Concept Description
1-800 Radiator & AC is an automotive parts distribution network. However no automotive knowledge or experience is needed to be successful. In fact, there are only a handful of current franchisees that have come from the automotive industry. Most weren’t even looking in the automotive sector when they decided to become franchisees.
Our customers are the repair shops, collision shops, dealerships and even the part stores. There are approximately 900 of these service type shops within each franchise territory. This is a unique business model and there are not many similar competitors. The primary competition are the part stores. The Napa’s, Autozone, and Parts Authority’s of the world.
What makes 1-800 Radiator & AC unique and able to become industry leaders competing with these national brands?
This brand focuses on select product lines where we will have the part 90-95% of the time these shops call us and we offer quick same day delivery. By focusing on the bigger, bulkier, and harder to stock product lines our competition will only have the part 20-30% of the time. Availability is our first competitive advantage. This is a need based business and when a shop is calling they need the part quickly because they have a broken down vehicle. We back this up with hard data that shows when we have the part at that local franchise our close rates are 3.5x-4x higher then when we do not.
In addition, we offer higher quality parts at a competitive price. This is what makes us the #1 choice with these service shops for the product lines we carry.
This is also an exciting time within the network. In the past 2 years we have added 2 major product lines into the network. Adding new product lines is part of our long term growth strategy. It allows our franchisees to quickly ramp up revenue and profitability by leveraging their existing buying customers. Our most mature locations have shown the largest growth this past year because they are the first to launch when we introduce a new line.
Testimonials
Our number one goal is to build personal relationships with every one of our customers. We believe that it doesn’t matter what you are selling, only that the customers are calling. With The 1-800-Radiator marketing tools I believe we can sell anything to our customers. After 27 months in business we are up in sales even in a down economy we have growth. I like what I do and believe that the tools that corporate provides are essential the growth of my business. – Andrew Fay, Broomall, PA
Before I opened I had a small idea how good this opportunity was. Once I got my arms wrapped around this thing I got more excited. This is the most fun I have had. I have only one problem… I haven’t slept a full night since we opened. I lay in bed and all I can think about is out performing our competition. – Ron English, Lebanon, IL
Publicity
[headline]1-800-Radiator(R) Announces Full Line Support for GM and Chrysler for the Next Ten[/headline]
1-800-Radiator(R) Announces Full Line Support for GM and Chrysler for the Next Ten… – Auto News from April 16, 2009
BENICIA, Calif., April 16 /PRNewswire/ — 1-800-Radiator today announced it has concluded arrangements with original equipment and aftermarket suppliers to carry the full line of cooling and air conditioning parts to supply markets in the wake of closures of GM and Chrysler dealerships nationwide.The New York Times reported today that Saturn has gone from 420 stores to 375 stores since the beginning of this year, and there is no longer any Saturn dealer support in Kansas City, Mo, Corpus Christi, Tex., and 45 other cities across the United States. 1-800-Radiator has put on an accelerated stocking model to cover each of these markets for Saturn and GM parts by the end of April – fifteen days from now.
1-800-Radiator is also working closely with Ford’s original equipment supplier, Visteon, to have a full line of Ford air conditioning and cooling parts in stock in all U.S. markets within the next 45 days.
1-800-Radiator has locations in all 268 major U.S. markets, and can usually deliver parts in two to three hours. In addition to covering all the import parts, 1-800-Radiator now will carry the full line of Ford, GM and Chrysler cooling and air conditioning parts. These include radiators, AC condensers, fan assemblies, compressors, dryers, evaporators, and heaters.
All 1-800-Radiator parts come with a lifetime guarantee and a labor warranty. All parts will be available in either an original equipment version or a less expensive aftermarket version. All parts are brand new. No parts are recycled or re-manufactured.
About 1-800-Radiator
1-800-Radiator is the largest independent parts distributor in the nation. The company continues to increase market share through added product lines and acquisitions. The 1-800-Radiator business model provides retail and wholesale customers with radiators delivered to their doorstep in a matter of hours at competitive pricing. To its franchisees, 1-800-Radiator provides state-of-the-art software technology, along with 24-7 support. For more information about the company or available franchises for sale, go to: http://www.1800radiator.com.
[headline]Consumers get frugal, so retailers get creative[/headline]
Consumers get frugal, so retailers get creative
By Jayne O’Donnell and Sandra Block, USA TODAY
For years, dietitians have urged Americans to practice mindful eating. Eat slowly. Savor every bite. If eating chocolate cake, make sure it’s really good chocolate cake. Now, as the country slogs through the worst recession in decades, consumers are increasingly taking a similar approach to spending.
The change shows up every month in retailers’ dismal sales. On Tuesday, the National Retail Federation said retail sales are expected to drop 0.5% this year, the first annual decline since the NRF started tracking sales in 1995.“Most of the consumer behavior we saw in 2008 will continue well into this year,” says Rosalind Wells, NRF’s chief economist. “Shoppers will be seeking value and trading down to discount and off-price retailers in order to stretch their purchasing power.”
Even though spending is expected to increase in late 2009, no one’s predicting a return to the devil-may-care shopping from earlier this decade. Now, when consumers spend, they’re paying more attention to what they buy. And this shift toward more cautious spending is likely to last.
Sales of furniture and clothing have been plummeting, with retailers in those sectors posting double-digit sales declines. On Monday, Home Depot announced plans to close its 34 Expo design stores, which sell high-end home decor items.
Essentials, such as food, health and beauty aids are selling, but even there, consumers are shifting to less-costly store brands. Consumers are still buying an occasional video game — an industry that’s proved to be largely recession-proof — but sales of big-ticket items, such as cars and vacation packages, have fallen off a cliff.
To survive, retailers are battling to convince these new, mindful spenders that their products deliver long-term value, not just empty calories.
“How smart you shop has become a new status symbol,” says Eric Gustavsen, co-founder of New York-based branding and design firm Graj + Gustavsen.
While the downturn is cited as the main reason for dreary retail sales, other factors are also at work. Many have realized that it’s not necessary to buy new vehicles or furniture every few years, unless the car dies or the springs give out on the couch. With vehicle sales down 18% last year — the biggest drop since 1974 — it’s auto repair shops that are expected to thrive. And after years of recreational shopping, many Americans are starting to realize there’s no more room in their closets.
Christine Jonard, 36, of Columbus, Ohio, meets regularly with local mothers to swap clothes and toys for her three children, ages 5, 3 and 1. With the exception of Christmas gifts, she can’t remember the last time she bought a toy. “We have too much stuff,” she says. “Plus, we don’t have any money, probably because we have too much stuff.”
Katherine Motley, 36, of Phoenix, started organizing clothing swaps in her community about a year ago because she was looking for low-cost ways to outfit her seven children. She says she’s spent less than $100 on clothes in the past year. She believes the interest in swaps will outlast the recession: “People who are like-minded will continue to do these swaps even when the economy recovers.”
Speaking before NRF’s annual conference this month, Carl Steidtmann, Deloitte Research’s chief economist for consumer business, said the spending slowdown was predictable. After a spending boom like the one that occurred after the Sept. 11 terrorist attacks, he said, “You always see a return to simplicity.”
Many consumers still have money to spend, Steidtmann says, “They just don’t have the will.”
Even high-income shoppers are cutting back, as shown by the sharp drop in sales of luxury items during the holidays, says Jim Harold, retail industry executive for Acxiom, a consulting firm.
Coach, manufacturer of luxury handbags, reported last week that sales at North American stores that have been open at least a year fell 13% during the quarter ended Dec. 27. The company attributed the decline to its decision not to lower prices on its signature handbags at a time when most other retailers were slashing prices.
Luxury shoppers aren’t just “looking for deals,” Harold says. “They’re demanding them.”
Consumer spending accounts for about 70% of the economy, up from 66% about 10 years ago, but down from about 72% earlier last year, says Marie Driscoll, director of consumer discretionary retail for Standard & Poor’s Equity Research. Driscoll predicts spending will continue to fall until it reverts to being about two-thirds of the economy again.
“We will grow again, but not at the rates we saw before,” she says.
HOW RETAILERS ARE TRYING TO SURVIVE:
Highlighting value
“In 2009, the consumer will act rationally,” says J.C. Penney CEO Mike Ullman. “They will shop for what they need and less for what they want. And they don’t need much.”
Cara Putman, 34, of Lafayette, Ind., falls into that category. She’s always looked for sales before paying full price for anything. Now, though, she’s less likely to make a purchase. What has changed, she says, is a new “willingness to talk myself out of a purchase (and say), ‘I don’t really need that.’ I hope that’s a discipline that sticks. And I honestly think it stems more from a desire to streamline and move to simplicity than fears about the recession.”
To appeal to customers like Putman, retailers need to convince them that their brand will make life easier or better, Gustavsen says. His firm helped women’s fashion line Rafaella come up with a new direction last year that emphasized the clothes’ functionality, including two-way stretch and “ergonomic” fabric that moves with the body. The campaign stressed that people shouldn’t buy a Rafaella garment “just because it’s pretty,” he says. Retailers are also looking for ways to stand out from the pack. Along with too many stores, the retail business is crowded with too much merchandise that looks the same, says Macy’s CEO Terry Lundgren.
“We need newness, freshness and unique products that will get people interested in buying again,” he says.
To compete in this environment, retailers need to go back to their roots, says Janet Hoffman, Accenture’s global retail managing partner. That means “knowing their customers and coming up with a unique offer or product, price or, in some cases, service,” she says.
Offering better prices
After a holiday season in which many consumers waited until prices were slashed 75% or more to buy, marketers are rethinking pricing strategies. The new directions include adding more lower-cost store brands or products and working with manufacturers to come up with starting prices that products are more likely to sell at.
In response to consumer spending trends, retailers are doing their own buying “with an increased focus on value and price,” says Dan Butler, NRF’s vice president of store operations and merchandising. Retailers are working with apparel makers and other manufacturers to come up with ways of lowering the cost of products so they can pass savings on to consumers, he says. “It has to be a relevant price for this economy,” says Butler.
The response to lower-priced private-label brands in stores has been increasingly positive, with consumers buying 8% more in 2008 than in 2007, according to a report by Sanford Bernstein analyst Ali Dibadj.
“Consumers are figuring out that many private-label products are just as good as branded products — just cheaper,” Dibadj says.
Still, style consultant and author Sherrie Mathieson says consumers should remember that sometimes when you pay more, especially with apparel, you’re getting higher-quality clothing that’s likely to last longer. And she urges her clients to keep that in mind in this economy, when a good suit or dress can be a good investment.
“The modus operandi of shopping wisely will always need to be a mix of trying to get value at a lesser price and knowing when to go for it,” says Mathieson.
Emphasizing local ownership
When design firm FRCH planned the redesign of 56-year-old Massachusetts grocery chain Roche Bros. in 2006, it decided to emphasize the local heritage and produce. Customers told store officials in focus groups that those were the two most important reasons they shopped at the stores. That was good news for a store run by the sons of one of the founders that competes against several national chains and discounters including Wal-Mart, which has attracted new customers during the recession.
“It fit right into who we are,” says Arthur Ackles, Roche’s director of marketing. “We’re a local company that’s very involved in the community.”
The five of 18 stores that have been redesigned highlight the chain’s long presence in their areas, including photos at the checkouts that date back to the stores’ early years. Since the Wellesley, Mass., store was completely redesigned, the local theme was stressed and product selections expanded last year, sales are up 40% despite the economic downturn, says Ackles.
A survey of independent retailers in a wide range of categories found that sales fell an average of 5% in December, vs. a decline of 9.8% for retail sales overall, according to the Institute for Local Self-Reliance, a non-profit research organization. Retailers in cities that sponsored “Buy Independent/Local” campaigns reported an average decline of 3.2%.
Consumers who patronize local businesses instead of big-box stores are “realizing that cheapness is not the same as value,” says Jeff Milchen, co-founder of the American Independent Business Alliance.
Going green
Last week, PepsiCo announced that Carbon Trust, a U.K.-based organization that studies climate change, will certify the carbon footprint of several of its products, starting with Tropicana Pure Premium orange juice. PepsiCo said the certification will provide a benchmark for the company to use in its efforts to reduce greenhouse gas emissions.
A January 2008 survey by Information Resources Inc. found that 70% of Americans are more likely to support companies that are mindful of their impact on the environment and society. The survey predicted the market for sustainable products would grow to $410 billion by 2010, nearly double its 2005 level.
To attract a piece of that market, online auction giant eBay launched a partnership last year with WorldofGood.com, an online marketplace that offers organic toys, BPA-free water bottles and other products that, the company says, “have a positive impact on people and the planet.”
Selling sustainable products doesn’t inoculate companies from the recession. WorldofGood doesn’t break out separate revenue, but in recent months, eBay’s sales have suffered. The company’s net income fell 31% in the fourth quarter.
“Consumers are definitely more cautious in how they’re spending their dollars and they’re looking for greater value,” says Robert Chatwani, general manager for WorldofGood. “We’re not immune to that.”
In response, the website has been promoting items that are gentle to both the environment and customers’ bank accounts. It has made it easier for customers to search items based on price, which provides “more exposure for items that might be more affordable,” says Priya Haji, chief executive of WorldofGood.
Anna Moncharsh, 20, a psychology major at Yale University, says she purchased most of her holiday gifts from WorldofGood because she supports its mission and was able to find relatively low-cost items.
“I’ve always tried to think about what I’m buying, what it’s made out of and where I’m getting it from,” she says. “And considering the circumstances everywhere right now, I think it’s made me more aware of how I choose to spend my money.”
Indeed, gone are the days when retailers could convince people they need something they really don’t, says Alexi Sarnevitz, who heads global retail strategy for business analytics software company SAS. They need to put their marketing support behind the products consumers really want, he says, and not focus on creating “artificial demand.”
“The changes in consumers’ psyches are too pervasive,” says Sarnevitz.
Gustavsen says people are looking for a “valid reason to buy something.”
“If the reason is authentic, even if it’s emotional, that’s as good a reason as any,” he says. “What’s out is buying just to buy. I guess that’s mindless spending.”
Unit Option
Single, Multiple
Background
FDD Franchised Units: 194
Corporate Owned Units: 1
Projected New Units: 4
Year Established: 2001
First Year Franchised: 2004
Type of Business: Franchise
Hours of Operation: Regular Business Hours
Number of Employees: Small (1-5)
History:
We are a B2B Automotive parts distribution business. Automotive knowledge and experience is not needed. There is no repair or automotive service, just moving boxes.
The network specializes in limited product lines and specific product lines where it is difficult for the competition to maintain deep inventory coverage.
1-800 Radiator & AC will maintain 90% coverage at the local franchise for vehicles within the market. This is compared to part stores who will just keep top movers on the shelf and will only have 25-30% coverage. This is a big advantage since our customer base are the repair shops, body shops, dealerships and part stores.
Ideal candidates have operational experience and are strong sales and marketing people.
Availability
Territories: United States, Canada: Willing to Register
Financials
Liquidity: $100,000
*Investment Range: $457,500 - $1,269,000
**Average Investment: $350,000 - $850,000
Provided by the Franchisor
Minimum Net Worth: $500,001 to $750,000
6 Month Cash: $75,001
Franchise Fee: $45000
Royalty: 8%
Royalty Description: 8% of Gross Sales
Advertising: 0.5% of Gross Sales (Local Marketing Fee, paid to franchisor and used for marketing in your territory)
Ramp-Up: 4 to 6 months
Passive Ownership: Semi- passive after 1 year
Passive Ownership means the owner is working 15 hours or less per week in the business.
Passive Ownership Explain: As long as certain qualifications are met.
Training, Support and Assistance
Co-Operative Advertising: N/A
Site Selection Assistance: Available
Lease Negotiation Assistance: N/A
Length of Training: 3 Weeks
Training Description:
Training is ongoing and doesn’t stop with the initial onboarding.
Initially franchisees will receive:
- 1 week of remote training working with subject matter experts
- 1 week of hands on training at corporate office as well as a nearby corporate store
- On site training the week before opening
- On site training the week of training
- Additional on site training within the first 6 weeks of opening
Once live franchisees work weekly with account managers to review all aspects of business. Additionally they work with inventory and accounting experts.
Operational and Marketing Tools:
State of the art proprietary software that covers all aspects of the business.
CRM- collects all historical data points for all customers. Allowing marketing programs to be optimized to target the customers that need to be seen and will generate the best ROI. In addition outside sales people are equipped with ipads with CRM to ensure they have the information needed to make a successful sales visit.
Inventory Management- Stocking models that optimize which parts need to be stocked and the appropriate quantities to ensure the part is on the shelf when the customer calls. Along with warehouse management tools that track the movement of parts in the warehouse and makes receiving product into the warehouse very easy.
Owner Reporting- Dashboard reporting that gives owners visibility into all aspects of the business as well as reporting to determine employee productivity.
Financing Assistance: Available
