers than the Company represented to investors. As a result, the Company’s statements concerning its business and prospects, including its fiscal year 2023 financial guidance, were materially misleading and/or lacked a reasonable basis.

On May 8, 2023, Driven Brands revealed that, on May 4, 2023, the Company’s former Chief Financial Officer, Defendant Tiffany L. Mason (“Mason”), had abruptly left the Company under unusual circumstances. Mason’s exit came just one day after Driven Brands reported its financial results for the first quarter of 2023.

Then, on August 2, 2023, Driven Brands reported earnings for the second quarter of 2023 that missed expectations, including disappointing results for its Paint, Collision and Glass business segment as well as its Car Wash segment. With respect to its auto glass business, the Company admitted that it was at least “several quarters” behind on its integration of the businesses it had acquired. In addition, regarding Driven Brands’ Car Wash segment, the Company disclosed that increased exposure to “intensified competitive intrusion” negatively impacted demand from Driven Brands’ high-margin retail car wash customers. As a result of delays in Driven Brands’ integration of its acquired auto glass businesses and the faltering performance of its car wash businesses, the Company slashed its full-year earnings guidance for fiscal 2023, despite having reaffirmed that guidance a little over two months earlier. These disclosures caused the price of Driven common stock to decline by $10.63 per share, or 41%.

Current shareholders who have continuously held Driven Brands shares since prior to October 27, 2021, can seek corporate reforms, the return of funds back to company coffers, and a court approved incentive award at no cost to them.

If you would like to learn more about this matter at no cost to you, you are encouraged to contact Joshua H. Grabar at [email protected] or Mia R. Heller at [email protected], or call 267-507-6085.