Established franchisee in Shrewsbury, MA draws on ROI’s knowledge, expertise, and contacts
“It’s not easy to walk away from a successful business you’ve built over many, many years; a team you have grown; and a very loyal customer base that has come to rely on you,” said Philip DiBlasi, former owner of Meineke and Shrewsbury Auto Inspections Inc., located approximately 40 miles west of Boston. “But turning it over to a buyer that cares about the reputation we had developed and the way we did business definitely helped ease the transition.”
Philip DiBlasi went into the auto repair business in 1988, just four years removed from Northeastern University’s College of Engineering. Building the then-muffler parts franchise from scratch, he gained a solid reputation for fairness and integrity in Shrewsbury and its surrounding communities.
“For over 30 years, I was committed to providing exceptional automotive services to the Shrewsbury area,” recalled DiBlasi, who sold his business in 2023. “Through this experience, I developed not only automotive repair skills, but business acumen and the ability to provide excellence in customer service. As important, I was able to assist one of my employees become Meineke owners themselves.”
Meineke’s Company History Dates to Early 1970s
Meineke Discount Muffler Shops, Inc. was founded in 1971 in San Antonio, TX by serial entrepreneur Sam Meineke. At the time, the only other muffler company in operation was MidasÒ and Sam felt that he could readily compete in this segment of the automotive repair market. The following year, in 1972, he hired Harold Nedell, a former operations manager with AAMCOÒ Transmissions, and began franchising the Meineke business concept. In 2003, Meineke changed its name to Meineke Car Care Centers, Inc. when it began offering full-service auto repairs.
Since its founding, Meineke has received numerous business and consumer accolades, including inclusion on Entrepreneur magazine’s annual Franchise 500® list as well as securing the #1 ranking as the publication’s top automotive repair and maintenance provider. In addition, Newsweek magazine named Meineke as having one of the best customer loyalty programs in the country and the World Franchising Network named Meineke one of its “50 Top Franchises for Veterans.”
Solid Reputation & Business Structure Attract Buyers
After many years developing his franchise into a robust, almost recession-proof operation, DiBlasi began running the business in a passive capacity with his time limited to weekly calls with key staff to ensure smooth execution.
A few years ago, DiBlasi began thinking about retirement and selected Massachusetts-based ROI Advisors to counsel him on maximizing the value of the Meineke and Shrewsbury Auto Inspections Inc. businesses and ultimately brokering the sale.
“Philip took the time to develop a really great, sound company which allowed him to reside in Florida part of the year ,” said ROI Advisors President Denis Mezheritskiy, who along with ROI Business Broker Don Buehler, handled the transaction. “He created a solid business structure with a very competent and collegial internal team. This allowed him to step back from running things day-to-day, something that can be very attractive to a prospective buyer.”
ROI Advisors’ Knowledge & Resources Accelerate Business Sale According to Mezheritskiy, there are more than a few moving parts that come into play when selling a franchise. In such instances, he suggests, experience, integrity, and even a bit of street smarts go a long way toward limiting the steps needed to reach a profitable business exit.
First, says Mezheritskiy, it’s important for both the broker and the franchisee to understand the requirements of the franchisor so that they know what will be required to get a prospective buyer pre-qualified.
“Every franchisor has specific requirements that a franchise owner must meet. These include industry experience, net worth requirements of a potential franchise, as well as limits on how much money a franchisee is allowed to borrow for an acquisition. Some franchisors require buyers to invest a minimum of 40% of the total purchase price in cash. Knowing these details upfront helps the broker create a more accurate profile of a potential buyer.”
Secondly, it’s important to pre-qualify the business with a bank before listing it for sale. Some banks have specific franchises that they do not work with, so having a pre-qualification from a bank is crucial before starting to market the business. In the process of selling this particular franchise, we had the business pre-qualified with two different banks. This way, we had a bank already familiar with the business, and all that was needed was to introduce a buyer who meets the qualifications of both the bank and the franchisor.
Thirdly, in a business where success hinges on location, the real estate component is extremely important. In this instance, the seller opted to lease the property rather than sell it outright to the buyers. This decision increased the number of items that both the buyer and the seller had to negotiate and agree upon. Like many franchisors, Meineke requires buyers to complete training in order to be approved as new franchisees. As this training is a significant investment, it’s essential that all agreements be negotiated, signed, and submitted to the bank for approval before the buyers commence their training.
Once everything was signed and the bank approved the training, one last hurdle remained: securing the State Emission Testing Certification from the state of Massachusetts.
In Massachusetts, emissions testing licenses are limited to 1,800 stations, with a moratorium preventing the issuance of additional licenses. This situation presents a significant strategic advantage for prospective buyers in the Shrewsbury market, as it limits new competition. However, it’s important to note that auto inspection licenses in the state are non-transferable.
ROI Advisors played a crucial role in navigating this regulatory landscape. According to Mezheritskiy, their understanding of the regulations and established contacts within the Massachusetts Department of Transportation were key. They facilitated the process by managing the ‘notification of ownership change’ paperwork, coordinating a facility inspection with state regulators, and ultimately securing the license for the new owner after the ownership transfer.
Mezheritskiy reflects that entering the franchise business involves numerous considerations. He observes that the buyer of the Shrewsbury franchise is in a favorable position compared to someone starting from scratch. An established business offers immediate cash flows, providing a significant advantage. However, he acknowledges that not everyone has the opportunity to invest in a substantial business like this one.
Short Guide for Buying or Selling Your Franchise: Essential Tips for Interested Parties
Understand Your Franchise’s Agreement Terms
- Review the franchise agreement thoroughly as agreements can differ by franchisor brand.
- Communicate with the franchisor early in the process to make them aware of your intention to sell the franchise.
- Franchisors often have to approve the buyer which can impact the timing of the sale.
- Franchisor support and training are often significant draws for buyers looking to purchase existing franchise.
- Many buyer questions can be answered by sellers who can discuss levels of support a new owner will receive -in training, marketing, operational guidance, etc. _ and how this support will be transferred to a new owner.
- Get a professional valuation of your business.
- The valuation will help you set realistic price and negotiate efficiently and effectively.
- Understanding the current market conditions for selling a franchise is key.
- With franchise businesses, unlike typical businesses, sellers are often limited to:
-Individual buyers who would be the owner-operators
-Other franchise owners (if the franchisor permits such a sale
- The due diligence process for a prospective franchise owner can also be different from that of a traditional business
- Prospective owners must complete both their own due diligence as well as work simultaneously with the seller to secure franchisor pre-approval.
About ROI Corporation
ROI Advisors, Inc d.b.a ROI Corporation, based in the Boston market, has been involved in the sale of businesses and real estate in over 30 states since 1997. They also assist in the transfer of business ownership between generations and to key employees and management teams. ROI serves all of New England including MA, ME, NH, RI and CT with two divisions: a main street division serving smaller businesses as well as their middle market M&A division. Their Marietta, Georgia, office, specializing in Service Distribution & Manufacturing Companies, serves the southeast United States. They also have an office in Simsbury, Connecticut. For more information, please visit www.roimergers.com or call (781) 682-6209.