TOLEDO, Ohio (Aug. 18, 2008) — While ongoing economic factors have created a tough operating environment for many U.S. businesses, Tuffy Associates Corp. is living up to its name.
In 2007, the Toledo-based franchisor's Tuffy Tire & Auto and Car-X Tire & Auto dealers brought in a record $264.5 million in revenue. Despite the current state of the economy, that record is being challenged, with 2008 sales already surpassing last year's year-to-date amount.
Much of this financial growth is a result of the rising price of fuel and other costs that have many customers opting to keep their vehicles longer.
“(The economy) has been good for our business,” said James Jacobs, director of franchising for Tuffy. “People are not buying new cars, they're keeping what they have and fixing and maintaining them, so at the store level it's been very good.”
Started by former Midas Inc. franchisees in 1970, Tuffy—which began as a small shock absorbers, struts and brakes chain—has steadily grown into what is now a 179-member, 406-location chain. Much of the growth has been recent, with Tuffy adding 15 to 20 stores each year, most in the Midwest and southeast U.S.
The company experienced its largest growth spurt in 2002 when it acquired the U.S. assets of SMK Speedy International Inc.'s Car-X automotive service franchise, which Tuffy continues to operate as a separate brand. The company now runs 237 Tuffy stores, 219 of which are franchised, and 169 Car-X stores, of which 156 are franchised.
Most new Tuffy and Car-X stores are opening under the Tire & Auto name, while older locations continue to operate as Tuffy Auto Service Centers and Car-X Auto Service. Mr. Jacobs said the differences are in name only, and most stores offer the same services.
Mr. Jacobs estimated that about 95 percent of the company's growth comes from start-up shops, though it also considers converting existing repair facilities that do not directly compete with a Tuffy dealer.
Tuffy also has been expanding its product and service offerings, Mr. Jacobs said.
“We've added a lot of services over the last 10 years, that's for sure,” he said. “Tires to fluid exchange to (air conditioning) and drivability—we're really full service automotive now.”
Both of Tuffy's programs offer a number of benefits to dealers, Mr. Jacobs said, including advertising support, store signage, employee training programs, point-of-sale (POS) materials, Web site hosting and a credit card program. The company also provides dealers flexibility when it comes to purchasing products.
“One of the key elements, our program is very franchisee-friendly since it was started by franchisees,” Mr. Jacobs said. “(Franchisees) don't buy any product from us, but we negotiate on their behalf and have some really good buying programs for, not just parts and tires and oil and all that, but also insurance programs and health benefit programs and that kind of stuff as well.”
According to Mr. Jacobs, the firm also is willing to go on a lease and provide the real estate, site and building on the franchisee's behalf, something he called a “huge financial benefit.” In addition, when it comes to advertising support, the money that dealers send in for advertising is spent back in that dealer's market and a franchisee has a say in how the money is spent, Mr. Jacobs said.
In order to apply to be a Tuffy franchisee, interested parties must take part in a four-week new dealer training program and invest $300,000. Of that amount, $125,000 must be liquid and the potential franchisee must be able to have an up-front fee of $25,000 in the bank when the store opens.
Tuffy does not charge dealers a monthly or annual fee, nor does it require a minimum purchase volume from dealers.