Driven Brands' Outlook After Acquiring ABRA Franchise Shops
Driven Brands’ collision vertical continued its growth recently, when it acquired ABRA Auto Body Repair of America’s franchise locations.
In acquiring ABRA’s 55 franchise locations, Driven Brands strengthened its size and scale at a time when consolidation persists throughout much of the collision repair industry.
The transaction, which excludes the more than 300 corporately owned ABRA facilities, left Driven Brands with a slight shakeup of its executive staff, yet poised to strengthen its positioning with insurers, auto manufacturers, and vendor partners, according to Michael Macaluso, the president of Driven’s collision vertical.
Shortly after the acquisition was announced internally on Oct. 1, FenderBender spoke with Dean Fisher, a longtime CARSTAR executive who will now assume the position of president of CARSTAR. Fisher addressed what the future holds for Driven Brands’ growing collision vertical and the industry at large.
How exactly did this acquisition come about?
Driven Brands is always looking to add franchise locations to their vertical, especially in the automotive space. … When ABRA purchased Caliber, we [had] enough relationships with the other consolidators in the marketplace to understand franchising is not their forte—the franchising, they weren’t really working to build that out. [ABRA] grew to about 34 franchises in their organization and then sat there for a while. They then continued to build to 55 stores over time and Caliber elected to stop at that point.
Bottom line is, Caliber and Driven Brands coordinated a meeting and had a discussion around their franchise vertical.
The acquired franchise locations will keep the ABRA name, right?
Yes. They come in as a wholly-owned subsidiary within Driven Brands, under the ABRA name.
Do you envision some overlap with elements like the EDGE Platform, or certain processes?
Driven Brands has a shared-service model, so, some things will remain priority processes to CARSTAR, and some things will be in our shared platform. For instance, human resources is a shared platform. IT is a shared platform. Finance is a shared platform.
There will be things that will be specific, or priority to the specific brand. The EDGE Performance platform, right now, is specific to CARSTAR. ABRA, Operational Excellence used to be their playbook, so that will be a process for them. Now, under the Driven Brands family of business, we share verticals and information. And we love being part of Driven Brands because, in a shared-service model, we power each other up; we gain strength from those shared opportunities between brands. There’s a lot of purchasing power in that brand.
What has the reaction been like internally?
The reaction has been positive. We have learned with the Driven Brands family of business to embrace growth and change. The name is appropriate, right? We like to drive hard, we like to run fast, and we like to grow. And CARSTAR is that way; we’re getting ready to announce our 700th store this year, which means we’re adding at a pace of almost 100 stores a year right now.
And we compete against consolidators who are growing. So we actually embrace this. … [We are] the Ace and the True Value Hardware of the collision repair industry. We’re the guys that are going to take the independents that may be in jeopardy against Home Depot and Lowes and we’re going to put them under a consolidated umbrella and provide protection for them.
Is it for everybody? Probably not. Are we a savior? No, we’re not. There’s some independents that will probably go out of business in this industry. … We do enough research, have enough analytics, so we know who’s in trouble, because of the technology of the automobile and the demands on cash, frankly, and the cost to invest in repairing the vehicle.
So where does that sit? Mergers and acquisitions.
What do you think other companies don’t understand about the value of running franchise shops?
Franchising is hard work. The hard work of franchising is the independence of the franchise owner. I always say, our greatest asset is the independent owner. And, our greatest nemesis is the independent owner. It’s hard work to manage that process. You coach, counsel, and consult.
The work is in helping independents understand what’s good for them, and how we partner. And, for them, to give feedback. We embrace their feedback. Performance groups—our 20 Groups—are powerful advocates for our franchise organizations, because we learn from them and they learn from us.
In this industry, think about it: The consolidators were probably five years ahead of us in moving toward insurance contracts. We built all the things that a consolidator has, to allow an independent to operate in that process—it being an independent store, under a brand protocol, looking like a consolidated process to the insurer.
The hard part is helping independents understand that they’ll need to embrace [insurance performance-based agreements]. You can say, “I’m just going to be DRPs,” or “I’m going to be certified,” and the OEs are going to force them into that. I think the independent needs to recognize that insurers will always be in play. … You don’t know who’s going to consolidate on the insurance side and how big that’s going to get.
Can we expect more of these types of acquisitions coming from Driven Brands?
Well, we’re Driven Brands; you can always expect more from us. That’s the way I’d say it.