Making Maaco Magic
Entrepreneur Anthony Martino takes a shine to franchising
Anthony Martino is that enviable franchisor who seems to have the magic touch when it comes to building franchises from the ground up. He's done it twice in the automotive field and then turned his marketing skills to a children's concept just to prove his magic doesn't always require grease under the fingernails.
Anthony Martino was giving a talk about franchising at a university when someone asked if his company, Maaco, had a franchisee relations department. Martino's lips twisted into a slight smirk before he answered the question: "That's franchising. That's every department's job."
Ahh, if only every franchisor thought that way.
Franchisees are important to Martino-as both people and executors of his brand. But he knows having so many relationships isn't easy.
"Tony sees the irony in what we do," says David Lapps, vice president of operations for the company. Franchisees may be entrepreneurs, but they're also following someone else's system. "We respect them as individual business people, but we manage them," Lapps explains. It's a dichotomy that requires synergy.
Franchising for all its successes really does make strange bedfellows. But, Martino, who founded Aamco Transmissions before selling it and turning his automotive touch to Maaco Collision Repair & Auto Painting, says the secret to good relationships with your franchisees is really no secret: "They've got to be making money."
After all, no one quits corporate America to go into franchising so they can make the parent company rich.
Martino, who was the International Franchise Association's Entrepreneur of the Year in 1991, has taken three companies from the ground up and made them national brands. In addition to Aamco and Maaco, Martino launched The Goddard School, a concept a friend brought to him to grow and then left once Martino grew it too big.
"Tony's one of the smartest guys I've met in franchising," says Jerry Wilkerson, president of Franchise Recruiters and a colleague of Martino's through IFA. Martino's "formidable genius" comes not so much from formal schooling-Martino says he dropped out of high school in the 11th grade-but from his street moxie, Wilkerson points out.
Franchising used to be described as a parent-child relationship-an unflattering description of the franchisee role. But as one of the pioneering franchisors, Martino could be referred to as patriarchal. He feels a responsibility toward the people who have invested in his ideas.
When asked by prospective franchisors what it takes to become a great franchisor, franchise consultant Michael Seid tells the story about his experience with Maaco after his cousin and wife were killed in an auto accident.
Seid had recommended the franchise to his cousin, and Alan Klein and his wife Debbie became owner/operators of two Maaco units. When they died suddenly, Seid says he rushed back from a business trip in Australia to see what he could do to help, since the couple's two sons were "college kids."
"(Some) franchisors would have assessed the damage and then expected the family to take care of it," he says. Martino, however, immediately sent in a team of senior people to run the business until the sons and executor could decide what to do. Not having to make a decision-much less think about the business-during a tragedy is not a luxury every franchisee or their family is given.
"That's why I think Maaco walks on water," Seid says, adding Martino runs "a class franchise."
Not many people who know Anthony Martino would question his work ethic. At 73, he's the first one in the office in the morning and the last one to shut off the lights at night. "This is not work for him," says Lapp. "Tony's not a vacation guy. He's hands-on, he wants to be in the fray."
While three of Martino's children who joined him in the business have already retired, the patriarch is going strong. Don't expect Martino to retire anytime soon.
Nor should you expect him to become a consultant even though people constantly seek his advice. "I'm never tempted to be a consultant, but I will give advice," he says, "but most won't take it."
To illustrate his point, he tells of the time a businessman asked him what to do because a lot of customers were asking for their money back. "I told him, 'give them their money back,'" Martino says. "He didn't believe me."
Another reason Martino won't retire any time soon is: "I love to achieve," he says. "I'm not in it for the money any more. I have lots of ideas...lots of ideas sent to me (from people who want help franchising their concepts). I'd like to build Maaco to a billion-dollar business."
Getting revved up
Martino grew up in Philadelphia's inner city, at "a time when people didn't have time to not get along," he says. He worked all through his childhood at odd jobs such as returning soda bottles for cash. An uncle who ran an auto repair shop gave Martino a job cleaning parts and sweeping the floor. When he showed an aptitude for fixing cars, he was promoted to mechanic.
One of the best decisions he made was deciding to specialize in automatic transmissions in January 1959. "The older mechanics didn't want anything to do with it," he says. In those days, a mechanic repaired, not replaced parts. "I was making money on the automatic transmissions and breaking even on the others (muffler and brake services)," he says.
When he increased the number of lifts in his auto shop to six, he started advertising. In 1958, he made $10,000 a year before taxes. The next year after advertising his automatic transmission services, he made $59,000, he says.
The chain-which he named using his initials attached to "co" for company-grew as his friends who were getting out of the armed services at the time wanted to open shops. "When they had an owner, they did well; with a manager, not so well," he says. "It seemed like I was swapping dollars-some centers were good, some not so."
The insight made him check out franchising.
Martino was smart enough to know that just because he had one set of skills valued in the automotive field, didn't mean he had the management skills to build the business. He found a partner and together they grew Aamco to 450 units.
As the business became bigger so did the headaches, and as many companies find, having two people in charge is tough. He also had a fight on his hands because "there were a lot of independents that didn't want Aamco in their market."
He sold his share of the business and for four years he tried his hand at a variety of things, including a recording studio. "I was 33, had money, but there's not enough money in the world for a 33-year-old to retire on," he says.
A friend had a business called Paint-a-rama, and Martino decided to give auto painting a try. He switched his initials around-which unfortunately bumped him from the front of the Yellow Pages-and started Maaco.
Martino's mechanic's skills helped him build two automotive businesses, but it's his marketing skills that grew them.
"Tony's a marketing genius," says Eileen Moran, vice president of advertising for Maaco's inhouse agency. "He sees things differently...things (others) don't see."
Martino didn't come up with the tagline that made his company a household name-"uh oh, better get Maaco"-but he knew how to get it air time. "When I heard it, it knocked me off my chair. I knew it was right," he says.
Martino had brought the advertising inhouse so staff could buy air time for all the markets. He started getting frustrated when he saw the bills for the air time, but never saw his ads on television. "I saw this guy on TV selling carpets-Big Marty sells carpets cheaper. I called him up and said 'I know your ads. I spend more money (on advertising) and I don't know my ads,'" Martino says.
Big Marty told him that ad space is like empty seats on airlines, you wait until the plane is about to fly and then you bargain for the remaining seats. "I went down to the ad department and said I want you to buy 40 spots (with the same amount of money they had been spending on 25 spots) and they quit," he says.
He gave the task to his assistant, Moran, and she excelled at it.
The key is to buy audience, not programs. "Others will buy prime time, we look at numbers," she says.
With a limited ad budget, they've produced commercials with big names at the time, including Charo and Burt Reynolds.
Had this happened in another company, Moran says, she may not have been given the chance to switch from secretary to media buyer. But perhaps because Martino himself never had formal training, he was interested in people who could do the job, as opposed to people who had the credentials to do the job.
Martino doesn't micro-manage, but he's always available.
"He thinks out loud and takes that thought full circle," Moran says. "And, when it comes back full circle, it's solid."
Lapps, who joined the company in 1974, describes Martino as being "very definite in what he likes and what he doesn't like." But, "that doesn't mean you have to surrender to his idea, you have to consider it," he adds.
Between 600,000 and 650,000 cars a year roll through Maaco, Lapps says. The core business is auto painting, focusing on 6- to 9-year-old cars with faded paint or dents and rust. "We're the 800-pound gorilla in that market," Lapps says.
Perhaps part of Martino's "marketing genius" is staying ahead of the trend. Just like he spotted automatic transmissions as the business to be in back in the early '60s, he's found a niche as a suburban chain that attracts insured drivers who would rather pay for minor accident repairs out of their own pockets than alert their insurance carrier. High deductibles coupled with stiff at-fault penalties by insurance companies are making late-model drivers reconsider their options-one of which is to go to an inexpensive paint shop that also is known for quality bodywork.
"I'm trying to slide the brand over to 'cosmollison' (a combination of cosmetic and collision),'" he says. The trick is to guarantee a "seamless repair" so no one will know it's been in an accident. To that end, he "accidentally" founded another concept-a used car lot that sells the newly repaired and painted cars. "I backed into used cars," he says.
While ideas seem to roar into real-life concepts, Maaco is his first love. He wants to take the company which has sales of around $400 million today to a $1 billion business.
His business philosophy is to give the end-user incredible value. And, at the same time ensure franchisees are making money. "Franchisees are buying an income, if they're aking money, you've done the job you're suppose to do," he says.
Anthony Martino manages by walking around and "noodling ideas." While he's hands-on, he values the input from his team at Maaco. Because of his success with three franchises, he's often approached by prospective franchisors seeking advice. If the questions they're interested in getting answers to include: How do I pick franchisees? or How do I make sure I'm not getting cheated? Martino claims, "They shouldn't go into franchising."