December 3, 2015 by Canadian Underwriter
Franchise automotive company Driven Brands, Inc. announced on Wednesday that it has acquired CARSTAR Canada, one of the largest multi-store network of independently owned collision and glass centres in the country with more than 230 locations in 10 provinces.
The development follows Driven Brands’ recent acquisition of CARSTAR’s operations in the United States. The combined CARSTAR business accounts for more than 450 locations and US$700 million of annual system sales, making it the largest brand in both system sales and locations in the automotive collision repair industry, Driven Brands said in a statement.
The Canadian headquarters will remain at the current location in Hamilton, Ont. and the operation of the business will remain under the current management. Michael Macaluso, who has been running the day-to-day operations of CARSTAR Canada over the last three years, will continue to lead CARSTAR Canada in his role as president. Sam Mercanti, CEO of CARSTAR Canada (pictured below), will continue on as chairman.
CARSTAR Canada marks the third acquisition for Charlotte, NC-based Driven Brands since it was acquired by Roark Capital earlier this year, expanding the brands’ footprint to more than 2,200 franchise locations in the U.S. and Canada. The Driven Brands family of automotive companies, headquartered in Charlotte, NC, serves as parent company for several businesses including: MAACO®, CARSTAR, Meineke Car Care Centers®, 1-800 Radiator, Merlin 200,000 Mile Shops®, Econo Lube & Tune, Pro Oil®, AutoQual®, Aero-Colours® and Drive N Style®.
Roark Capital focuses on consumer and business service companies with a specialization in franchised and multi-unit business models in the retail, restaurant, consumer and business services sectors. Its current brands include Anytime Fitness, Arby’s and FOCUS Brands (the owner of Auntie Anne’s Pretzels, Carvel Ice Cream, Cinnabon, McAlister’s Deli, Moe’s Southwest Grill, and Schlotzsky’s), among others. Since its inception, Roark has acquired 48 franchise/multi-unit brands, which have generated US$20 billion in annual system revenues from 21,000 locations in 50 states and 75 countries.
Adding CARSTAR Canada to the Driven Brands portfolio is part of the company’s overall strategy to grow through acquisitions, the statement said, adding that “this newest addition strengthens the company’s position as a North American powerhouse in the automotive aftermarket franchising industry.”
In a letter to franchise partners, Mercanti (pictured left) said that “over the last few years, we have been searching for the right strategic partner to help CARSTAR Canada take our amazing organization to the next level. I’m pleased to announce that we have found that right fit with Driven Brands. They share our same values, determination and success, and have extensive expertise in automotive retail franchising around the globe.”
Jonathan Fitzpatrick, president and chief executive officer of Driven Brands, added in the statement that “as we continue to accelerate our exposure and growth throughout North America, Driven Brands remains committed to maintaining a portfolio of brands that our customers associate with quality. CARSTAR has a long and established history in Canada and I’m proud to have this iconic brand join the Driven Brands family. CARSTAR not only strengthens our product offering and expertise, but builds upon our established footprint in Canada.”
CARSTAR Canada will be part of Driven Brands’ recently created Paint & Collision business segment, comprised of Maaco, CARSTAR U.S., and Drive N Style, led by Jose R. Costa, Group president, Driven Brands. “Joining the Driven Brands family will bring new capital resources to CARSTAR, allowing us to strengthen and grow for the future,” Macaluso said. “This joining of forces demonstrates both of our organization’s drive to be humble and hungry.”
Mercanti said in the letter that “with this association, CARSTAR will now be in the automotive retail space and our diversification strategy will happen at a much faster pace. The move into retail is very important to our insurance partners and your businesses as it allows us to build stronger and more frequent connections to our customers.”
Mercanti stressed that “this was not a decision that we made lightly or without a great deal of due diligence,” noting that three staff members – Larry Jefferies, Lisa Mercanti-Ladd and Dennis Concordia – all decided that “this was the right time for them personally to step aside in order to provide opportunities for the existing team to thrive. We carefully evaluated all pros, cons, risks and benefits and at the end of it all, we believe this is the right approach to protect the long term investment of all of our franchise partners, our stakeholders, and our shareholders.”