How to start a carwash: Other profit centers; JD Byrider
The name “Hoffman’s” is well known throughout upstate New York. Paired with their Jiffy Lube oil change franchises, Hoffman’s has staked their reputation on efficient and quality service.
Now, the Hoffman crew is branching out but staying in the car industry – opening the first J.D. Byrider franchise in the state. They’re hoping they can compete the big-time dealers, much in the same way the big-time dealers have opted to compete with them.
“We were looking for something to continue to grow our company with,” Ron Slone, president of Hoffman Development Corporation said. “We still wanted to provide opportunities for both our company and our people.”
Slone explains the company had spent a few years looking into different businesses that would fit this mold. However, until they discovered the J.D. Byrider franchise they hadn’t had much luck.
But the process in order to run a J.D. Byrider franchise did not happen overnight. Slone and Tom Hoffman Jr., CEO of Hoffman Development spent time learning about the business from J.D. Byrider representatives. They toured other franchises which gave them to opportunity to learn from people who have been in a business mostly unknown to Hoffman.
“That was terrific. They were very honest with us,” Slone explained. “They told us the good, the bad and the ugly. But through the process we became even more excited.”
Slone explains that the franchise agreement required by J.D. Byrider is “stringent,” and because Hoffman is doing business in New York there was some additional red tape to bypass. On top of the capital and credit Hoffman Development had to put up to become a franchisee, $1 million and $5 million respectively, they had to get licensed like a bank is licensed, a process which took close to a year and required background checks.
Another step involved, of course, getting a location. Their J.D. Byrider location is housed in a 20,000-square-foot building on 3.2 acres on Central Ave. in Colonie, a suburb of Albany. Central Ave. has several other car dealerships on the strip, including a DeNooyer dealership, which is who they bought the building from. The building required some renovations and upgrades but since it was designed as a dealership, it was mostly outfitted for their purposes.
So, aside from having to get licensed like a bank, the process was almost business-as-usual for Hoffman Development Corp. They had previous experience as franchisees with their Jiffy Lubes and have bought and renovated buildings. However, Slone nor Hoffman, admittedly, had “never sold car.”
“People look at us like we have two heads,” Slone said with a half-smile. “The good thing is we realized we don’t know what we’re doing.”
Because of their inexperience Slone and Hoffman did what most good presidents and CEO’s might do – hire an expert. They hired a general manager, service manager and office manager – the “three key people,” according to Slone. From there they hired three technicians, three sales people and brought in a “get-ready” guy from one of the carwashes. The get-ready guy washes and details the cars before they hit the lot, after they have new tires and brakes installed and any other work deemed necessary during the inspection.
Of course, J.D. Byrider wants to help each of their franchises be successful, so on top of Slone and Hoffman getting the best talent they could find to fill those key positions, they have the support of J.D. Byrider to help strengthen their knowledge base in an industry in which they are not experts.
“The franchise community works very, very closely with each other,” Slone explained.
The J.D. Byrider system is set up as such that franchise managers in other parts of the country can dial into individual operations and assist with any technical issues and help walk them through the system. Slone asked more experienced owners to look at the deals his franchise had made so far to make sure they are what he should be doing. Slone lauded the J.D. Byrider proprietary software which measures the risk associated with the deals. Everything is considered: the amount paid for the vehicle, the vehicle itself and its condition, the buyer and the terms of the loan. These factors are then calculated by the system to determine the risk.
While J.D. Byrider supplies the software to help determine these risks, it is up to Slone and Hoffman to actually purchase the vehicles. J.D. Byrider does have a short list of vehicles that should not be purchased because of extensive problems. They also require the purchases to be within a certain model year and mileage.
“That’s the fun part of the job,” Slone said. “I love it.”
Slone goes to auctions every Wednesday and buys vehicles, which even with the software, carries some risk. Slone admits he has made a “couple” of mistakes with his purchases. They never buy cars with body damage nor do they buy cars that people have smoked in. They will take cars in on trade but they are almost always sold to a wholesaler or scrapped.
Because of the variety of vehicles there are no parts in the J.D. Byrider garage. Instead, depending on what they get in stock, they source the parts from local retail stores.
The site is not completely separate from their carwash business, however. One of the rooms near their 12 service bays in their massive center will be revamped as their “carwash control center.” The room will be equipped with monitors in order for Slone and Hoffman to have an eye on the carwashes while they are at J.D. Byrider.
Whoever is watching those cameras might even see one of the cars bought at J.D. Byrider.
Slone explains that included with every purchase are services from Hoffman’s other centers. Customers are given not only free, unlimited, carwashes for a year but also $10 oil changes at their Jiffy Lubes for the entire time they own the car.
“The history [of J.D. Byrider] is pretty good,” Slone explained.
Slone is hoping the endeavor to be a positive chapter in the history and add to the Hoffman legacy.