magictouch - Janco International, Inc.

MERLIN CORP. automotive service MAGICTOUCH
Merlin Corp. may not pull rabbits out of hats, but for millions of car owners who
aren't mechanically inclined, its employees perform magic. -ERICA GALLAGHER
N ARTHURJAN LEGEND, MERLIN WAS A MAGICIAN AND
prophet who served as counselor to King Arthur. For peo­
ple in Dallas, Atlanta or the Midwest, Merlin is probably
more likely thought of as the sm ili ng mascot on the front
of a neighborhood car repair shop, however. That 's because
in these regions, Merlin Corp. ranks among the top car
repair and maintenance companies. Merlin has 70 total
shops in Illinois, Wisconsin, Michigan, Dallas and Atlanta.
W hile some merely recogni ze the blue·and-white mascot,
others recall the service they received at their local Merlin.
"We're very focused on the long-term benefits of providing the
customer with good service at a reasona ble prices," says Frank
Smo la, presi dent and CEO. "Our feeling is that our system
should: attract new customers; convert new customers to
repeat customers ; and get existing cu stomers to refer their
friends and families. Word of mouth is very important."
People also enjoy the haggle-free experience of visiting a
Merlin shop. "We provide the best package - we're not a
bundler of services," he says. "We sell and install only what's
US BUSINESS REVIEW APRIL 2C84
needed. When a customer comes to us, instead of selling a four­
wheel brake service, we oftentimes prescribe them a two-wheel
brake service because we know from experience that the front
brakes wear out quicker than rear.
"Frequently, that is all that is really needed," he continues.
"It boils down to treating our customers as we wou ld want to
be treated."
Smola believes that retaining employees is another advantage
to its customers. Because turnover is substantially less than at
its competitors, he says, return
customers wi ll be deali ng with
r---PROFILE - ­
Merlin Corp.
the same Merlin employee in
www.mertins.com
repeat visits. "[Working with the
2003 Sales: $40 million
Headquarters: Geneva, Ill.
same employee] means a lot to
Employees: 400
many consumers," he says. "They
Services: Auto repair
feel as if the person they know
Pres. and CEO Frank Smola:
"We looked at the service
and trust is there."
Though there are some services
you'd find in previous times at
Merlin doesn't offer - spec ifically,
the corner gas stations."
[>
157
MERLIN CORP.
(lutomotive service
i>transmission, internal engine repair and body work - it does
just about everything else, including anything needed to pre­
serve the mechanical life of a vehicle: an oil change, fan belt
replacement, new light bulbs, air conditioning repair, new
coolant and so forth.
Merlin has evolved from a muffler and exhaust company to
an under-car specialist; in fact, business in mufflers has
dropped 50 percent since its founding in 1975.
"We've had dramatic growth in the brake business," Smola
explains. "We're really a brake shop that does all of these
other services. Brakes are by far the largest segment of our
service offering."
Maintaining the Work Force
MERLIN WORKS TO DEVELOP EMPLOYEES TO MAINTAIN A
long-term, experienced work force. "We do far more coaching
and mentoring than decades ago," Smola says. "We've had to
squeeze all kinds of efficiencies into our business model, but it
has enabled us to compensate our employees better - we've
really refocused on the future of employees.
"In 1984, when I entered the business, our labor component
was only 14 percent of sales and today it's nearly 19 percent,"
he continues. "We're looking internally to develop people and
make sure there's something for them in the long term."
Recently, Merlin has invested in state-of-the-art training
programs Smola says are superior to the competitors'. "Our
ratio of training personnel to shops is higher than many larger
chains'," he says. "We won't be tempted to cut training and store
support - we're going in the other direction. We have a state-of­
the-art training facility for technical and management training.
"Instructors come from the industry - they either owned a
shop or worked as technicians," he continues. "Much of our
training is computer-based and led by an in-house instructor."
Asserting that "training is key to increased sales" and
"advertising isn't a cure-all" for slow sales, Smola adds:
"When a customer comes in or calls, they're also buying an
experience, so it's up to us to deliver it. As long as we have
trained people on board, we can count on them to playa signifi­
cant role in our success - our people make the difference."
In 2002, Merlin introduced the Two Language Program (TLP),
which is designed to assist a bilingual franchisee candidate in
purchaSing his or her new Merlin franchise by means of a
$10,000 equity award. The candidate must show substantial
proficiency in at least one other language in addition to English.
TLP is the latest addition to EOP and FASTRAK, two other equi­
ty assistance programs Merlin offers.
The Old Days
SMOLA SAYS HE FEELS A CERTAIN AMOUNT OF NOSTALGIA FOR
old-time repair shops and has incorporated some of those good
business practices into today's Merlin shop.
JANCO INTERNATIONAL
Janco International's StockTrac' has been the premier point-of-sale. shop-manage­
ment system in North America since 1982. Janco's cutting-edge technology combined
with its legendary customer and technical support continues to redefine software for
the undercar industry. Its latest release. Enterprise for Windows"'. will take the Merlin
franchise into the 21st century by providing its dealers with the state-of-the-art soft­
ware tools necessary in today's competitive marketplace. Janco is proud to be a part­
ner-in-profit with Merlin Corp.
158
US BUSINESS REVIEW APRl l?tXl4
"In the 1980s, the business was going to specialty service
providers and in the beginning, Merlin tried to imitate the big
guys and chased transactions," he recalls. 'Then we said, 'Let's
not follow the market. Let' s focus on keeping customers and
building relationships. ' We looked at the service you'd find in
previous times at the corner gas stations where 'my mechanic'
was someone you could tru st.
"In the '70S and '80S, 'my mechanics' dimini shed. In order to
evolve and embrace the future, we've had to look to the past."
Merlin's future growth is expected to be furthered both by
developing current shops as well as taking customers away
from the competition.
'We see growth in shop count; we expect to grow between 5
and 15 percent per year, depending on t he economy and real
estate markets," he says.
not fully understand the challenges of day-to-day operations or
how you give good service to a customer when five people are
waiting and one employee called in sick and you're waiting for
parts, " he says. "1 used to anguish over being a jack of all trades
and a master of none. But it's important to understand the big
picture and to never lose sight of the details. I try to pass this
idea on to our employees."
Community Matters
MERLIN KNOWS LIFE GOES ON BEYOND ITS BRICKS-AND-MOR­
tar shops and for 12 years, the company has participated in
Kids Helping Kids, part of the Snug Hugs for Kid s winter
clot hin g drive.
Each year, thousa nds of kids participate in this program with
the option of earning a collectible badge. These groups include
Girl Merlin, which helps by collecting and distributing clothing
with its huge fleet of courtesy vehicles.
"Bu siness is about getting an d keeping customers and
making profits, but in the end, companies must have a purpose
above and beyond measuring th emselves by money," Smola
says. "Our employees and franchisees are not just about money."
So t rue, that it was a franchi see w ho had the idea to start the
winter clothing drive back in 1990.
"When we started this, there was a feeling that if there's a
need in the community that is not served - or group of people
who need help - we should try our best to be part of the solu­
tion," Smola says. "In addition, a bette r community makes fo r
better business. _
Growing Relationships
IN ADDITION, AS MERLIN GROWS IN THIS MATURE INDUSTRY,
the interdependencies among vendors, customers and employees
become that much more important.
"It's important that we have open communication and mutual
respect," Smola says. "We're all on the same team - there are no
one-man shows."
And because Smola knows the ins and outs of the auto
se rvice bus iness - having been a mechanic during high school
and much of his college years - he believes he can pass some
wisdom of his own down to employees.
"1 think that if you h aven't been there and done that, you may
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