There comes a time when a technician or service writer thinks about starting their own service operation. It is tempting. Being one’s own boss and operating a business in the way one believes it should be run. Many have taken the plunge.
There is just one catch. Transitioning from being a mechanic or service writer to an owner is more than simply hanging a shingle and saying ‘Open for Business.’ It requires a new set of skills and expertise that are different from those needed to diagnose and repair a vehicle. Too often, many first-time owner-operators of service operations have a difficult time keeping the business going or making a profit because they lack the skills and procedures needed to operate a business.
This is where becoming part of a franchise can be an advantage for those looking to make the transition to operating their own service operation.
What You Have to Bring to the Table
One of first things that one will have to do is to leave the wrench behind. Once one decides to operate a facility as an owner, one cannot be dividing time between managing the day-to-day operations of the shop and running to the bays to work on a vehicle.
“As much as we respect automotive experience, we do not want the franchisee spending time in the bays working on cars,” says Randy Moore, president and CEO of Mister Transmission, a national franchise that has operated since 1963. Moore continues that persons most able to become successful operating their own automotive service business are those who bring a unique set of business skills to the table. These include people who have strong sales and customer service experience, understand business processes or those who have run successful businesses, often from consumer segments not normally associated with the automotive trades. “An ideal franchisee is one who is a service manager or a service writer at an existing successful automotive facility or someone from a dealership operation who is managing a service department that is doing more than a million dollars. Those persons understand how to communicate with people, how to manage staff and technicians and know process management. They may be working in a big facility that they can never afford to own themselves, but for a minimal investment, they can be in their own facility.”
Franchise operations such as Mister Transmission, Midas or Meineke offer several advantages to someone just starting out. Bill Ketchem, vice-president, franchise development with TBC Corporation, which operates the Midas franchise, says that with the automotive service industry becoming more competitive, “independents face big challenges with promoting their stores, sourcing parts, and keeping current on the latest industry trends. A good franchisor is constantly looking at these changes and developing programs, marketing, training and supply chain strategies to keep in front of these changes. This allows the owner to focus on his customers, team and profits while benefiting from the brand name.”
Mister Transmission’s Randy Moore adds that what a good franchise partner provides is established process management. “It puts structure into smaller businesses that is sometimes lacking.”
Moore continues that Mister Transmission’s process management model is specialized for its market segment and helps the franchisee identify and leverage three key business segments. The first is the retail segment of the automotive market, making up 45 per cent of the business. This segment is of persons who own vehicles that are on average seven years old. The next segment is business sourced from existing automotive service operations that need Mister Transmission’s specialized transmission expertise and knowledge for their customers. This segment will send transmission work to Mister Transmission because they either cannot do the work themselves or cannot afford to tie up one of their bays for the time needed for the transmission work.
“We have to remember that today’s transmissions are becoming more complex, more electronically controlled and too big of a hassle for some to take care of,” Moore continues. “It is easier for them to ask us to take care of it or to refer their clients to us. A lot of automotive service shops use us as [transmission] specialists. We don’t do general repairs, so we are not going to steal their customers. We are a value-added service to their customers.” The remaining 15 per cent is fleet business.
“We have processes from the time you open the door in the morning, to each telephone call that comes in for each segment,” Moore says.
“We have processes for calling accounts, we have marketing materials, training manuals and how to approach new customers and generate sales. We have processes for how to effectively talk with customers, how to provide them with car rentals, payment options and how to sell same-day service. All the processes we put in place are there to help the franchisee capture and grow the business. We also have procedures to help them on the financial side of the business; we will help them watch parts and labour costs, and parameters that help in hitting financial benchmarks to become successful and profitable.”
“For most successful business owners the transition to becoming a franchisee is very smooth,” says Midas’s Bill Ketchem. “They continue to do the same things they have done in the past, such as oversee the day-to-day operations, provide excellent customer service, and recruit and retain employees. We provide ideas to help improve the operations of the business, but franchisees are still the business owners and decision makers. A strong brand has the ability to attract more buyers through resources such as training, development, real estate, advertising, plus so much more. It is unlikely that buyers would invest in an independent shop when they can seek out a brand with a proven track record.”
It Is Not About Product
Another advantage of a franchise is that one is not locked into sourcing parts and supplies from a single supplier, as often is the case with some banner programs. Mister Transmission’s Moore says the focus of a franchise should be on revenue generation and effective process management, while providing marketing support to ensure the franchisee is profitable.
“We allow franchisees to act as business owners and make their own purchasing decisions. At the same time, we’re involved to ensure that we maintain profitability and meet quality standards. Our franchisees are truly in business for themselves – but never by themselves.”
“One of the strengths of the Midas system is that customers can expect a similar level of high-quality service at each of our locations,” Midas’s Ketchem adds.
“To ensure that the customer experience is positive we require franchisees to participate in our warranty programs and to install only approved parts. We do not restrict from whom franchisees can buy product as we have many choices for approved parts. Our top priority is making sure that the customer experience starts and ends with premiere customer service and that high quality parts are installed on our customers’ cars. Our goal is to give you the ability to source quality products from vendors who will give your location the best overall service.”