Summary

In this conversation, Jon Stoddard interviews Brian Beers, the president of Prenlin Automotive Group, which operates Midas franchises. They discuss Brian's journey in the family business, the expansion of the franchise, the economics of running a Midas store, challenges faced in underperforming locations, the importance of operational efficiency, acquisition strategies, and future growth plans. Brian emphasizes the significance of people in the business and shares insights on how to successfully manage and grow a franchise. In this conversation, Jon Stoddard discusses various aspects of managing and growing a franchise business, including employee management, scaling operations, and the benefits of being part of a franchise system. He shares insights on private equity, family dynamics in business, and the challenges of acquiring struggling franchises. Stoddard emphasizes the importance of marketing strategies, particularly direct mail, and addresses the future of electric vehicle repairs in the automotive industry. He also touches on cultural integration during acquisitions and the potential for innovation in service offerings.

Takeaways

Brian Beers took over the family business and expanded it significantly.
The Midas franchise model allows for easy duplication of successful practices.
Effective communication and a strong team culture are crucial for success.
Acquisitions can lead to rapid growth if managed well.
Understanding the economics of a franchise is key to making informed decisions.
Underperforming locations often suffer from management issues and staffing shortages.
Operational efficiency can dramatically increase sales and profitability.
Building relationships within the franchise network is essential for growth.
Owner financing is a common strategy for acquiring new locations.
Hiring remote talent can significantly reduce operational costs. Scaling operations with remote employees is efficient.
Private equity can provide growth opportunities.
Family dynamics play a crucial role in business.
Franchise acquisitions require focus and dedication.
Speed to scale is a significant advantage in franchises.
A built-in community supports franchisees.
Franchisees can leverage marketing data for better ROI.
Electric vehicles present new challenges for repairs.
Cultural integration is essential in acquisitions.
Innovation in services can drive incremental growth.

 Watch the Interview:

Transcript

Jon Stoddard (00:00.214)
Welcome to the top &A entrepreneurs. This episode is brought to you by the Deal Flow System. If you like this episode, please subscribe down below. Today, my guest is Brian Beers. Brian is a entrepreneur podcast host of Business with Beers. And he's also the president of Prenlin Automotive Group, which owns, operates 24 Midas franchises. We're going to talk about that.

pros, cons of that. So welcome, Brian. Awesome. And it's now 29 as of today. So 29. Congratulations. You've been on LinkedIn. That was a no. You're right. OK, it's almost 30. It's almost actually 30. So I'll just wait till then. So I was going to ask you, like, how did you get into this? But I read your story that your family started it quite a few years ago and you took over president and you're on an acquisition tear. So

Tell me how you guys got into that yourself. mean, did you just go to them? He's man might as franchises your parents drag you or what? No, so I guess my my dad got into it in 1976. He got into it because his uncle or his cousin was in it up in Boston area in the early 70s or late 60s. So pretty early in the, you know, franchising world back then, completely different business model. But my dad was 22 years old.

in his, him and his dad, who was like a school teacher and a football coach. And they started with one location and just, you know, he was an entrepreneur and grew it to six, throughout Philadelphia area and, did it for 30 something years. And, know, it was a great, you know, great, great life for us and our family. And, I went to college and I studied business. came back 2010 and decided, you know, I was going to join the family business. And at that point, my dad,

Business wasn't doing too good. 08, 09, you know, it was rough for a lot of people and they were tired and they were thinking about selling the business and just holding on to the real estate and just kind of getting out of it. And so I come in, I breathe all this new life, new ideas. I go to all these conferences, I meet people, I learn all these new ideas because I knew nothing about business. I knew nothing about cars. I still don't know that much about cars, but I can. That's OK. It's not my job. And so I started learning these best practices from these guys around the country who became my friends and

Jon Stoddard (02:23.502)
started implementing the things and 2016, my brother who had joined the business decided we were going to start expanding. So we kind of went off on our own. We bought a couple of two stores, still ran everything as like one company, but you know, we separated ownership and then yeah, we started and then we bought another one, another two and it opened a couple and then we bought seven and then four and then five and then, you know, these some larger groups. And anyway, and a lot of it's been recent. We went from 12 to almost 30 now.

in like the last 16 months. So that's fantastic. So anyway, a lot of it is kind of like you got to really figure out, put the systems in place. But once we have it, it becomes what's nice about a franchise system, even being a franchisee is it's easy to then duplicate out what we did in Philadelphia into New Jersey and then do it again in this other market. So the franchise in place. But what is it that you do that allows the franchise?

Yeah, great question. you know, a lot of success, you know, we're in the people business. So, you know, we fix cars, but we're in the people business. So it's communicating, right? Like customer comes over the problem, you come in, you got a noise, whatever, we got to be able to understand what that is. And then make sure our technician is finding the right problem or solving the right problem. We're communicating. And so that's a lot of what we focus on is hiring really good people. And we try to create a culture that is of people that, you know, kind of aligned with our core values.

And that is fun. we're big into, we use Slack, which is like a tech, you know, communication tool between our stores. So guys throughout the day will post up, you know, sales or funny things they find in cars, like, like kittens and big balls of stuff out of like air filters and, you know, so we kind of have some fun throughout the day and we just try to keep the guys engaged. have competitions. We do have a trips incentive trips and, know, we just kind of bring energy and just, just.

you know, just trying to make it fun, I think. And so then we are able to energize, like we do these acquisitions and a lot of times we keep the same team in place and we can double the sales at the location with essentially the same group of people. And a lot of that is because we're just bringing ideas. We also invest in marketing and we have a couple other things I'd be happy to tell you about as well that are a little bit more specific. Yeah, let me get a little baseline for the economics of a Midas franchise. If I was to go to BizBizell and

Jon Stoddard (04:45.56)
Somewhere in Pennsylvania or Wisconsin and Midas is there. What is the kind of the average sale and profit of a Midas franchise that somebody wants their distress seller? Not that this is distress business, but you know, they want to sell. Yeah, so the volumes range, the average volume store does over a million dollars, right around a million dollars in revenue. The range though is, you know, the top quartile does, you know, probably two million. The bottom quartile does like

500,000. You know, for us, a store that's doing less than 700,000 ish is losing money. You know, based on a lot of it's because just the the the payroll support and all the admin costs and and so anyway, we've we've bought locations that are losing $10,000 a month. And you know, when you're bigger, we can absorb some of that as we get them going. But on average, you know, they should make 1010 percent.

the best locations could make 15. There's some that could make 20 like crazy numbers. A lot of it's the rent. You know, if you have really high rent and really high taxes or really cheap taxes and cheap rent, all plays a factor too, roughly, roughly a million dollars, roughly 10%. So you can make roughly a hundred grand a location if you get everything. That's including like a general manager running that or in that business unit. Yeah. Yeah. Someone running the day to day. If someone was an owner operator, you know, on that,

that unit, there'd probably be another 65, 70 grand that would be the owners if they were also the manager of the unit. they have a pretty tight range of salary for the owners? You know, 50,000 to 200,000 or is it just right? 175,000 or 125 or something for what the owners for what the owner operator? Yeah, for sure. If it's an owner.

operator like he's running the day like there's no manager. He's there five days a week or whatever. Yeah, he's probably making 100 grand. You know, something like that. And what are the franchise fees that you pay to Midas? Yeah, so we pay 10 10 % on an ongoing basis of sales. And half of that goes to, you know, them like to run their business and profit. The other half goes to a marketing fund that is then, you know, distributed across multiple layers, like part of it goes to a national fund for TV and stuff you'll see.

Jon Stoddard (07:08.599)
Some of it goes to website. Some of it goes to like digital marketing, SEO, all that. Just for bigger buys, better price on bigger buys. Yeah. And it's something we don't have to think about. It's kind of the benefit of being a franchisee is like marketing is totally done by somebody else. Like we'll vote on promotions. You know, we kind of vote on the direction and, and, know, what we want to see on a national basis for sure. but then we don't like they have the buying power, you know, there, there's a multimillion dollar budget that they can get much better deals on buys than.

You know, we would. Yeah. Do you only real estate or does the Midas on the real estate? Everybody remembers that that video about Ray Kroc and the McDonald's. not in the McDonald's. You're not in the fries business. You're in the real estate business. Yeah. So it's changed over the years. They own they owned a lot of it. They followed that model before. And then when they ran into some financial trouble years ago, like before I joined.

And so they sold off a ton of real estate into like a REIT to raise a bunch of capital. And so there's a kind of a combination where Midas directly owns some properties. This REIT owns some properties, but you know, it's not them. It's like this independent group. Some are third party landlords that Midas is a head lease with, and then they sublease it to us and sometimes mark it up. And then there's others that were direct with the landlord. And then there's some that we own directly.

So you could have any flavor that you want, but we try to buy as many as we can. own seven of the properties. Well, what kind of multiple does a Midas store do a million dollars with, let's say 10, 15 % EBITDA? Sure. So like you can buy them, we can buy them at, average. mean, if someone's on BizBuySell, it's going to be two and a half to three times earnings. So it really depends on what your role you're buying in it. if I was going to sell just one, like I'd say, all right, it makes a hundred grand.

I'd add back the manager salary. I had back in all the things, maybe it's 150. And then I say times three and it's worth 450. But that assumes that the buyer is also going to run the business and be the manager. Right? Cause you're doing an ad back for that salary. If I was buying it myself, like when I go to buy one, I'm looking at what's the profit to the owner with the manager in place and everything. And I'm going to pay off that number. Cause we're not going to run, I'm not going to run the store. Like I'm going to hire somebody. Right. Right. Right.

Jon Stoddard (09:32.065)
That's kind of our approach for you. Yeah, yeah, sure. And that's how we scale. I that's the scale of it. So so and then sometimes I can buy them for asset value, like a location that's losing money, a location is losing $10,000 a month. You know, we're not paying on a negative multiple. Yeah. So what's it worth? Company one one. Yeah, one fifty. Yeah, because it would cost us two hundred plus these days to if we had to outfit a new like a whole store with like lifts and tire equipment and racking and all the stuff.

Easily 180 to 200. And so if I can buy for 150 and I have $600,000 a sale and I got a team in place and I've got, you brand recognition and I can go in there and you know, do our thing. Some of those stores we can get. Yeah, we can get up pretty pretty quickly. We could double the sales in a couple months and some we can't something. What was going on with that store that was losing money? What was happening? So in a couple it's it's a couple different ones. It's all people, right? So it's.

one of the ones was, you know, it was just a carousel of managers of bad manager after bad manager. And so it hurt the reputation. And there was hard to it's hard to hire and retain good technicians. If there's this bad manager, you know, who's constantly changing every three months. And so it's just so then, you know, we go in and even for us, took three, three different people in the store until we found a guy that fit with the team. And is now like, you know, we're getting that store profitable.

There's other ones that are purely just understaffed like they're they're really good locations and we bought this location It had like two employees in it three employees something like that and it should have it's a ratio but it should have like six six two so at a manager in a tech and so like And they're working six days a week or whatever and there's only so many cars they can process right and then the half the lights are out in the building so it's really dark inside and stingy and so we go in there and we fix the lights and we

paint the inside and we hire four more people and you know, magically, you know, there's a clay sales and profits appear. Yeah, it's sometimes like the simplest thing. We think it's like this big. We come up with these big crazy plans, but it's just like we just need nice people in the store who say yes to customers. And then we run our process, which is like we say yes, we look at the car, we inspect it, we present the findings, we offer payment plans and you know, we get the sales. So yeah, I was just rewatching some of the hotel hell with rent, the chef Ramsey and every hotel that goes,

Jon Stoddard (11:53.965)
It's always the ego of the person, individual. Just fixing that. What's the kind of economics of how many bays, average bays and how many cars you have to turn over to get the cash flow? Like in a restaurant, you goes, hey man, we got to bring in this many people and they can usually sit around for an hour. And the average ticket is this. Yeah, automotive is funny. Cause it's like, I mean, our average ticket's like 250 to 300, something in that range. And so, you know, if we can get

Yeah, we do 80 to 100 cars a week. You know, we're hitting the numbers. You know, we want to hit our goals. Our goal is 25 grand a week per store, which would be 100 cars at 250. We hit, you know, some of my stores do well above that. doing, you know, 40 grand a week. Other stores are doing 10. But, you know, in terms of what they can process, I mean, it's amazing. I mean, I've visited stores that, you know, I know the owners of and they're doing like $100,000 a week in sales under the same base.

right? $75,000 a week at the same six bays. So what's the best process going on there? Yeah, so it's teamwork. It's like they just have more people but then they're working together in team so like two guys will pull a car and you know, they'll both work together to take the tires off like they they work in more a team based with a high sense of urgency. Yeah, I watched the guys at discount tire do that. mean, same thing. It's all team but they it's the same square footage, right? It's the same lifts. It's the same like air guns.

Maybe they can do a couple things faster and they have multiple tire changers and multiple. It's a speed game. And especially the tire business, that's, know, whoever's the fastest wins, right? And discount tire, you know, you can get in and out and whatever 45 minutes of water. That's all they do. That's all they do. And they're really good at it. Us like, you know, we do brakes and suspension, dyag and exhaust and yeah, And oil changes. And so that's one of the downfalls, I think, to, you know, Midas is like, as a brand we've

trying to be like everything to everyone where it's like, there's quick oil changes. we can do full service tire this and engine, you know, I've guys that can do engines and transmissions and, then we want to sell tires and we have good pricing on it. like, and it's, you know, at discounts, like success is like, they're, they're so narrowed in there on one thing and they're really good at it. And so, you know, it's one of the things I'm, know, I'm on the committees and I'm all this stuff and Midas too, is we're really trying to get focused in on, you know, being having like that target niche and then being really good at it. So, yeah.

Jon Stoddard (14:20.715)
Well, how do you purchase? If you see a couple Midas stores, I'm sure they come up with Biz by Sell quite frequently. How do you purchase like what's your cap stack look like at percent down, seller financing, owner financing? So I've never bought one off Biz by Sell. The beauty of being in a franchise system is that everything's for sale and none of it's public. you know, I create relationships. So in your network of Midas, they're like, hey,

So and so from even I once out. That's happened. But more often than not, I approach them. I create relationships, you know, with the franchise system, you have the contact information of everybody, you know what their sales are. So I'll just call them up and tell them, listen, hey, we're looking to expand in the next six to 12 months. If you're interested in selling your stores, you know, please make me the first call. I've done that multiple times. That's how we've acquired almost every one of our stores, to be honest. And so that's like

If someone wants to grow within a franchise system, it's very easy because you have the book, you have the contact information, you know what their sales are. You know if they're older, I mean all these guys are older. I knew like retirement was on the horizon. And then my goal is just to establish a relationship with them and to be known, which is easy to be liked. I get liked because I help them with things. like, you know, I'll say, hey, here's you know, compensation plan we've been working with techs or here's like this advertising plan we've been done.

And I would share information. You're a podcast. Yeah. a podcast. little bit of celebrity authority. Yeah. That's right. Yep. And I've hosted things like this from Midas corporate. during COVID, I hosted a Zoom thing with like 75 franchisees just to get on and talk about best practices. I'd already interview a top performing franchisee who was like a friend of mine. And I would ask him a series of questions. It's like you're asking me of like, how'd you get into it? And how do you manage your guys? And how do you do this? And how do you do that?

then you become like this figure of status and because now you're known nationwide, they all trust you because they see you. And then they like you because you seem like a good person and reputation gets around if you screw people over or you're not a good operator or you cheat your employees. God, people talk, everyone would know that. So once you can get into a system and you start establishing yourself and you can take advantage of

Jon Stoddard (16:43.885)
the infrastructure that's already in place. You go to conferences, you participate in committees, you get together, regional guys, maybe you host a Zoom call like I've done. Then, you you start calling these guys up and, you know, some deals, they say, yeah, I've been waiting for you to call me and we want to do it. Other ones, they say, hey, you know, I'm not ready now, but like my daughter's going off to college in like a year and I just want to get that. I want her in and then I'll be ready. I'll talk to you. And then sometimes they sell, you know, hell-freezed over. I'd still keep the one location and then they sell them all.

And like, it's funny. so yeah, and then so that was your kind of first question, how we find them. So I create relationships. Now we're looking outside of the area of Philadelphia, New Jersey is kind of my region. And so, you know, we're looking at other markets and all like, I'll just get the big list and I'll just go through and say, All right, I need I need like five locations to get started. Like, because I put a district manager in place, right? I can't go one location in Texas or something. I need five. And so

I can pretty easily then go through the whole list and say, all right, who's got three and two or who's got five. But if it's all if one franchise group like myself owns all the ones in, you know, Ohio, like I'm not even going look at Ohio because there's no chance that I can buy in his locations. Right. Because it's it's all entangled in another large group. And so then I would just call them up and or email them and say, hey, I'm looking to, you know, expand across the country. And, you know, if you have any interest, you know, we should talk and say, yeah. So if you find, let's say you find five

ready to sell, motivated seller in Texas. What's the capital stack look like? How do you? Yep. So the way I've we've acquired almost all these since is owner financing. And so I've never I've only gone to the bank once. How much owner financing? Almost every almost every deal. wow. We paid a couple cash like, you know, if it's like hundred fifty grand or one hundred and twenty grand, we just pay those in cash. But losing ten thousand dollars a month, it's like, here's. Yeah. Yeah. Even those I've owner financed.

I've owned a says too. But yeah, so I mean, the call goes like this, I've done it 100 times, where it's we'll, we'll just tell them this is how we buy it, right? So we'll take your PNL, we'll add back, you know, all your owner expenses to get with the, you know, seller discretionary earnings, or just what cash flow to the owner, whatever you want to call it. And then we'll, we'll take that number, we multiply it by let's say, like two and a half to three times. And then from there, we structure it, we structure it based on like three numbers, which is down payment, monthly payment, and number of months. And so I find

Jon Stoddard (19:08.509)
single store, it's making 100 grand. I'll say, all right, it's let's say 250. And I would then put say, Hey, we'll give you I don't know, I just made I just make up numbers, but like $30,000 down, let's say, right. So 250. And then I got minus 30. So I got 220. And then I'll say, Hey, we'll and we'll pay you $3,000 a month for the next whatever 75 months. And so someone would take that up, they say 75 times three is whatever one

225 plus the 30. So in total, I'm going to pay them inclusive of principal and interest, 255,000. And so then, for how many years? Whatever number, whatever I choose. I just pick a number, right? I've done 13 years. I've done eight years. I've done, you know, four years. I've done, you know, random numbers like 88 months. because I'm going based off of the three numbers, the down payment, the monthly payment, and the number of months.

And then we back later, we back into the principal and the interest rates and all that stuff for the loans. But what's interesting is if you start it that way, then that's how they negotiate back. And then they'll say, well, I want like, you know, 50 grand down or 100 grand down or, you know, I want $4000 a month or I only want $2000 a month, but I want it over 10 years like. But but then we negotiate around those three numbers, which is money out of my pocket, money into their pocket. Yeah. And then later we get into

Well, all right, we agree on that in terms we set the interest rate by setting the interest rate. You can back into like what the principal should be. And then you can you structure the note. What you what interest rate do you look at? We make up numbers. So like six, eight, three, six. Yeah. I think six and half is my highest. think two point three nine one seven. Like we just make up a number that gets the payment to what we need it to be. You know, and our goal is that the interest rate is low as possible, which makes more principal.

And then of the principle, we want as much of that into asset value. Sure, because you appreciate your right out of the cash flow of the business. So yeah. But then we can depreciate the assets versus if it's goodwill, we can't appreciate it. Yeah. Right. It's amortized over 10 years. And so the seller wants the opposite. So you got to meet somewhere in the middle. But but yeah, we normally are in the like market market rate interest. But it doesn't matter as much because we've already determined what the we are determined what the payment is. So the interest is just kind of like a

Jon Stoddard (21:33.249)
more for an accounting purpose than anything else. Yeah, they can deduct it. But it simplifies the conversation rather than upfront negotiating the value, the down payment, the and the interest rate. So you're not going for any financing aside from seller financing outside. Yeah. And so does the franchise offer that and say, hey, we want you to buy this. They offer what financing like we want you to buy these franchises because they're not performing well. Yeah.

They've they've brought me deals. Sure. They don't finance it, but like they they'll they hear somebody wants to sell and it's in our territory. Even if it's not, if it's a larger group, they bring us deals because we're the easy button. Like they know we can get the deals done. They know we're good people. They know we take care of our employees and we grow sales. And like, you know, that's that's like, you know, once you become the easy button, it's you get more work. You get more deals to do as long as you can execute. What do you?

want to keep doing you've already added four since the last time you updated your LinkedIn. So where's the goal? What's the goal like 50? So you're having fun? Yeah, we're trying to figure that out now the you know, we want to grow within our markets. So if there's any opportunities that are in our current footprint, right within Philadelphia, New Jersey, or in this market called Allentown, which is now our north, we will buy it because we don't we already have district managers like I five district managers that

oversee roughly six have the operations people have the operations I could easily each one of those could easily take on another store right so that's five more that's 35 stores and then if we had to fill in you know then you get into this little hairy this gray area where if you have too many stores for a district manager it starts they start to you know get spread thin and they can't spend as much time like doing more the hands-on the work to help develop people and they spend more time just like putting out fires and dealing with like low value stuff and so there's other

major brands like Monroe, believe, like the single district manager might have 15 to 20 stores. And we've interviewed these guys and they tell us like they spend all day in the car driving between all these crazy locations. And they they don't actually like it like real work done to see progress because they're just like, just dealing with all the crap. And so then so it's kind of like this stair step growth thing where if we get to say we get to 35 here in Philly, whatever, then we say we want to add another

Jon Stoddard (23:51.383)
three or another five, it's like we're kind of then teetering on how we'll probably need to bring another district manager in, right? And pay him whatever 80 80 grand, whatever they get paid. And then, but then it's like, well, now we need to grow more, right? Now we got this extra capacity, we need to now add not just five more, we need to add seven more. Right? And then it kind of continues down that path. So that's, that's, that's one thing that we're like, any dealer comes along, that's in our area, we're gonna do.

That sense. And that seems like a like a domino effect that you gotta make decisions on. Yep. And then if it's like, like I mentioned, if we can go into a market and buy five or five to seven within a three month timeframe, like pretty quick, they don't have to be the same day. But if it's like a three and a four or one and a four or whatever it is, we would we would do that. Yeah. And these are new companies under a holding company, right?

Yeah, yeah, I mean, we're all the MICE brand. I mean, we have our own Prentland Automotive Group, and then we have separate entities. like legally, they're owned by different, you know, EINs. But we operate them all as like one, you know, one company. And all the operations payroll goes into just one office? Yeah, we have one headquartered office. We actually only have two people physically here. mean, you're just barely bigger than Berkshire Hathaway. That's right.

And we've got six people in the Philippines that work for us full time. There are, you know, our employees, remote employees. What do they do? They do HR. They do accounts payable. They do accounts receivable. They do, you know, accounting stuff. saved quite a bit of stuff. Yeah. So you can hire extremely talented, you know, reliable, trustworthy person for roughly seven dollars an hour.

That's like an all in costs like 1200 bucks a month for a full time employee. And then there's no like payroll taxes, no health insurance. We give them like paid time off and stuff and they get holidays off. they're, you there are employees. but yeah, they're, great. And so then we, and it's easy to scale. Cause then if we got to like five more locations for us, it's AP it's bit, we have a lot of bill pay, right? Cause we buy a lot of parts. And so, yeah, we just, we just bring on another person for, you know, 1100 hours, 1200 hours, whatever it is a month.

Jon Stoddard (26:12.621)
And then that's our incremental cost on the on the office side, versus if we are in a physical office, at a certain point, we'd physically outgrow the office, right? And then people are gonna have to work remote, or we're gonna need a bigger office space. And at the end of the day, if people can work remote here in the US, why can't they do it in Philippines for exactly a of programmers are curious if you were to buy one store or one minus, and it's doing a million 10 % a bit of

What's it doing to, and the multiples maybe one or two, something like that. Now you've got almost 30, let's say around $30 million in revenue. What's it doing to the multiple, you know, for the bigger fish out there, like private equity going, Hey, we love it. You're doing pretty I've, I've heard, like in the seven range, seven, eight, you know, I haven't, really gone down that route yet.

Even for us, a lot of it's been, you know, recent, you know, obviously recent growth, but, you know, their conversations we're going to have in the future is, is that could be one way to, we could grow as we, we, we partner up and then we go and, know, got some money behind us to go and instead of doing, yeah, you're too young to sell out. Right now, but you can do plot. They had this thing called a platform, right? So they're like, we sell a portion of it and then we have this backing and cash and then we can use that cash instead of like doing this bootstrapped growth.

you we can go to the other guys who have 10 locations or 15 locations and just rate them a check or the private equity company can write them a check, right? That we're buying them at three or four, but now because it's part of this like bigger company, now it's worth seven. Right. That's, that's the model. I don't know if we would do it, but that's what I've been pitched. I think you're pretty accurate on that. Now you work with your brother still. Yeah. And he's older, younger. Yeah. He's a four years older than me. Four years older.

And what does he do for the business? he's like the, you know, I'm one of more outgoing person. I have a podcast, you know, on this. He's, he's in the office, you know, he's the, like he's the numbers guy, the tech guy, you know, he kind of, oversees her office, and a lot of the operations and daily like tasks. And he's very good with, that a lot of our technology, like we've built a number of things, custom software, custom reporting, things that we can pull data out of our sales and trends and identify patterns and stuff that

Jon Stoddard (28:33.261)
Other guys don't do because they, you know, they'd have to build it out. And if you had to hire somebody, it would cost it would cost hundreds of thousands. So yeah. And he does it for fun. So, that's cool. Do you guys have a board of directors? Is that your family? No, it's me and Chris. It's just you and Chris. Are your parents still alive? Yeah, yeah, yeah. Yeah. We had bought them out a couple of years ago. Yeah. And you're like, son, you have quadruples the size of our business. Yeah, yeah.

They're obviously proud and they still work. My dad like his hands on like he loves now. He's always loved like the hands on stuff. So he like even today he's up at one of our stores like helping to renovate it. And so like we're redoing the racking. We're painting. We're like it's one of the new stores. We're like, you know, he loves like working with his hands. He's very creative and he's very he's very like good. And so, you know, sometimes it's just simple things of rerunning these lines or building these shelving or whatever these things that just make the store like a little bit more efficient for the guys.

he loves that stuff. So that's, so anyway, spends half his time in Florida. I'll come back here for two weeks or something. And then he'll like, want to do a project. We'll renovate a waiting room or like redo one of these stores. And then he'll go back down to Florida or go golfing and, that's, that's his hobby then. Yeah. Do you pay him? Does he pay? So have you purchased any kind of, acquisitions outside of franchise? I'm what I'm trying to understand is like,

What you see as pro cons of buying a franchise, not buying a franchise. Yeah, I mean, I said no, we've bought two other franchises that have both failed mainly because of, you know, I tried to view as like diversity, like, I'm diversifying my income, these different things. But at the end of the day, I I couldn't focus on them because I was so busy. I thought I could just like buy this thing. I put a manager in place and it would run just as good as our mighty shops.

And it didn't because I, you know, I couldn't dedicate the time that was necessary to get a brand new, both of them are brand new, like green territories, green locations up and going, which is a lot different to them by an existing thing that has cashflow systems and teams in place. And we just got to like, you know, massage it right versus like building from zero on day one. And so I just didn't have the time, the energy to focus. And so both of those just became a distraction and. You know, we, you know, moved on.

Jon Stoddard (30:53.709)
So, but yeah, some of the some of the benefits I'd say is I mean, speed to scale like is the big one. Like if if if you want to grow and you want to make money like you can you can grow really fast within a franchise system, you know, and you don't need a ton of money to get started because you're buying now you're buying, you know, four or five at a time. Yeah. And I'll buy one at a time. I just I'm working on this one now just to buy one. But like and also we're willing to deal with like all the

the BS stuff that goes through some of these purchases. Like this one I'm buying, taken me three years. It's back and forth with this dude to buy a single store. And it's cost me more than buy the seven or the 10 at a time. Yeah. is that? Lots of stuff. But even that, like I'm willing to deal with that versus like the private equity guy or the big guy, they don't want, right? They want the nice, clean, big purchase. Like I'm willing to get there and do the dirty work and deal with all the crap.

We take over these stores, the guys are getting paid cash and we got to get them on payroll and then they don't want to be on payroll. So then we got to get new employees. And there's all these little things as you go and you buy up these, especially the individual operators, they're doing more things. They're a little off the books. We're in a bigger companies. We can't do that. We don't want to do that. yeah, so speed to scales, I think like a big one. have a built-in community is the other great benefit. Day one, you join, you're now part of this

country club where everybody knows he can, you know, has the ability to know each other. I could call up any franchise in the country and he would probably talk to me about his business. He'd probably tell me what his payroll is and how he's doing his cost of goods and like what's working, what's not working. And so, you know, the, value of that is like turning decades into days of, knowledge and experience. And for me, that's, that's huge. You know, I think I'd rather have the friends and the support system to help me grow.

you faster versus if I was on my own. Yeah. You would say that 10 % off the top is definitely worth it. There's no regrets in that checkout. Yeah. I mean, it's like it really, yes. So I have no regrets because it's like if I was beer's tire and auto, there would be no way I would be at the size I was today. A for a couple of reasons. One's real estate. Like, you know, franchises just like McDonald's, they want to control this real estate. And for us, we need

Jon Stoddard (33:18.965)
a certain size store, 4000 square foot bigger, we got to be on a major road. We don't want to be like by a Taco Bell or KFC or, you know, something like that. And there's just there's just there's not that many that exist. Right. So it'd be really hard for us to get real estate control when all the other major brands already own it if I was an independent operator. Right. So then I would need to go out and like buy a parcel and probably develop a property and probably spend two to three million dollars. That's like, that's risky. Right. So like, you know, real estate controls, it's already controlled. So like

you're in there, right? And that's for us. If I was a subway franchisee and I could go into any 1200 square feet in any strip mall that made sense, right? It's a little bit different. But for me, I want to focus on operations. For the marketing, I have an opinion of marketing. I have things, but I don't want to deal with all that. I want to focus on how do we drive more sales? How do we increase our leads? How do we increase our conversion rate? How do we increase our process? How do we hire better people? How do we retain them? How do we create culture?

All the things are running the business. That's what I enjoy. so when you're in a franchise, it's like 90 % of your job. And like the 10 % is the marketing, right? Because someone, there's a whole nother team. That's all they do. Do you spend, I'm just curious, does the individual store spend on marketing or does that come from the market development funds from Midas Corp.? Well, so there's two parts. pay the 10%, half goes in. You could say 5 % goes to marketing, that you get a direct benefit. The other five goes to the support system, which you get some benefit from.

We do put up an additional, I think it's one and a quarter percent of our sales. We get some match on that for Midas, some like they match 30 % of whatever we put in. And then I control 100 % of that budget. And so I've got, you know, whatever it is, $400, $500,000 a year in this budget that I then can choose how we spend it. And for me, it's direct mail. Direct mail works best for Midas versus SEO or... Yeah, so Midas spends a lot of their, they spend a lot of their money on SEO and all that.

So they're already covering that basis. So I view it as 80 % or 85 % of our customers come from the zip code that we live in and like one more. So it's very local to a store. So like I can have locations 10 minutes apart and they don't cannibalize each other at all because it's extremely local. You have to use their marketing approved pieces. Yeah, they're pieces. I found actually I found the suppliers in every door, direct mail routes. It's mail rate, mail route based. But then there's all this data that I can do to see

Jon Stoddard (35:44.397)
who do we mail? This is like the custom, the custom stuff. Who do we mail to? How much we spend? And then I can pull our point of sale data to see what customers came in. And then I can match the addresses. And then I know how many customers came in, what my ROI was, how many of them were new, how many of them were returning. I can then determine, all right, we're getting a 10 to one or a 15 to one or a 20 to one on the spend, specifically to the route that it was mailed to. $15 Yeah. Did you say 15 to one or 20 to one?

Some of them. Yeah. Some of the route I can do it. I can do it based on each route because I, I know the route. know the addresses. know all that stuff. How many do you usually, usually send out at a time? Five, 5,000 a month. Like it costs 1500 bucks and it can generate, let's say 10 to one. it can generate 15,000 in sales from that. Right. So, but anyways, so some of that is like also what's, you know, helped our, some of our growth is, know, we have this data behind us. We figure this stuff out and then we go, you know, we go heavier on it.

So while other guys are spreading their all their money around all these different places, I'm like all in on this thing because I know that I know that it works for me at least. Yeah. 15 to one return. Keep doing it. Yeah, that's right. Yeah. Can you keep doing it or can you only do it once a month? I can do as often as I want. We actually do it. This company that does it, they do. We send out weekly, so we'll do 5000 mailers and then they get mailed out like 1200 a week. And so then that's how they so you can then spread spread it out versus like we used to do drops like, you know, 10 a year or whatever.

But then it would, we'd have this huge boost in business, but then it would be like tail off and it was like a drug, like when's the next drop coming? And then we drop and then boom, we hit it. then, so, now, but then, but then there's also lost opportunity too. Cause like, if all these people are calling the stores can only do so much versus now this like, you know, this trickle out seems to be, easier on that. So, yeah, I got it. You can only take so many customers. can't do a rush. What do you do? You know, let's say a Midas is here in Tucson.

and it was a high demographic concentrated area for 10, 15 years, but the population moved out. mean, how do you analyze a business? That's a question. So mine, mean, so, you know, mine are, I have drastically different locations. I have locations in the city where people get shot, like on a regular basis. have a store. Pay them extra for hazardous duty. they, no. And the store does really well too. It's one of the best stores.

Jon Stoddard (38:13.357)
These people like, you know, and low income areas have cars that don't get new cars. They have used cars and they get them fixed because they have to. Right. And so some of our lower, you know, demo income demographic areas do do pretty well. We have location. I have a location by Villanova, which, you know, if you listen to basketball fan, you know, like it's a super high income area. We're around the corner from a Maserati dealership and like. But even that we get we get some new cars. Right. But then we get the like daughter's car and the like.

You know the other ones, even that traffic's lower like we don't see as many cars, but generally we you know the average is probably a little bit higher because they're you more expensive cars and more expensive repairs. What's the cost like there do brakes in that high crime rate and the same? It's the same. It's the same markup. It's just a question of the parts like you drive a Volvo. Everything just costs more than if you drive a Honda and so a lot of it is just.

You know, our pricing is a cost markup basis. And so a lot of times it's just they cost more. And so we mark them up more. Yeah. What's, is there any, are you seeing any trends happening with fixing, you know, electric cars, Tesla, any changes there? not currently. I mean, I, I think that we are like, Hey, the media makes you think. that a fear down the road? especially when, Biden just signed a bill for $369 billion to

subsidize electric cars? Yeah. So I've heard, you know, I read a lot about this. First of all, that there's a lot of like criticism on that, that it made it too easy to get the credit and that these these a lot of cars that were still gas powered or, you know, slightly hybrid, like they have a bigger battery or able to get that credit. And it's not like full electric, like the purists want the bigger issue. There's a couple of big issues. Number one is like the U.S. doesn't have the infrastructure to support more than a certain percentage of

cars being electric, like the grid can't support it. I think I've read it's up to 10 % or something like that of you of cars could be electric. And the grids, want to watch a state go into a suicide is California. If everybody goes to electric, and there's no power to support it, there's no power or Texas, you these rolling blackouts, right last summer because an electric costs going crazy. And so then you can't charge your car and then you can't go to work because you can't charge your car, or you can't afford to.

Jon Stoddard (40:32.909)
Right. Like and so what happened when needs to happen is they need they need they need increase the the you know the capacity to grid. And the only the most efficient way they can do that is through nuclear. And and and so then they this small. Yeah. The micro nuclear things they need like 50 of them or something to get to like you know it's like one in every state or more. And so then you talk about the years that it would take to develop these things all the people in the communities who aren't going to want this. I'm not going to planet. Right.

So all the all these infrastructure changes to make it actual impactful. You know, yeah, the the Biden bill is great. And like, yeah, they're all going to make all these new cars. And but they're only going to sell like 100 of them, you know, a year like the four lightnings, like 100 of them or whatever it is. And maybe it's more than that. But the bigger problem is this infrastructure. And then it gets to like do I don't know. I mean, in the city, right, we're in the city of Philadelphia, like everyone parks in the street and the side streets and stuff like where the hell they get to charge the cars like.

they gonna install chargers to telephone poles that people are gonna like break and try to steal and like, are they gonna put them in at Target or Walmart and then you got to like go to Walmart to like charge your car like, I don't don't I don't buy that. So anyway, long like that's I'm a bear on that. But then in terms of our business, listen, they they, know, 60 % of our business is the wheel well, so brakes, tires, steering suspension, which every electric car has all those things. If anything, they're probably have more issues because they're gonna have

a million different sensors, all those sensors are going to get reset, they got to get recalibrated. Even in today's car, you've got lane departure warning, you've got the variable speed control, you've got the backup cameras, there's all these sensors and LIDAR and all this shit. so those need to get recalibrated if you get something replaced, if you're in an accident. so we've got these demos of this equipment that's needed. Some of it's inexpensive. It's like a...

thousand dollar thing, other machinery, it's like 50 grand for us to buy the equipment to recalibrate these things. And then we get to train our guy. 50,000 around 30 stores? Yes. so but then think to the customer, you know, it's going to be 500 bucks to reset this sensor. And it's going to take us like an hour to do it with this guy who's like extremely trained on this machine, right? And so but that's what it's going to be like. Otherwise, you know, you're like steering wheel.

Jon Stoddard (42:49.589)
like lane departure, things not going to work. And that's liability for us too. And it's obviously the danger to the customer. And so think what's going to happen is there's going to be this trend, these cars get more technical, they're going to need higher cost equipment for us to repair it. Labor rates are going to go up. I we're going to pay our technicians even a lot more money. And there's going be plenty of guys who don't want to invest. so they're going to shut down. And there's going be further consolidation of the bigger players, the bigger brands and the bigger operators within the brands.

is what's going to happen. And for us, it actually might become more profitable because if I charge you $500 to recalibrate your thing, I have no cost of goods into that. And it's just the cost of the labor to the tech. Right. And you charge $15, $20 an hour and you're boom. He's got to be paid way more than that. But yes, he'd probably be $40 or $50 an hour. yes, at that point- 10X markup. So- Yep. Something like that. So-

And then you hear stories of these batteries being replaced. And like, you know, there's this thing on Twitter the other day was there, you know, $34,000 to replace a battery in a Chevy Vol. The sources, the rare minerals come from people that we're not friends with. Yep. Yep. In China and stuff. then and then but then there's these guys who can replace cells in batteries so they can diagnose like what what part of the battery is bad. And there's like these individual cells and they're able to like fix the existing battery at a fraction of the cost of replacing new.

And so there's all these like new services and I don't, my guys don't know how to do that or anything, but there's these new services that I think, you know, we'll adapt and learn and, know, we'll figure it out and, you know, I'm not evolution. got a question and I don't have a lot of time yet. So I want to ask you about what's the hardest thing to, simulate a new, Midas is it the culture differences or, where do you bring the culture in if there's, you know, they're

It's not friendly. What happens? So if I buy a new location and kind of a, let's say unfriendly culture to, what your culture is, because you bring your culture and they had a culture with the previous owner. Yep. we, you know, listen, we give everybody a chance to get on board. You know, we, this is what we're going to do. You're going to get on Slack. You know, this is like, you're going to follow this process, right? And a lot of us, and we didn't talk about this at all, but it's like, we're beginning to consumer financing.

Jon Stoddard (45:13.005)
So auto repair is expensive. have a number of programs that we can help people from good credit to no credit, pay us nothing today and get anywhere from three months to six months to 12 months of interest repayments. So a credit card for good people, good credit, and there's like a no credit needed program for people with bad credit. so we're really good at those. We're one of the best in the country at it. But you got to train it. Guys have to understand this is how these programs work. This is how they help the customers. This is how they help us.

So we train that we train how to answer the phones the way we train the process. And at end of the day, we'll give them all the training and then, Hey, you know, we can tell pretty quickly. Like, are they on board? Are excited? Is this fun? Or are they like, this is bullshit. Why am I doing this? Like a blah, blah, blah, blah, blah. And at that point, I mean, we, you know, we can identify pretty quickly, you know, with 30 locations, we have assistant managers, a lot of stores and we want to promote from within. So then we would just, you know, have somebody in the wings waiting, getting trained and, you know, we would make that move if,

We felt it of the- everybody's, do you get a lot of applications? It varies. mean, we can, you know, for the manager side, you know, we could take someone who has not, who, who's like a non-automotive person, as long as they can like, they're mechanically like, you know, brain, like they get it. And we can, we can train them. Cause for us, the manager's role is communication. So they got to be a good communicator. They're going to be able to talk to you. They got to be able to talk to the techs, the parts suppliers, right? They got to like, be a problem solver. But they don't fix the cars.

for the techs, obviously their job is to fix the cars. They need to be very technical experience, have the tools, that kind of thing. Yeah. Is there a path for a new hire to assist a manager, manager to possibly owning a friend or running a franchise? was thinking about how discount tire does it, you know, they'll. Yes. Within. Yeah. Yeah. So for discount tire, yeah, they, it's a profit sharing plan. so they manage, you know, they hire them as a tech or whatever, and they can work their way up to a store manager. And then eventually they, get paid as a

percentage of the profits of the store. And so they're, they're, feel like an owner. don't have equity, but they feel like an owner. They act like it too, man. When we see, when I go over there, it's just like, Hey man, this guy likes working here. Yep. That's great. Yep. And he's probably making a lot of money too. He should, should like it. And he's got a good job, right? So yeah, I mean, it's, know, every franchise he operates differently. There are some guys that have plans that are, that are very similar to that when it's more of a profit sharing plan.

Jon Stoddard (47:40.023)
You know, we do it more at a high level of based off of, you know, more, some high level things. There's a lot of our costs are fixed, like our, you know, our rent is what it is, right? Different things are what they are. And so we can kind of back into some similar performance metrics, but, make it at a higher level. makes sense. But yeah, there's guys. mean, my, there was a guy who worked for my dad, who was a manager who became, became a franchisee and, know, resigned and went and bought his own store. And, know, my, my dad,

they supported him and there was actually two of them, two of those guys in the, there's the Philly market too. Like, and so that happens. Yeah. It's really up to the individual. Yeah. Have you back to that turnaround? Do you like turnarounds if they're losing money or do you swear off turnarounds or is it just too much energy? No, I've, you know, we, we, we'll, we'll buy them. We, know, all day long if we have to, and you know, it's just matter of

You know, it says me putting pressure on my team that like, you know, we can't just sit there and wait for it to get better. Like if it's a lot of work to. Yeah, yeah, sometimes or sometimes you just get like a good manager and a good tech and you just paint the place and like and that we're there every day because a lot of these stores like the phones are ringing like the cars are coming in and it's really up to us of are we following the same process in the same car every single day? It's consistent execution. If we can do that with, you know, I think every single store

could do, you know, let's say, you know, the average is like a million or 1.1 or whatever, you know, we're right around there. But my best stores do 2 million, right? Like every store could get to 2 million. It's it's not the same four walls, right? It's the same marketing traffic pricing. Traffic's a little different. Some of them are some but but they could build it right. Each one of them could could build it if they if we get the right people in the right places doing the right things. And so you curious, can you add

new products or services. So, you know, I will you look at some of these Starbucks franchise and go, we just made this mocha mocha mocha with goat's milk. Yeah, we've done some, you can package things a little bit differently, right? Maybe we could package a group of services together. You know, maybe we can get into we sell some multi year alignment. So you can buy a one time a one time alignment for a certain price or a three year alignment, you know, for that location for certain price.

Jon Stoddard (50:01.831)
And so then they pay a one-time thing and for the next three years they come back and there's no cost. Things like that. Our main thing is more innovation around process, I'd say, like this financing thing. We're the best in the country at it. And so we have a specific way that we offer it, that we talk about it, that we train it. Everybody has the same product, but I got stores doing 50 % of their business through these products. And the system average might be 7 % or something like that.

So, it's a lot of it's incremental growth. so innovation for us is more on process than it is like, you know, We're just kind of- excellence, man. That's awesome. Brian, I want to thank you so much for spending time on the Top &A Entrepreneurs Podcast. So this is Brian Beers. He's got a podcast, Business with Beers. He's president of Prendland Automotive Group where it's acquired 29 locations. Yep. Almost 30. Yeah. Awesome.

Thank you so much for spending time with me today. Awesome. Well, thanks for having me. It's been fun. Take care. Cheers.