Efficiency is critical for Fix Auto, not just at its body shop locations, but also at the corporate level.
The company, which operates 48 franchised locations in the western U.S., recently consolidated its corporate operations from two locations to one. "We had a split headquarters for three years, with our call center, marketing and finance departments in one building, and our claims group and some executive leadership in the other," says president and COO Paul Gange. "They were separated by about 100 miles, but it was still inefficient. We were leasing two facilities, and there's just something to be said for being able to meet someone at the coffee pot for a quick meeting."
In fact, Fix uses what Gange calls "flash meetings" to help convey information to employees without needlessly tying them up in long, structured meetings. "We have everybody turn their chair around, they get a quick update on something really important, and then they get back to work," Gange says. "You can't do that when everyone is spread over two buildings. Coming together allow us to drive more efficiency and better communication."
Efficiency and communication are critical elements of Fix's growth strategy, too, as the company forges closer relationships with insurance companies and expands its coverage in other parts of the U.S. "We're excited about where the industry is going," Gange says. "Stores in our network are growing, and we see expansion within the network by franchisees that are adding stores."
Fix launched its U.S. franchise offering in the U.S. in 2011, establishing 48 locations in California and the Pacific Northwest. Another 100 stores are part of Fix's affiliate model (called Collision Repair Experts); those locations don't share the Fix brand, but do access a "suite of solutions and services that help them operate more effectively," Gange says.
The first Fix location opened in Montreal in 1991, and company founder Jean Delisle franchised the brand throughout Quebec. There is an affiliate Fix business in Canada with 225 franchise stores, and another in the UK (with 80 stores) but each of these businesses operates independently of each other.
"The biggest difference between the U.S. and the other two markets is that when we began business here, we felt as though the U.S. market wasn't ready for the type of franchise business model we deploy in other parts of the world," Gange says. "That's changing."
Meaningful expansion
According to Gange, the company's expansion approach centers on providing as much coverage as possible in a given market. "If you are going to compete as an MSO, you have to be meaningful in every market you serve," Gange says. "If you have 1,000 stores in 1,000 cities, that may make you the biggest operator in the U.S., but you can't deliver efficiency to the insurance carriers, or brand recognition to consumers.
"We evaluate new market expansions on the basis of whether or not we can rapidly become meaningful in that market," Gange continues. "For us, that means around a half-dozen stores in a mid-sized market, and ten to 12 in a larger market."
The other key component of Fix's expansion strategy is based on a stringent store selection process. The company doesn't just let any shop buy into its network; stores are evaluated and issued an invitation. "We moderate our own growth because we're very selective about the type of operator that we want to be a part of our organization, both from a current performance standpoint, and where they are at mentally or philosophically with respect to the industry," Gange says. "That's all very important."
Now well established in the West, Fix is looking to expand in multiple markets, including the southeastern U.S. "We were asked to go there by some of our insurance partners," Gange says. "We don't have any stores there right now."
Gange says the company is working with key suppliers in the market to help identify potential shops. "We invite those owners to a symposium where we provide an overview of our business model," Gange says. "We work with those shops to see if we can find a group that will serve as a good launch group. We put feet on the ground, visit stores, work with other suppliers and evaluate the market."
A lengthy brand transition
Gange says that a shop's reputation is a top concern when Fix evaluates potential franchisees. "The store should be established, and not just hanging on in the market," Gange says. "Most of our stores are larger, well performing stores when they join us. We spend a lot of time with ownership to make sure our values are aligned."
The company also evaluates the stores for equipment readiness, the background of the ownership, performs a credit check and reference checks with vendors, insurers and customers, and takes store size into consideration. The shops also have to participate in the VeriFacts Verified Quality (VQ) program, and receive the I-CAR Gold Class designation.
"We're looking for operators that are committed to their businesses," Gange says. "While they recognize that the industry favors the MSO model, they want to stay and compete. With Fix Auto, they see an opportunity to reposition their stores. You can be the best operator in the market, but if you are a single store operator, you can't compete at the same level as the MSOs. We provide that opportunity for market repositioning."
Gange says the biggest reservation that owners have when considering joining the network is the brand change. Fix requires consistent representation of its brand, both in the aesthetics of the shop and the operational processes. "The way we transition those locations is that we ensure the customers know that the ownership is remaining the same," Gange says. "We love the concept of local ownership, and we promote it heavily. We work with the franchisees to transition their brand, and sometimes that can take as long as a year. We try to be sensitive to the value of the brand in that market."
The process begins as soon as the shop signs the franchise agreement. Fix launches a customer outreach program via e-mail and direct mail, and begins communicating the change to vendors and insurers in the market. "Over time, the store takes on our brand standards. It's not overly imposing, but it is common from store to store. The signage has to be consistent, and if there are any issues with the store's internal environment we work with them to make upgrades," Gange says.
Stores are required to use a comprehensive shop management software system (Fix works with all of the common platforms), and Fix implements technology so that data can be fed to the company's central systems for comparative analysis with other shops in the network.
Owners attend training sessions that cover the IT systems and operational processes. "In addition, each month in each market we host a meeting for owners and GMs," Gange says. "We also have a painters roundtable, and do some task-specific training as well."
Best practices shared across the network
The company focuses heavily on working closely with insurance companies and winning and maintaining DRP business. "That's fundamental to our approach to any market," Gange says.
That means deploying best practices to optimize efficiency and repair quality. The operational model is what Gange calls a "working together" model that even high performing stores can gain from. The company focuses heavily on cycle time and customer satisfaction index (CSI) scores, and is constantly revising processes based on input from the stores in the network. "Often the best processes come from the operator, and we share that across the network," Gange says.
Fix's performance reporting platform evaluates store metrics and identifies opportunities for improvement. "Even the best stores, when they look at that, quickly realize that they have areas where they are getting beat by other stores of a similar size," Gange says.
The Fix Claims Solutions (FCS) group serves as a single point of contact for insurance carriers on both the national and regional level. That group oversees Fix's comprehensive audit and compliance program to manage the DRP relationships. "If our files are pre-audited prior to going to the carriers, then fewer of them are going to be flagged for review, and the experience will be more efficient for the carrier and the shop," Gange says. "They have to deploy fewer resources to manage our claims."
When there are conflicts over a claim, the FCS can help settle those disputes. "We help mitigate those situations and bring them to a resolution," Gange says. "Our relationships with the carriers are incumbent on the belief that nobody is trying to get something over on the other party. Everyone is trying to do the right thing for the customer."
This centralized approach improves efficiency, which makes Fix a more attractive partner for the carriers' increasingly stringent DRP programs. "The carriers are focused on efficiency in claims processing," Gange says. "MSOs can provide that efficiency to the carriers. We are myopic in our focus on KPIs for every carrier and meeting those objectives."
If there are anomalies at a particular shop, they are spotted early and addressed quickly. "We have field personnel assigned to the FCS team, and they evaluate processes and share best practices during visits to any shops that may be experiencing issues," Gange says. "There is a full review every month during the market owners' meetings, so everyone is aware of everybody else's performance. We also have extensive coaching and an on-site training program."
Strength in numbers
According to Gange, the challenges that face the collision repair industry (fewer, more expensive repairs; an increased focus on DRP participation; more complex vehicles) have highlighted the value of being part of an MSO network. For single-shop operators, Gange says those challenges will be even more pronounced.
"I don't know how you can stay on top of everything on your own anymore," Gange says. "From the technology changes to the vehicle design and construction, changes in the way insurance contracts work; it's a lot to manage. That's one of the functions we provide, a sort of industry oversight. I don't fix cars, but my group is looking out and is very involved in the industry and trying to help our members and franchisees understand the impact of those changes.
"This is an incredible time for our industry, because things are changing so fast," Gange adds. "That creates a tremendous opportunity for us to work with the right operators across the U.S. The challenge will be maintaining our focus on expanding with the right shops in the markets where we can be meaningful."
Those changes are also driving more shops to consider the Fix model, or others like it. "Most of the owners who become Fix members will say they became part of the organization, not because they felt compelled to do it now, but because they felt it would be a key part of their five-year or ten-year plan," Gange says. "That's what I'm talking about when I say we want our franchisees to be aligned with our values. They are looking ahead and saying, 'I want to change course to succeed in this business.'"
