Carrying On A Franchise Legacy

Keeping the family business in the family is often a cherished tradition, but the succession process from one generation to the next can be difficult. At AAMCO, the Second Generation School provides the training needed to assure a smooth and efficient transition

(Monday, May 01, 2000) - Of the roughly 20 million family businesses in the United States – companies in which a family member other than owner has a paid or unpaid role – only about one third are successfully passed down to the second generation. And of those that do make that transition, it is estimated that only a third will exist long enough to see the third generation.

In large corporations, leadership turns over frequently, creating the need for a thorough, measured approach to succession planning. But in small companies, where the average tenure of a founder is 25 years, a plan for management succession is rare, even in a family-owned business. However, the survival rate of family businesses is on the rise. More sons and daughters are looking to carry on the family legacy, spurred on by the increasing popularity of small business ownership. This has led many family business owners to take steps to establish a succession process to make the transition from one generation to the next a success.
Learning the Ropes
When my father asked me to take over the helm of AAMCO as CEO in 1993, I was prepared. My father and his partner started AAMCO Transmissions, Inc. in 1963. As a student, I had worked at AAMCO during my summer vacations learning every aspect of the business. After college, I honed my business management skills at MasterLease/Tokai Financial Services, a national equipment leasing company where I was president and chief operating officer from 1987 to 1991. When I returned to AAMCO, I was equipped with an understanding of the company and the leadership capabilities I needed to feel confident that I could make the right decisions.

Students already know the basics of running an AAMCO center, so the school concentrates on advanced management training and practical strategies for growth.

However, in speaking with many of our AAMCO franchisees, I found that their succession plans and opportunities were far less clear. When I was appointed CEO, AAMCO had been a successful franchisor for thirty years, and many of our dealers had owned their franchises for much of that time. Many were either approaching retirement age or reaching a point where they had accumulated enough wealth to retire early. Driven by my own recent succession, I realized the need to form a program to aid AAMCO's franchisees in the process, which led to the development of the AAMCO Second Generation School.
Since its inception in 1994, the program has been a boon to AAMCO and its franchisees. The training enables shop owners reaching retirement age to feel at ease as they move to the next stage of life, because they are leaving behind a capable heir. It has also been of aid to AAMCO, permitting us to focus on developing business in new territories rather than on re-selling existing franchises.

Beyond the Basics

The Second Generation School was created for adult sons, daughters, husbands and wives of current AAMCO dealers. The school is designed to award "life experience credits" to its attendees for the time they have already spent in on-the-job training at their parents' or spouse's stores. Today over fifty AAMCO centers are owned and operated by second generation AAMCO dealers.

"I am a real believer in the value of continuing education at AAMCO," said Kathy Ferguson who owns two AAMCO centers with husband Tim. "The Second Generation School program was a great experience for me because I not only learned from the instructors, but also benefited from the experience of my fellow students, some of whom had been working at AAMCO centers for over twenty years." The knowledge that Ferguson took away from the program led her and her husband to take steps to effectively increase center productivity through employee motivation. The couple recently started a retirement plan for their fifteen employees.

The program... has also been of aid to AAMCO, permitting us to focus on developing new business in new territories rather than on re-selling existing franchises.

The week-long AAMCO Second Generation School is very different from our normal five-week Dealer School, because students are already AAMCO knowledgeable. It is like a master's program for participants. Students already know the basics of running an AAMCO center, so the school concentrates on advanced management training and practical strategies for growth.

Applicants to AAMCO's Second Generation School must meet the following criteria:

• Prior AAMCO center experience.
• Completion of a franchise application.
• Hold a percentage of ownership in a center.
• Previous attendance at an AAMCO Customer Service Manager School.
• Demonstrated proficiency in AAMCO procedures.

During the comprehensive program, students undergo training in sales, customer relations, shop management and financial practices. This instruction culminates with a final project that centers on the development of a working plan of action that will later be implemented at their centers. This plan of action project has been applied to all AAMCO training programs because of its success in encouraging our dealers to put their newly acquired skills into practice.

"Attending the school gave me the tools and perspective to take a step back and focus on my business," said Steve Knickerbocker, whose father started the three AAMCO centers he know owns. "The program allowed me to establish a network with other dealers across the country, and made me see the value of what the franchisor can do for the franchisee/"

Graduating To Success
Graduates of the Second Generation School often experience a great deal of success as AAMCO shop owners. They generally have prior work experience in sales or marketing, and this enables them to apply valuable business skills and best practices to the way they run their AAMCO centers.

"With over half of our 720 shops having been in business for more than twenty years, succession training is instrumental in increasing the longevity of our centers nationwide."

"From the perspective of the franchisor, the Second Generation School is helping maintain the legacy of the AAMCO brand," said Brian O'Donnell, senior vice president of operations at AAMCO. "With over half of our 720 shops having been in business for more than twenty years, succession training is instrumental in increasing the longevity of our centers nationwide."

AAMCO has proven to be more than just stable: our system-wide revenues have grown 48 percent during the last five years. Programs such as the AAMCO Second Generation School have been a major contributor to our growth. After 36 years in business, AAMCO has become a stable force in the franchising world and enjoys 90 percent brand recognition by the motoring public.

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