By Jeff Sanford
Toronto, Ontario -- October 23, 2015 -- The consolidation of the North American collision repair network continues with big news out of Charlotte, North Carolina. Auto industry conglomerate Driven Brands will acquire Kansas-based CARSTAR Auto Body Repair Experts, a company better known here as CARSTAR US. This deal does not involve CARSTAR Automotive Canada in any way. The two companies are completely separate entities.
“There is no change to the ownership of CARSTAR in Canada and we are eagerly watching to see what their organization can bring to the overall CARSTAR brand on a global basis,” says Michael Macaluso, President of CARSTAR Automotive Canada. “We are very excited about Driven Brand's expertise in automotive franchising and their commitment to work with CARSTAR on a larger scale. This is the fourth ownership group in the history of CARSTAR US, and in our opinion, the most strategic.”
The American version of the CARSTAR banner is being bought up by the company that also owns the MAACO banner. This is going to be one big MSO.
Driven Brands, a company itself owned by Roark Capital, bills itself as the leading franchise automotive company in the US.
Driven Brands has announced it will create a new division, Paint & Collision, that will combine MAACO and CARSTAR into a single division (along with some other brands). The companies will continue to operate as separate brands.
The new Paint & Collision division will be led by the current president of MAACO Franchising, Jose R. Costa. “…the division's new structure will allow the business to streamline services and share expertise to improve the customer experience and profitability for franchisees,” according to the press release. CARSTAR will retain its current management team led by its CEO, David Byers.
"We will benefit from Driven Brands and the Roark Capital team's extensive franchising knowledge across a number of retail categories including automotive, retail services and restaurants," says David Byers, CEO of CARSTAR Auto Body Repair Experts. "And, there are many opportunities for improving operational efficiencies, customer engagement and national branding as part of their portfolio. This move also will bring new capital resources to CARSTAR to continue to drive our growth."
Jonathan Fitzpatrick, President and CEO of Driven Brands, was quoted as saying that, "CARSTAR [is] an iconic brand that is well-recognized and respected by leading insurance companies…it brings us additional expertise in the collision repair business. We are excited about the strength this addition brings to the Driven Brands family creating an unrivaled North American powerhouse in automotive franchising.”
Costa has served as president of MAACO for the last three years and will apply his heightened expertise to lead the Paint & Collision business segment. He will blend “best practices and create opportunities to leverage purchasing power across the system,” according to the press release.
"We are energized by the addition of CARSTAR to the Driven Brands portfolio, and know it will play an important part in the newly created Paint & Collision business segment," said Costa. His title will now be Group President of Paint & Collision, Driven Brands.
"I look forward to working with the new members of our franchisee family and to bringing technological developments and competitive pricing to all of our customers," added Costa.
Driven Brands manages a family of automotive companies including MAACO, Meineke Car Care Centers, 1-800 Radiator, Merlin 200,000 Mile Shops, Pro Oil Change, Econo Lube & Tune, AutoQual, Aero-Colour and Drive N Style. Incorporating CARSTAR into the Driven Brands portfolio, the brands will now generate annual system revenues of approximately $1 billion through 2,000 locations in 48 states and two countries. Note that although the deal does not include CARSTAR Automotive Canada, Driven Brands already owns the MAACO banner in this country, as well as other automotive franchise operations.
CARSTAR US enjoyed a record year in 2014, with growth in same stores sales of 8.3 percent. This outpaced the overall collision repair industry average by more than four percent. Over the first half of 2015 system-wide sales hit $386 million. This number is on track to outpace its performance in 2014. In addition CARSTAR US is expanding its insurance relationships by securing programs with several top insurance carriers.
CARSTAR represents the 11th acquisition for Driven Brands since 2013. The company has expanded their footprint to more than 2,000 franchise locations in the US. Adding CARSTAR to the Driven Brands portfolio is part of the company's overall strategy to grow through acquisition. CARSTAR is one of the largest multi-shop networks of independently owned collision repair facilities in the U.S., operating in more than 240 locations in 30 states.
Combined, all of Driven Brands’ businesses generate more than $1 billion a year in system sales.
Roark Capital is the owner of Driven Brands. The company focuses on consumer and business service companies, specializing in franchised and multi-unit business models in the retail, restaurant, consumer and business services sectors. Since its inception, Roark has acquired 47 franchise/multi-unit brands, which have generated $19 billion in annual system revenues from 21,000 locations in 50 states and 75 countries. Roark's current brands include Anytime Fitness, Arby's, Atkins Nutritionals, Batteries Plus Bulbs, Carl Jr.'s, Corner Bakery, Driven Brands, FOCUS Brands (the owner of Auntie Anne's Pretzels, Carvel Ice Cream, Cinnabon, McAlister's Deli, Moe's Southwest Grill, and Schlotzsky's), Hardee's, Il Fornaio, Massage Envy, Miller's Ale House, Money Mailer, Naf Naf Grill, Pet Valu, Pet Supermarket, Primrose Schools, Waxing the City, and Wingstop.
Watch Monday for an exclusive interview with Jose Costa, head of Driven Brands' new Collision & Paint division!