How 2 Non-Mechanics Became Part of the Leadership Team of 36 Midas Franchise Shops
Posted on: June 24, 2014
Midas franchise veterans Alan Mahrt and Russ Gibson discuss their three decades with the brand
Alan Mahrt likes to joke that when he first applied to work at a Midas, he was the third choice: “Lucky for me, the first guy lasted a day and the second guy didn’t show up!” As it turns out, the third choice was the charm. Alan is now president of Auto Systems Experts Inc., based in Davenport, Iowa, which owns 36 Midas franchise locations throughout six states in the Midwest. He has been with the company for 26 years. One of the vice presidents of the organization and a co-franchisee, Russ Gibson, has been with the company for 30.
This is their story.
Tell us about Auto Systems Experts Inc. You have an unusual setup.
Russ: We are an employee-owned company that has its roots at the very beginning of the Midas franchise in 1956. Jerry Altheimer, our original owner was one of the original Midas franchisees in 1957 and opened his first store in Davenport, IA where our home office remains to this day. His son, Steve eventually bought the company from his father and we worked as part of the management team under Steve. In 2000 Pat Walton, who was then our company president who now serves as the Chairman of our Board of Directors, approached several of us who had invested a substantial part of our careers into the organizations about forming an Employee Stock Ownership Plan and purchasing the company from Steve. A sale price was negotiated and a controlling interest in the company was purchased that same year. Shortly thereafter the remaining shares of the company were purchased and we have been wholly employee-owned ever since. Employees become eligible for the plan after one year of employment, start acquiring ownership shares after their second year of employment and they become fully vested after seven years. Regardless of their position, everyone who meets those criteria from an entry-level employee all the way up to the company president has an ownership interest in the company.
Alan: The hope is that it creates an incentive for employees to stay for the long haul and have a vested interest in watching the bottom line. Over time employees can build up substantial retirement savings by simply going to work every day and doing what they need to do to make the business profitable.
How did you join Midas?
Alan: I graduated from college in 1987 with a business degree and my 1st job out was an entry-level management position at McDonald’s. I had just gotten married, and our honeymoon was a McDonald’s management training class in Kansas City. After a year of working noon to midnight and having a wife working retail too, we didn’t have time for much of a relationship. I knew I needed to do something else and there was an ad for a management trainee for Midas in the Omaha market. I was hired as a trainee and took over my first store four months later. I ran that store for five years and then became a district manager.
Russ: Before he took over the business from his father, Steve Altheimer was the Youth and Camp Director at the YMCA in Springfield, MO and I was a camp counselor for him. After college I eventually became a pharmaceutical salesman, and whenever I traveled over to eastern Iowa, I would visit with Steve and stay at his house. At the time, he was looking for a wholesale sales representative to build local fleet business in the company. In conversation one day he offered me that position making the same money I was making, plus a car and I didn’t have to travel as much. I told him that I really didn’t know much about car repair and he said that really didn’t matter in this position. When I started I remember that when I went into my first training class I didn’t even know what a caliper or a wheel cylinder was.
What do you like about the job?
Alan: It’s more the day-to-day challenge and involvement with customers and employees. I wasn’t made to sit behind a desk. I need to be out and about and there is always something different to make each day interesting.
Russ: I would say the same. I have always enjoyed working closely with people. I studied journalism in college and worked at the Des Moines Register for a while before I realized that it wasn’t very fun and you couldn’t make any money at it! I enjoy building a relationship with customers, training people and seeing them succeed. Some of the up-and-coming leaders in our organization who are now managing high-volume stores started out as parts delivery drivers for us.
Alan: We have 200+ employees in our 36 shops and it’s great to watch them and their families grow up.
What sets Midas apart?
Alan: The brand recognition. You say “Midas,” and most people know the heritage. The brand recognition, I think, fell off a little among younger people, but being back on TV with our new ads is bringing that recognition back.
Russ: I think the oval and the support you get from Midas sets the brand apart. You get a lot of name recognition and you get support in your marketing efforts and operations. I currently serve as chairman of the International Midas Dealers Association Marketing Committee which works with our corporate Midas partners to represent the dealer’s interests in helping to structure our company’s marketing efforts, messaging and strategy and brand identity efforts. We were very effective back in our earlier days in building the brand, its identity and resonance with the consumer. You still hear people today reciting ad slogans that haven’t existed for decades. We started with mufflers originally and then moved into steering & suspension and brakes. We now have become a full-service car care center. I bet it’s been 20 years since we have advertised anything to do with exhaust, but you’ll still hear the slogans. These days, exhaust work only comprises about 10% of our sales mix or less. There is so much we can do to re-identify and reestablish the Midas brand in the marketplace and we are working with great partners to accomplish that. The Martin Agency, who were the architects of reinvigorating and reinventing the GEICO* brand, were retained to create our new iconic imagery with the Golden Hand and all of the other creative assets and messaging that you see in today’s television commercials and other mediums. It’s an exciting time for the brand!
How is the relationship with the franchisor since TBC Corporation bought the Midas franchise in 2012?
Alan: TBC is offering much more support. At first there were a lot of growing pains as we built relationships and learned the who/what/where of everything. They appear to be more concerned about us as individual business owners and the success of the franchisees.
Russ: There have been numerous times when I have had conversations with Bob Crostarosa, Vice President of Marketing where he would ask; “I’m thinking about this. What are your thoughts?” Or, have gotten a call from Mike Gould, Chief Operating Office on a Saturday morning just to check in or converse on a topic. Recently I was involved with a task force working with corporate partners to develop an online estimate response template for dealers. That kind of franchisee-franchisor relationship provides real value for everyone concerned and just didn’t exist much previously. It has increased substantially with TBC and the new leadership team.
What is the biggest value you get from being part of Midas?
Alan: Knowing that the support of the brand is there. When a new franchisee comes in, they get training to learn the ins and outs of the business, but it’s also great to be able to reach out to the franchisor for help and also to have the IMDA (International Midas Dealers Association). As long as you are not scared to reach out for help, there is a lot of support available from TBC and from other franchisees.
What does a franchisee need to do to succeed?
Alan: You have to be willing to work the business and be there working elbow-to-elbow with your manager and your people at the stores. You also have to continually be recruiting. It is getting increasingly more difficult to find qualified and trained technicians as cars have gotten more and more complicated in their design. These days, in addition to basic automotive service and maintenance, an automotive technician has to understand electronics and how computers work. To run a successful store, you have to be a people person because your employees and your customers are the most important thing. You have to be willing to be out there taking care of people all day long. You can’t just purchase a franchise and expect to sit behind a desk all day.
Russ: To run an operation the size of ours, you have to learn all aspects of the business and then make sure you have the right people in the right places all the time. You have to have “aces in their places.” That is what enables Alan and I to do what we do. The guys who run the stores that we are not physically in — because they have been coached and trained and are quality people — allow us to do what we do. If you invest yourself in your business and your people, it will pay dividends.
How large is the growth opportunity?
Russ: Oh, I would say that it’s huge. The number of underserved markets is huge. We currently have stores that are up 30%, 40%, 60% up over the previous year’s sales because the advertising is working, the marketing is working and the teams are executing properly at the store level. We just have to keep up with it and keep after it.
How important is previous automotive experience for a Midas owner?
Alan: I had next to none when I started. I knew where to put gas in my car, but that was about it. I think it is more about having good business sense. You don’t have to know every exact widget on a car — that can actually prevent you from excelling. Success comes from the way you interact with customers and employees, not the way you interact with the car. It is certainly a part of it, but it is not the main thing. Automotive parts and service is what we sell and you need to be familiar with your products and services, but that can be learned. You have got to have the people part regardless.
Russ: Ditto. I can say with confidence that 30 years in, you still would not want me working on your car.
Has Midas had a positive impact for you?
Alan: Absolutely! I wouldn’t be doing it if it didn’t. We have been very fortunate. Two years after my wife Dawn and I married, we had a child. We made a commitment that our children wouldn’t be raised by someone else and that she would be able to stay home with them. This company allowed that to happen. My wife has only worked (by choice), at most, part time through 25 years of marriage. And now that the kids are grown, she does it mostly to get out of the house. It is not easy. There are a lot of long, hard hours. If you think it’s a 9-to-5 job, no, it’s a 55-60 hour week, especially for managers.
Russ: I’m not mechanically inclined, so for me to invest 30 years of my life — more than half my life — to this brand, yes, it has absolutely been rewarding. I met my wife here. She was a receptionist in our home office in Davenport, IA. We have four kids who range in age from 10 to 31. It has enabled me to provide them a very comfortable lifestyle.
* GEICO® is a registered trademark of the Government Employees Insurance Company.