Small Business Stories - DrivenBrands

Ivy Hartman: Well, we’re taking care of all your automotive and small business needs all in one here in SEMA 2007 on sbtv.com. And with me is Ken Walker, CEO of Driven Brands. Ken talk a little bit about how you got a big umbrella or a big roof so to speak that you cover a lot of different franchises. Kenneth Walker: We do. We began with the Meineke was our initial brand and Meineke is about 900 stores in every state except for Hawaii and seven other countries. So, about two years ago, we bought another automotive franchise brand by the name of Aero-Colours which does scratch and chip repair, bumper repair on a mobile basis we got about 220 trucks on the road through Aero-Colours. Then we also own Econo Lube and Tune, the franchise of Econo Lube and Tune which has got about 200 locations. And then finally, our fourth little company all under the Driven Brands umbrella is one by the name of Tortal.net which does internet base training company. That’s internet-based training for a number of companies both franchise and automotive and non-automotive. Ivy Hartman: So what are some benefits of being a franchisee under the Driven Brands, one of the Driven Brands companies? Kenneth Walker: Well, first of all I can tell you a little story about a year ago when we bough the Econo Lube and Tune. One of our goals was to co-brand it. So they had a great foot brand on a brand that has been lead up a little bit over a long period of time, but was still very vibrant and alive. We have started co-branding it we’re of the same facility so both the Meineke which the consumer identifies as “fix my car, fix my muffler, fix my brakes” and Econo Lube and Tune, which the consumer identifies “quick oil change, quick tune-up.” So now all of a sudden it’s a little bit like some of the restaurant brands where they put Long John Silver’s and somebody else together or Taco Bell and Pizza Hut put them together where the consumer sees that one of the kids wants taco and one wants pizza and you can go to one place. Well this one the consumer can see that there’s a single location that go for a multi—a large range of services and those focus that we’ve actually gotten co-brand as—we may rule that out or having success of significance success from the sales we’re going straight up. They’re up 25%. Ivy Hartman: Well, we talk about branding for a small business owner. You know, that sounds like it’s phenomenally important because you talked about Econo Lube out from kind of a weird stigma now into a totally different room by carrying it with Meineke and giving consumers a branding. Kenneth Walker: Branding is absolutely important. That’s the reason that franchising has worked so well where Tim maybe a great on mechanic and can run a great shop but Tim’s is Tim’s. So there’s 15% to 20% of the population is moving every year so you got folks coming in and they don’t Tim’s but they do know the Meineke brand, they didn’t know the Econo Lube brand it gives them some sense of security that there’s something bigger behind it. So where Tim maybe terrific at what he does, having Meineke gives him the chance the first chance that no consumers coming in and the others in the market that might very well believe that it’s an opportunity to have a bigger brand behind them. Ivy Hartman: Speaking of that, are we seeing more of a trend in the automotive franchising industries than we might in some of the other franchising industries? Kenneth Walker: I don’t think its bigger franchising is growing. Franchising is just on far today one-sixth of all of the jobs in the United States are related to franchising. So it’s either directly or indirectly in that—it’s either the guys are actually handing the hamburger across the counter or the person that’s providing the meat to hand across the counter. Ivy Hartman: Right. Kenneth Walker: So, it’s a huge industry and it’s a huge grabber of our economy. So franchising is early at the forefront of the growth in the economy. Ivy Hartman: And then when you mention a portion of franchising I didn’t even think of and that’s interesting with the shows in Las Vegas at this point is the distributor that has that partnership with those franchises. Kenneth Walker: Right. Ivy Hartman: How does that work? Does Driven Brands have to arrange that then for your franchising? Kenneth Walker: Typically the franchising will be the person between the manufacturer and the franchisee and we’ll help arrange those relationships. Ivy Hartman: What are some challenges that automotive franchisees face? Kenneth Walker: Well automotive franchise—first of all, cars are being made better. It excels the great Meineke can just—or we change the name of that four years ago to Meineke Car Care Centers because the mufflers in 1983, car manufacturers began to move from steel—the stainless steel on the exhaust system. As a result, in 1996 was the largest year there were 50 million units of Excel sold in the United States. This year, there will be under 10 million units. So 80% of what used to be the Excels market in the US has gone away. It’s unusually large migration and quality issue with Excel but it’s happening in all of the products. Ceramic bright are lasting longer than previous materials with respect to brights. So just having someone behind you that can help identify where your next product line can help you continue to grow even as the products become—last longer and the cars become more sturdy. So that’s the biggest challenge. Ivy Hartman: I would think so in order to remain competitive and to think, oh my gosh what’s going to be the next thing. At least you got this under Driven Brands that’s in your hip pocket to help you with that. Kenneth Walker: That’s one of the reasons that is—I’m sorry I didn’t mean to interrupt. Ivy Hartman: No, you’re fine. Kenneth Walker: I get excited about these things. Ivy Hartman: We like excited. Kenneth Walker: One of the reasons that we think that it makes sense is because we’re worrying about those things that are going to happen 3, or 4 or 5 years out and trying to put plans in place today to manage those. Our same stores sells inspite of the fact that 65% of our product was exhaust in 1995 and that that market has shrunk by 80%, our same stores sells are up 20% over that timeframe. So it’s because we identified new products, we continued to think about other things that our franchisees can do successfully and they have done remarkably. Ivy Hartman: That’s perfect! We talk a lot about how different brands can help all these different companies and Tortal—what a phenomenon. I mean you need to train your employees. You’re spread out all over the country, so talk about how Tortal—what Tortal is and how it came about. Kenneth Walker: I became the CEO of Meineke in 1996 and I made a tour around the country to visit the franchisees to find out what we needed to be doing that weren’t doing. And training was one of the issues that came up over and over again. As luck had it, I’d been to a seminar and someone started talking about internet base training. I thought you know maybe—because our franchisees I said, “Well when do you want that training?” and first guy says, “Monday” the next guy takes “Tuesday” one will take it during the day and one say at night, one say on the weekend. And I thought “Holy cow!” And everybody wanted it within their shop. And I thought how in the world am I going to do that. As luck had it, I went through a seminar and I heard something about the idea that internet base training was going to play the future. I looked around there weren’t any companies doing it, and I thought well I wonder if there’s any reason why we can’t do it ourselves. So we started building programs in 1999 I guess was the first one for Meineke franchisees and they were so well received. Some of my friends said, “Gee Ken that’s a good idea, would you mind building some for me?” And I thought well, okay. And so I built a few for them and kept building them for Meineke and then somebody else would see the second brand and then the third brand and before you know it we have a little business there and it has been a very successful part of Driven Brands. Ivy Hartman: So any industry could use Tortal or an online training system for their company. Kenneth Walker: Absolutely! We build training programs for probably 30 different franchisors. We’ve got restaurant companies; we’ve got manufacturing companies that will need to train on a specific piece of equipment. Anybody that has got a broad distributed network that they need to do training on it makes sense. We train all of our franchisees, but before we will bring them in to the training program we actually ask them to take a number of courses online. It doesn’t eliminate the need for hands-on training but it makes go a lot quicker. Ivy Hartman: Sure and it’s on demand! Kenneth Walker: It’s on demand! Ivy Hartman: Right there in your shop or wherever when you need it 24 hours a day— Kenneth Walker: 24-hours a day seven days a week. Ivy Hartman: Yeah, and you don’t have to worry about getting yourself there. It comes to you. That’s perfect. Kenneth Walker: Right! Ivy Hartman: Ken Walker, CEO of Driven Brands. Thanks for joining us here on sbtv.com.