It’s been nearly a year since Franchise Direct published its report on the automotive industry. After assessing the FDDs of 30 franchises, we found the automotive aftermarket thriving in the wake of the crisis in Detroit.
Those looking for a glimpse into how that franchise market is holding up should check out this recent video interview that CNBC did with Ken Walker, CEO of Driven Brands, owners of Maaco, Meineke and many, many other automotive franchises. Speaking live from Charlotte, NC, Ken touches on many topical subjects, including the state of both the economy and the auto franchise sector.
Mr Walker says the biggest challenge for his businesses is “finding credit capabilities.” Driven Brands franchises, like so many other small businesses, are struggling to find financial assistance from banks and lenders.
He provides a stark view of the funding landscape: “In a typical year,” Ken says, “I’ll open 70 stores between the brands and about 60 of those will be SBA-financed. This year, I think we had about four.”
The US economic crisis has been good for the automotive market because it’s coincided with problems in Detroit. Ken does say that he finds the level of unemployment worrying, saying that if there’s a 5% drop in employment, that means a 5% drop in people driving to work. All in all though, he admits his companies have thrived as Ford and GM have suffered.
“The candid truth is it helps us. We took a second step and said if there’s gonna be additional closings… we said we’ll make lemonade out of lemons and went after those folks... We think we’ll have 50 of them before it’s all over with.” Interestingly, it is not only macroeconomic factors that determine the profits of Driven Brands. Ken says that bad weather in particular can mean big business. And anyone doubting the profitability of the franchise industry should take his following comment on board:
“The last three weeks have been the best in the company’s history,” Ken said.