O, Pioneers!

The companies that helped define franchising success.
Magazine Contributor
5 min read

This story appears in the October 1998 issue of Entrepreneur. Subscribe »

Like the wild west, franchising has a hearty share of pioneers: entrepreneurial companies that have broken ground in their industries, claimed impressive territories, lassoed lots of consumers and, most important, survived the onslaught of competitors.

But don't mistake these companies for old-timers content to sit back and reminisce about the early days of franchising. These pioneers are constantly seeking innovative ways to improve their systems and meet consumer demand as they face the new millennium.

As a result of their steadfastness, these franchises have become household names not only among consumers but also with prospective franchisees seeking a tried-and-true trail to success. To introduce you to these grandfathers of franchising, we've talked to Taco Time International and AAMCO Transmissions, two companies that have been franchising since 1961 and 1963, respectively.

Time To Grow

A lot has changed since TacoTime International Inc.'s founder, Ron Fraedrick, mortgaged his home in 1960 to come up with the $5,000 he needed to launch the Eugene, Oregon-based franchise. "Nobody really knew what franchising was then," says head of international development John Shickich of TacoTime's early days. "It was a bunch of entrepreneurs feeling their way through a new way of growing a concept."

Today, TacoTime's original franchise agreements, short enough to be written on a napkin, have expanded to numerous pages that rest in the hands of approximately 330 franchisees. But even within a more complicated regulatory framework, the essence of the franchising model has remained intact, says Shickich. "The core element of [taking] a perfected concept and teaching people how to do it still works." In 1997, it worked to the tune of $110 million in gross sales.

Over the years, technology has brought about some of the biggest changes. "We try to innovate through technology to lower our costs and reduce the risk of foodborne illness," says Shickich. "One of the things we're noticing is every time we make a significant technological change, it helps reduce costs and improve sales."

When TacoTime started out, its primary means of marketing was through individual stores. Today, the franchisor's marketing has expanded to include co-op advertising with TacoTime's corporate stores and franchise outlets. "There's a synergy there," says Shickich. "You get a lot more bang for your buck."

Shickich believes all of franchising's rules and regulations may actually provide a bonus to franchisors. "It's very positive in that [the law] requires you to disclose key information about who you are and what you do," he says. "It's good for franchisors to [review that information] regularly and look at the business they're in and what they're doing."

The wave of TacoTime's future? Expanding beyond America's borders. Says Shickich, "It's a great benefit to go overseas, but it brings a host of challenges," challenges the company is meeting head-on in such locations as Asia, the Middle East, Europe and Canada.

Driven To Succeed

In 1959, when most auto repair shops were still offering a broad variety of services, Anthony A. Martino opened a shop that specialized in automatic transmissions, dubbing it AAMCO Transmissions (an acronym for his name). The shop's first year in business proved to be an overwhelming success, and the Bala Cynwyd, Pennsylvania, company began franchising in 1962. Some 18 million transmissions later, "[The automotive services industry is] very specialized," says AAMCO's vice president of franchise development Jack Wilki. "Brake, fast-tune and muffler specialists work in each other's favor because consumers are now used to going to specialty franchises for service."

In the 1960s, says Wilki, investors were buying AAMCO franchises because they offered a proven system and training that would provide extensive support. The resulting benefit for today's approximately 710 AAMCO franchisees? "Our name recognition in America today is 93 percent," says Wilki. "We've spent probably half a billion dollars on TV and radio advertising alone"--much of it as pioneers in the use of celebrity spokespeople and athletes.

Even with AAMCO's estimated systemwide sales of $450 million in 1997, it takes more than a big name to bring customers back year after year. "Training is incredibly important," says Wilki. "Over the years, we've learned what works and what doesn't and how best to teach it to franchisees and their staffs."

Perhaps the biggest key to AAMCO's franchising success, however, is building relationships between the franchisor and its franchisees. "Relationships were always important," says Wilki, "but today we're realizing that when a franchisee comes into the system, he brings a lot to the party."

Technology also rates high in AAMCO's overall scheme, allowing the franchisor to communicate more efficiently with franchisees and provide valuable support to AAMCO dealers throughout the chain. And AAMCO's evolution continues, says Wilki. "I don't think we've explored all the options," he says. "We're always trying to better our personal best

Contact Sources

AAMCO Transmissions Inc., (800) 292-8500, http://www.aamco.com

TacoTime, 3880 W. 11th Ave., Eugene, OR 97402, (800) 547-8907

Listing compiled by Liza Potter


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