System heats up
Owner radiates with good franchisees
A person doesn't need to know about auto parts to become a 1-800 Radiator franchisee, according to the franchisor's chief executive, Mike Rippey. And Rippey should know – he didn't know anything about auto parts before he bought the San Francisco company 15 years ago.
Today 1-800 Radiator has roughly $200 million in system sales, rings up about one out of every five radiators sold in the auto aftermarket industry and has almost sold out of franchise territories. The company is considering expanding into other products so it can continue to grow.
Mike Rippey’s company, 1-800 Radiator, didn’t take off until it began to franchise.
The franchisor grew modestly for 11 years after Rippey bought the now-25-year-old company from its original owner.
The real growth didn't come until Rippey decided to try franchising. In 2004, 1-800 Radiator had 33 locations and did about $60 million a year in sales. It had about 6 percent of the $1 billion market for aftermarket radiators. The company tried franchising as an experiment, to determine if franchised operations could equal company-owned stores in quality.
The verdict? "It turned out a lot better," Rippey said. "We started out with three locations and they killed our company stores. They grew faster and bigger. The service was better, the customers were happier."
The concept is simple: It sells radiators (and a few other parts, like air conditioning parts or fans) wholesale to mechanics in a particular market. A mechanic working on a car that needs a new radiator calls 1-800 Radiator, and the local franchise delivers the part within a couple of hours.
1-800 Radiator is succeeding by squeezing through a small opening in the auto aftermarket industry. Radiators are a commonly repaired item and are as varied as the number of cars on the road. Yet most parts dealers carry only the fastest-selling items because radiators are too big to store.
The 700 types of radiators a typical unit carries would fill up an entire Auto Zone, Rippey said. The radiators are also priced right – $100 to $150 – to make it worth delivering them.
The simplicity of the concept has helped the franchisor go from 33 units in 2004 to 235 today in the U.S. – with seven locations in Canada. The company places one store in a market, and has only 15 markets remaining in the U.S. – seven of which are sold.
It's not easy," Rippey said. "You have to be proactive in going out, talking to these guys."
In the Minneapolis area, that means talking to people at 2,500 repair shops. It's Ray Robbins' job to call on most of those shops regularly. Robbins owns it with his wife, Angela, a former auto mechanic, who wasn't excited about other franchise possibilities.
Robbins said. "This is the only one she gave half a second to. She knew the auto part of it, and we have a background in sales, so it was a good fit."