How auto brands school their franchisees

Posted Nov 12th, 2015
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AAMCO University is a bricks-and-mortar institution to train new owners and others in the system, covering topics such as payroll, shop efficiencies and profit-and-loss management.

Maybe you noticed it during your last oil change. Dusty, cramped waiting areas with frayed vinyl chairs at auto shops have given way to large, luxuriant customer lounges with tasteful artwork, plush chairs, soothing colors and, in many cases, coffee, snacks and games.

Peer behind this much-improved veneer, however, to see even larger changes happening behind the car repair scenes. Auto franchisors have become institutions of higher learning to keep up with the times and cultivate a crop of sophisticated business owners who are primed to become multi-unit franchisees.

As a side benefit, this extensive technical and business training is also providing pathways for ambitious shop employees to become their own bosses.

Tactics include forming so-called franchisee 20 groups—groups of peers to share ideas and work through problems, hiring business consultants, building dedicated training centers and developing in-depth online coursework. Those moves have become commonplace in an industry that’s still often stereotyped as the domain of grease monkeys and Bondo Billys—pejorative terms for mechanics and collision techs.

With mom-and-pop shops giving way to a handful of aggressive national brands, automotive shops are tasked with staying au courant on vehicles increasingly built with exotic materials and complex safety and propulsion systems. At the same time, customer expectations have increased to a point that dirty, testosterone-driven shops now struggle in the face of fancy, friendly facilities sprouting up on opposing street corners.

In-depth education programs, both on the technical and business management sides, have become key for auto aftermarket brands to keep their technicians current, while also teaching modern business tactics to managers and operators in hopes their success propels them to buy additional locations, lessening the ratio of stores to franchisees.

This need for greater sophistication was “eventually addressed by a few visionaries who believe the challenges could be met by drawing repairers together under the banner of a franchise network,” such as CARSTAR or Fix Auto, said Mike Bryan, vice president at Marx Group Advisors, a marketing agency based in San Rafael, California, focused on the auto aftermarket. “The franchisor would employ staff with the skills to provide their franchisees with how-to knowledge in all aspects of their business, as well as generating buying power and more favorable supply terms.”

This wider trend of industry consolidation, happening at the same time private equity began dipping its toes into the industry, favors franchised auto players in their drive to foster multi-unit owners, rather than single-unit operators.

“Franchisors would much prefer to have 500 shops with 100 franchisees, rather than having 500 shops with 500 franchisees,” said CARSTAR CEO David Byers. “Transitioning those franchisees from good store owners to great business leaders gives them the tools and the platform to buy additional businesses and grow their franchises.”

To that end, Overland Park, Kansas-based CARSTAR started a Masters in Bodyshop Administration (MBA) program and five-tier EDGE Performance Platform covering everything from the technical methodology of collision repair to lean operations and corporate culture.

“At the core, we’re really a training and education organization,” Byers added. “We could be talking about fast food or haircuts or any number of other franchise industries. When you make this transition from a good store owner to a great business leader, it puts them in a position to add more stores.”

Auto repair franchise AAMCO has gone bricks and mortar with its education program, starting AAMCO University, which provides training at all levels of the organization.

AAMCO 101 is a four-week training program for new owners in the system. Its curriculum includes payroll, shop efficiencies and P&L management, while the 201-level training is for both new and experienced customer service managers. Located in Newnan, Georgia, AAMCO University includes classroom work and hands-on technical training with a miniature shop on site that covers diagnostic training and basic maintenance services, among others. Like many of its contemporaries, AAMCO also has online learning programs and webcasts for technicians unable to go to Georgia.

Brian O’Donnell, senior vice president of sales at AAMCO, said the training programs deliver significant results, and cited a 10 percent increase in performance for those who have completed the coursework.

Formerly just in the muffler biz, Meineke Car Care—part of the Driven Brands stable of auto brands—has diversified into full automotive service and has seen consecutive same-store sales increases in recent months.

Roark Capital, the private equity firm in Atlanta, bought Driven Brands earlier this year. As Roark aggressively expands its automotive portfolio, Dave Schaefers, senior vice president of franchise development at Meineke, said the industry is seeing an increase in interest from C-level and VP-level people looking to become franchisees. Asked why the auto aftermarket invests so much in training, Schaefers offered a simple retort: The data supports it.

“We put KPIs around every training program we do,” he said, referring to key performance indicators. “We have a program where we record phone calls, grade them, send them back to the franchisees and measure the difference in same-store sales versus those who answer the phone right.”

Every month, Charlotte, North Carolina-based Meineke offers two-and-a-half-week training programs teaching business skills, and also created an online university that covers phone procedures, vehicle inspections, customer greetings and how to build car counts, among many other topics.

Beyond improving metrics, Schaefers said the training efforts provide “tremendous upward mobility” for energetic employees looking to move up within the organization and, ideally, someday become franchise owners.

‘It’s going to be tough’

Jeremiah Graham, owner of Jeremiah’s CARSTAR in Oklahoma City, has held most titles during his collision repair career, and stepped up to the owner position in 2013 after his late mentor, Hugh Dooley, showed him the ropes and the profit potential for owners.

While his first two years have been “like drinking out of a firehose,” he said training through CARSTAR has given him the tools to manage myriad crises and decisions that need to be made as a first-time business owner.

Graham said franchisors need to do a better job of scaring potential franchisees to underscore the amount of time and emotional firepower needed to get a fledgling shop off the ground.

“Hey, it’s going to be tough, really hard, do you have the stomach for this? If you don’t, you might not be the right fit,” he said, referring to the conversations he has with prospects.

Braden Poole, vice president of operations at Scottsdale, Arizona-based Honest-1 Auto Care, said assisting the company’s franchisees with operational support is a major responsibility of the company, along with ongoing training for the technician base.

“The automotive business is changing constantly, from not only a technology standpoint but also the chemicals and equipment being used,” he said. As most of its franchise owners come from outside of the automotive industry, modern customer service training is also a core part of its training program.

“When you have people come into the industry with only the experience they’ve had as a customer, there’s a great deal we need to teach them to manage profitability, their pricing structure, the customer experience, how to follow marketing and customer retention plans,” Poole said. “There’s a lot that goes into it.”

Original Article by Tom Kaiser

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