Shop Profile: Five Star Collision

In the late 1990s, Ken Hanley saw untapped opportunities in the collision repair industry. The business was highly fragmented, and a spate of consolidations as well as changes in direct repair relationships had created favorable conditions for growth — but only for someone with the know-how to turn those conditions to their advantage.
Hanley was willing to gamble that he was one of those people. With a degree in finance and economics and eight years of experience in investment banking, he certainly had the business credentials. And, like many others in the industry, he also had a personal history in auto body repair.
His father, an entrepreneur and 30-year collision repair veteran, had recently passed away, leaving Hanley and his two brothers — John, an IT professional, and Rich, a police officer — with the difficult decision of taking over the business or selling it. “My brothers and I all went to college, and [my father] didn’t want us turning wrenches for a living. But we were always peripherally around the business and involved in it. We used to sweep the shop floors when we were kids,” says Ken Hanley. “When our father passed away, it was a traumatic event and we banded together. We felt we should continue the tradition [of the shop]. We wanted to invest back in it.”
At the time there was only one shop — Five Star Collision in San Antonio, Texas. It had a loyal following and a solid reputation, but the Hanleys wanted to take it to the next level. “We took it from being an old-school handwritten estimating shop to one with all the latest technology,” he says. “We also pursued direct repair relationships and were successful in doing so.”
The shop was a “great success story,” says Hanley, so they decided to expand — but not right away. “We were pensive about expanding with insurance-owned shops and Caliber having an interest in companies,” he says. “We were not ready to go up against the insurance companies — [they] had a clear advantage.”
In 2003, however, Texas passed House Bill 1131, which prohibited insurers from holding or acquiring ownership interest in a collision repair shop — effectively limiting Allstate from opening any more Sterling body shops. So the Hanleys seized their opportunity to expand in the market.
They started researching shops in Houston, where both John and Ken lived. What they look for in a shop, says Ken, is “a place that operates with integrity and focuses on customer service.” From the start they planned to keep the owners involved to ensure continuity and stability while helping the business grow. “We came in and really looked hard at the market, and the shops we acquired were 30 years in existence and had great reputations,” he explains.
By 2005 they had acquired two shops: Expert Collision and Foreign Auto Body, a high-line shop certified for Mercedes-Benz and Aston Martin repairs. Both were medium sized — 15,000 sq. ft. — and were run by a strong independent operator with a good reputation. Another factor in their decision was the business allocation. They looked for businesses with a good mix of quality repair relationships and good working relationships with insurance companies. Today the three brothers manage the shops collaboratively — the youngest, Rich, mostly operating the San Antonio shop, and Ken and John co-managing the shops in Houston.
The newest shop, Foreign Auto Body, is currently undergoing renovation. When complete, it will boast a new 3,300-sq.-ft. office with plasma TVs. Hanley envisions it as a place where customers feel comfortable relaxing with a cup of coffee while waiting for their vehicles. “The facility itself is great, but I think we’ll have something that’s unique,” Hanley says. “There’s nothing like it in Houston.”
They’re also adding a new area to the shop floor focusing exclusively on aluminum repairs. “The technology and materials used in cars these days, especially in the last eight or 10 years, requires some specialized tools and training to use them,” Hanley says.
He plans to stay ahead of the curve, unlike some of his competitors. “This business has been slow to get on board with some of the critical drivers that are necessary in any business, such as technology and continuing education,” he says. You need tools and training, he maintains, or you’re setting yourself up for bigger problems. The auto body technicians at all three facilities receive training from the Inter-Industry Conference On Auto Collision Repair (I-CAR) and Mercedes-Benz and other manufacturers,  as well as certification from the National Institute for Automotive Service Excellence (ASE).
For now all three shops will retain their original names, but the Hanleys are still searching for a way to re-brand the shops so customers know they’re related — a move that would become even more important if they decided to expand to a network of shops. If they do, there’s an obvious choice for a name: Hanley’s. They can start by renaming the three existing shops Hanley’s Five Star Collision, Hanley’s Expert Collision and Hanley’s Foreign Auto Body. What a way to carry on their father’s legacy.