From the August 1999 issue of Entrepreneur

"Uh oh...better get Maaco!" Now there's a tag line we all remember, and therein lies part of the value of this car-painting franchise, which was established in 1972 by Anthony Martino.

To this day, Martino remains the sole shareholder of King of Prussia, Pennsylvania-based Maaco Enterprises Inc., which had gross revenues of more than $60 million last year. Make no mistake about it, this is a family affair-- a fact emphasized when Mark Martino, Anthony's son, took the reins as president in January 1996.

Maaco is looking for front-line operators. In fact, Martino believes the best franchisee is one who's an "aggressive follower." Accordingly, the best franchisees in the system routinely provide tours of their facilities and press the flesh with everyone who comes through the door.

Maaco has determined that its customers use discretionary income to buy its products and services, which establishes Maaco's competition as pretty much all retail vendors. The franchise competes on this large a scale through a specifically designed program of low-price advertising, scripted sales pitches and point-of-sale materials that up-sell the service. As Mark Martino says, "If a customer wants a $199 paint job, we'll give them a $199 paint job." But, truth be told, after hearing about all that Maaco has to offer, very few of them opt for just the advertised special.

Also adding to the customers' ticket price is the fact that many Maaco locations provide collision repairs (the full name of the franchise you purchase is Maaco Auto Painting and Bodyworks Center). Still, auto painting remains the core of the business for at least one good reason--at the franchisee level, the margins for replacement parts are rather dismal. As one franchisee puts it, "The profit is in the paint." Painting seems to make money at all levels, as Maaco offers for sale most of the goodies franchisees need to operate their businesses. One related caution: When deriving your own pro forma income statement for this opportunity, don't base your cost of goods sold purely on paint costs.

Maaco franchisees are required to pour money into consumer advertising programs--approximately $850 per week depending on the costs in your market. Maaco's in-house advertising agency takes responsibility for creating, placing and coordinating your advertising in all media formats. Thanks to this solidarity, franchisees receive extensive access to TV advertising, which has been a proven benefit for this chain.

A suitable location for a Maaco Auto Painting and Bodyworks Center requires a 7,000- to 10,000-square-foot building with a secure parking lot. The site should be in proximity to a well-established neighborhood and should have 100,000 garaged cars in a 15-mile radius. The initial investment is $324,500 (which includes the $30,000 franchise fee). Because the franchise now has 550 locations and has been successfully franchising for 27 years, you should have little difficulty financing this expense through outside sources, assuming you yourself qualify. The four-week training at Maaco headquarters seems very comprehensive--the opening support includes three weeks of on-site assistance, and the system offers franchisees easy access to further help.


Todd D. Maddocks is a franchise attorney and small-business consultant. You can reach him at TMaddocks@aol.com.

Contact Source

Maaco Enterprises Inc., (800) 296-2226, http://www.maaco.com