Ken Walker’s accounting background laid the foundation for his skill sets as a CEO. His incredible ability to trust his people empowered talented individuals to build the world’s largest auto holding company within the franchise space. After turning around Maaco, Ken Walker and his team began acquiring complimentary auto brands to deliver more value in the marketplace. In doing so, Ken Walker and team grew the system from $350M to north of $900M. Through the journey, many team members grew their skill sets and expanded their abilities as they climbed through the ranks, wearing many hats and sharing their talents to make the vision for the organization a reality. This conversation sheds light on the world-class skills of Ken Walker as an executive leader. His ability to find the talents of others and to put those talents on display by empowering and supporting them is impressive, to say the least. We cover the strategies and tactics carefully executed by Ken throughout his leadership tenure as CEO of Driven Brands. This show is a must-watch if you are interested in right-sizing and taking brands to the next level.
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In this episode, I am humbled to have our guest on the show. He was the CEO and Chairman of Meineke and Driven Brands. He was instrumental in helping Driven Brands grow from $350 million in systemwide revenue to $920 million in systemwide revenue. He was also the Chairman of the International Franchise Association. Ken Walker, welcome to the show.
Thank you. It’s good to be here.
Ken, you’ve done so much in franchising. You’ve given back in so many different ways and have most certainly been a leader in the franchise industry. However, a lot of folks don’t necessarily raise their hand and say, “I’m getting into franchising.” Franchising is often misunderstood and generally looked at as McDonald’s, Burger King or something to that extent. The realization that franchising is in all sorts of industries from home service to auto, which you’re very familiar with. I’m curious and I’d like to know, how did franchising find you?
It goes a long way back. I was doing turnover. I was a CPA by training. I had become an Operating Manager with a company called Big 4 Automotive out of Fort Worth. We kept buying distribution centers and I figured out how to turn them around. I got a chance to take what was then the largest bankruptcy in automotive history out of California, a company by the name of Curtis. I was lucky enough to go run it while it was in Chapter 11 and it was a public company. After 4 years, we had 2 young daughters and 2 sons back in Texas. My wife said, “It’s time to get out of California.” She could see that it wasn’t a great place to raise kids.
I got recruited to go to Memphis to a company called Parts Inc. which was owned by GKN out of Great Britain. Also, Parts Inc. the company that I was responsible for owned Meineke and Sparks Tune-Up and was a franchisee of one more. I forget who it was. After we fixed it and sold it, I said, “It’s time to talk about what happens to me next. Is there an exit package?” They said, “We’ve got this great idea. We’ve got a problem at Meineke. Would you mind going over there?”
In 1996, I went to Meineke and what they described to me was a problem. They said the franchisees think that we have been misusing the advertising fund but the total amount is $16 million and we can handle that out of our chunk change. That $16 million issue ended up in the company losing a lawsuit that got troubled and it ended up being $650 million. Half the franchisees hated the company. Half the franchisees loved the company. Those two halves hated each other. It was much more an emotional issue than it was an accounting issue that I had been used to fixing.
My view is that people want the right people. You got to put them together to let those things be fixed. We did that in a couple of ways. We had an issue I mentioned to you about we started raising money for the Children’s Miracle Network. That way, even if you’re in the half, the group that hates the company, you love Children’s Miracle Network, there was nothing to dislike about it. Those that loved the company were all in as well as the company.
We started raising money via a charitable trust that raised money for Children’s Miracle Network and ultimately put the Vertical People Mover, which was the elevator at the local hospital here in Charlotte. People liked each other. After the lawsuit got reversed, the franchisees were taxed with some of the costs associated with it became much easier to settle the lawsuit at that point in time.
We renegotiated a new contract and I told the franchisees, “If we can get this done by Friday, I’ll charter us a boat down in the Caribbean and we’ll go sailing.” We got the contract finished and took the leaders from each of the halves of the franchisees and put them together on a boat. Some of them were washing dishes together and some of them were raising the sails together. People being together solved the problems. That was much a cultural issue. That’s what got me to franchising in the Meineke.
That is an incredible story, Ken. There are so many different elements there that can be elaborated on. You so directly overviewed in a handful of minutes there that I’m sure was such an amazing journey. What I love that you mentioned was that at the core of that, it was people coming together. You mentioned that it was more than an accounting problem.
However, it was a matter of getting these two sides of the fence on the same page, those that were in line with the franchise and those that were not. What’s incredible about that is that it took something beyond any one individual or the company itself to unite them. It was a cause greater than everybody, that charitable initiative that aligned everybody. Ken, I’m curious. You had mentioned that it was the misuse of funds there but the misuse of advertising dollars.
The claim was that the lawsuit finally, when it prevailed, showed that was not being done. The issue was that the company had formed its own advertising company that it owned and it had told the franchisees that it didn’t make money on advertising. The advertising company that was owned by two of the previous owners had made some money on it and they didn’t feel fully disclosed.
Truthfully, I had a great mentor at Meineke, Ted Pearce. Ted and Gene Zhiss both were VPs there when I got there. They both taught me franchising. Both of them live with such integrity. Ted, the attorneys said that sunlight always disinfects the truth. You make sure that you had plenty of sunlight on issues and the truth will come out. That’s where you ultimately want to be.
You were coming from a publicly-held company there in Fort Worth and then coming into a new industry and franchising with an organization that had some serious cultural differences. There are two real challenges there to tackle. I was curious, how was that journey coming to learn about franchising? It is different from a traditional corporate company.
You live it and learn it. My journey was made much easier because of the two gentlemen that I mentioned, Gene Zhiss and Ted Pearce. Both of them had been with Meineke for twenty-plus years by the time I got there. They pretty much taught me franchising. As we were on the fly, I may have been more difficult with our attorney, Ted Pearce because I kept wanting to do things and he’d shake his head and tell me, “You can’t do that.” He had some great sayings. One of them was you disinfect the truth with the sunlight. One of them was that no matter how flat that pancake was, there were always two sides. Talking about stories, it’s how people want to interpret the stories that define the reality of the situation.
They were great mentors to allow me to learn from their knowledge. Gene Zhiss was the one who had such a huge heart. Gene was sitting at home on a holiday and happened to see the Children’s Miracle Network, CMN broadcast. He got up out of his chair on this holiday, went down to the TV studio and volunteered on the spot to answer phones and help raise money for CMN. He came back and suggested the idea that maybe that’s where we knew and thought we needed to find a charity to support to bring the franchise groups together. Gene found that one and it worked great.
You were pretty much on point there. I was curious about what that journey of franchising was like. Gene and Ted had an instrumental complementary role in helping you make that transition. You said it was great living it out and having good peers to help with that learning curve and franchising. The Children’s Miracle Network became the center of this divide within Meineke. What was that process like?
Taking two sides of the organization that probably didn’t speak to each other and were much different in terms of points of view seems to me a pretty intimidating situation and overwhelming, especially when you’re new to the organization. You were put in that role for a reason. Your skillset combined with your team ultimately helped bring that organization together, which is an amazing organization in franchising and the country in general.
It was pretty easy because we didn’t tell the world and ourselves that we were focusing on bringing everybody together, although that was one of the benefits. We knew that we needed to get everybody pulling in the same direction. We either had to pull against a competitor or we had to pull apart something and we chose to pull apart something.
It was easy because it was something the franchisees, irrespective of whether they believed or didn’t believe the company, believed in this mission. Some of the strongest advocates for the company and some of the strongest against the company were all force-pulling, taking care of kids. How do you not love giving money to kids that needed our medical attention? It was something that was a lot bigger than our issues were.
It doesn’t sound like the franchise owners were struggling to be successful. It sounds like they were at Meineke and were there to stay. They were frustrated about the use of those funds. Being able to raise funds as an organization for CMN ultimately gave a unified cause beyond any one person or opinion. You eventually took Meineke with your team and created a holdings company in Driven Brands.
Driven Brands is an amazing holding company in franchising in any industry. When I knew that you were coming on the show, I was very much looking forward to hearing from you about how that process came about and the formation of Driven Brands. The story behind it, Ken, if you wouldn’t mind sharing it with the audience, that’d be great.
I’d be glad to. It was a pretty easy decision. With the lawsuit, we were having to put monies up to sell franchises. Selling franchises is very difficult. We decided that we could grow and build more franchises ourselves. Our franchisees were successful. They got back what they put into it emotionally and great people that worked hard and made money. We were either going to open a bunch of those ourselves or buy something else to continue to grow. That was when I started looking at franchises to buy.
We bought Econo Lube first. When we were buying Econo Lube, it felt bad to have Meineke own Econo Lube. It made them sound like a second-class citizen. We had another company called Meineke Holding Company that owned Meineke. All we did was change the name of it from Meineke Holding Company to Driven Brands, which one of our accounting controllers came up with. 4 or 5 of the managers came to it and knew that we were looking for a name.
It’s amazing if you’ll trust your team. I’ll tell you a quick story. Many years before that, I was in California and this company was in Chapter 11. We listed all the problems that this company had and what we’d like to do. We forced votes and ranked them. One of the issues was we had a union in two of our facilities out there in Sacramento, California and Oakland.
One of the managers came to me one day and said, “You can check number sixteen off your list.” I wasn’t focused on sixteen. I didn’t know what sixteen was and it was voting out the unions. I said, “How did that happen?” He said, “You said you wanted it done. I went up there and told them and they said okay. They voted it out.” That’s what I mean about trusting your people.
When that gentleman, Dave Holland, left California, he went with me to Memphis and then he came to Charlotte. He’s one of these guys you trust they’ll get something done for you. Tell them what it is you want to be done and get out of the way. He did it. The same thing happened. What did you ask me about? That was what prompted the reply anyway.
Your team had ultimately come up with the name Driven Brands.
They knew we were looking for a name. The 4, 5 or 6 of them over lunch came up with the idea and presented it to me and sounded like I could use it. We couldn’t have paid somebody more to find that name. It worked well. As luck had it, we used that name and bought Econo Lube first and then Aero Colours, Auto Qual and Drive N Style, which were cosmetic types of franchises. Our plan was to be automotive in the franchised world. We said non-competitive.
The reason the Econo Lube, although they were doing much of the same issues that Meineke was, they were in California and we didn’t have much at all in California. Out of 800 or 900 franchises, we maybe had 12 in California before we bought Econo Lube and got another 50 or something. We then bought Maaco. It was through these acquisitions that we primarily grew. We went from $350 million to over $900 million, nearly $1 billion. It was specifically through buying other franchises and normal growth inside the organization, a number of franchises that you had.
I would assume that has some accounting and financial implications, bringing these entities together. Was that the predominant skillset that you brought to the team?
I’m not sure I brought it but it was there because our accounting and sales organization did a wonderful job of figuring out what they were doing and moving it. There were a lot of cost implications. There were financial implications. Our CFO at the time, Mike Carlet, did a good job of figuring out the problems. He and Mark Street had been with us forever. Mark was the original CFO. He hired Mike and Mark took on one of the others. He did everything at some point in time in the organization.
You have to love those team players.
Mark, especially because he started as the CFO for me in Memphis. We were owned by a British firm and Mark was British. They like to send over people. Mark was a great young guy. He took the CFO role when I came to Meineke. He came with me shortly thereafter and ended up serving as the VP of Information Technology but he also served as the VP of Sales at one point. I don’t think he was ever the VP of Operations but a great young man that probably wouldn’t appreciate the term young man anymore. He’s not as old as I am.
He’s a tremendous team player with a lot of skills. I’m sure great people skills are at the center of that. Ken, what’s standing out to me about you is your ability to bring teams and people together, appreciate their skillsets and empower them to level up the organization in their unique way. Keeping the team and the organization in mind but empowering your trusted teammates to get the job done. Ken, what is your background? You’ve served as CEO in several organizations but where do your core skills come from?
I was a CPA and worked as a CPA in Fort Worth for six years before I started into the real business of the world. I had a great mentor in Fort Worth at Big 4 who consisted of getting up and walking around the warehouse and to the office, shaking hands with everybody and knowing everybody. He knew whose daughter was sick or whose mother or dad was sick. He cared about his people. That was as genuine as it could be. That’s who the man was. That was probably one of the first mentors I ever had whom I learned something different from because I was numbers-driven like, “This is the line to take. Follow it and do these things.”
We had a warehouse when I was there in Lubbock and just blind luck. They said we wanted to turn it around and it was losing money. Our Fort Worth warehouse was killing it, making money and had for a number of years. I took the two sets of financials and laid them on a piece of paper side by side. I said, “There are only 2 or 3 numbers that are different. The gross margin is lower there and the payroll cost is higher as a percent of sales. All we got to do is raise the price and right-size the organization.”
I did that. What I didn’t understand was half the customers left because the price had gone up. I said, “There’s good news and bad news here.” When I lay the financials beside the gross margins in line, even though it’s at a smaller level, all we got to do is right-size the number of people. We did and then something happened that I wasn’t expecting. All those customers that had left came back because they liked the service that they were getting. I had to go out and hire a bunch of people to replace the ones that we had right-sized. It made a whole career out of doing that thing from that point forward.
I was in accounting, CPA. Bringing these organizations together as you were acquiring them with this new entity and Driven Brands, a fundamental element of that was understanding the books and the P&L and finding opportunities to close gaps and level up that organization through the numbers. I’m making an assumption there but I would assume that was a fundamental element of bringing the Driven Brands organizations together and ultimately growing from $350 million to almost $1 billion in system-wide revenue. What were those elements that created that growth? We’ve hit on a couple here like your ability to bring a team together and trust them. With some mentors, you learn a couple of things about the power of people and being beyond yourself.
Even the nuanced details of who is sick of members on your team, that’s incredible leadership there. I could only imagine from an employee standpoint how much that means. Not every organization leads that way. I can see that is a staple in creating a team to be able to take on that growth. You add in the ability to look at balance sheets and finances to find opportunities. What were some other elements that allowed you to make those acquisitions and nearly grow to $1 billion in revenue?
I did understand the financials and I understood that if I put two companies together, it was a case where 1 and 1 might equal not 3 but 2.5. I knew where to look for economic changes. When we bought one of the companies, I remember the number of people they had per franchise in the corporate group was way different than what Meineke was. It was way higher. I thought that I could probably match that but they had a different role within the organization and I ended up not changing that one. We did always have the CEO and the CFO at the high level. We typically would be able to take out because we could handle more within the Driven Brands group and take those out. That raised the value.
One of them, we took $1 million of cost out in less than a year. Those things make up a difference. It worked fine. The other thing was I had a friend that pointed out that franchising is one of those businesses that is typically very cash rich. If you say you made $1 million, you got $1 million of real cash. I teased that the most expensive asset in our company was my desk and it was worth probably $500.
You don’t have to spend a lot of money as the franchisor on fixed assets. You’re always doing it on live assets and finding ways to help the franchisee be more successful but you don’t have it in fixed assets. If you said you made $1 million, you typically had $1 million of cash or close there too. That was a real biz advantage because if you take somebody that’s in the oil drilling business, they may think they made $1 million but they had to spend $400,000 sticking that hole in the ground and building the infrastructure around it. Franchising lets the money flow to the top quickly.
It is pretty streamlined. That is only going to make for healthy books and growth to ultimately support franchise owners. On that point, Ken, when you take an organization and acquire them into your Holdco, what are some of those fundamental elements that you look at in that organization to say, “We need to level up this organization by XYZ to get it up to par with our standards at Driven?” What were some of those fundamental elements that you leaned on when making that acquisition in welcoming a new brand into Driven Brands?
Technology is always one of the issues because it seems to me that a franchisor is supposed to be adding to the value chain of a franchise. The real heart and blood are the franchisees that are running through the system, doing all the work at the consumer level. The franchisor’s role is to get customers in the door, either through advertising or the brand.
Technology is always one of those things. You can differentiate yourself from your competitors. Let’s take the automotive business. There are probably 250,000 places you can get your car fixed in the United States. When you take Meineke, Maaco and the big brands and add them all together, you maybe get 5,000 to 8,000 units. I don’t know what the numbers are specifically. It’s a lot of mom-and-pop, small people that you’re competing with. What can you do differently or better than anybody else with what ought to be technology?
That was one of the first things that we worried about. How do we improve the technology? There was always an element of cost reduction. I was good at doing compare. You put 2 numbers together, 5 on one side and 4 on another. I nearly will always tell you that 5 is bigger than 4. I figured that out. You lay the financials down and figure out where the gaps are maybe.
Wherever there was a big gap, I would go in and try to figure out why that number was bigger than the other one. It might be in Maaco where they were doing a lot more for the franchisees but we’re charging a higher royalty as a result. You don’t want to change something because the numbers are bigger. You want to get into the detail and understand it. My financial background helped me do that.
Looking at the financials is the scoreboard and that’s the objective measure that gets beyond human opinion. As a franchise owner, in particular, your head’s down in your business. You’re probably not that objective about your performance. It’s pretty biased because you’re working your tail off. Everything is as good as possible but being humble and able to truly look at the reality of the situation, which is the scoreboard there in a business, the financial or in this case, looking at an entire organization. Those financials are going to show downsides or opportunities depending on how you look at it. You tackle them as opportunities.
From an engagement standpoint, we’ve talked about a lot of things like your leadership, your team’s leadership and the importance of the financials and opportunities there. I would love to hear from you, Ken, what were some of the practical approaches that you took to help with engagement? Getting in front of customers is the franchisor’s responsibility and the franchisees are to deliver that brand experience. That requires engagement and commitment to whatever way of doing business whether it’s Meineke or Maaco. What were some of those practical approaches that you took to keeping engagement top of mind and helping keep franchise owners aligned with the way that the organization did business?
We had franchisee councils and they weren’t just for show. I genuinely trusted and believed those guys. One of the requirements within Meineke and then ultimately Maaco and the others was that they had to send in their financials every year. If Meineke, as a whole, was having a problem but I had some franchises some outliers that were doing well, I’d try to figure out why they were doing well and then take that information and share it with the rest of the franchisees.
You look so smart and you’re not doing anything but taking what somebody else has already figured out and leveraging it against the whole of the franchise. The biggest advantage that a franchisor has is that he can see the ups and the downs within his organization and give them. Not everybody wants to get better. Some guys want to deal with what they’re dealing with and aren’t looking to grow or expand it. That’s okay. That fits their lifestyle and it’s their decision. They’ve got the money and the energy into it.
Having a council that you trust and rely on is important. I’ll tell you one other story. I took the group on a big boat into the Caribbean to try to put the two sides back together. One of the things I found out was on those trips, you’re together night and day for 5 or 6 days and they would tell you everything that was going on in their business. We used that as the start of our strategic planning each year. I would listen to them and say, “You got to give me 100 ideas before you get off this boat of how we can make this company better.”
They would work their tails off. We would sail from port to port during the day. During those timeframes, we’d have a big table outside and be taking notes. I’d get 100 from 2 or 3 different groups a year doing that. We’d work them into our strategic plan, at least the best of those ideas. It’s an idea but it may not be the one that you can afford to effectuate at that point in time. You can only afford to do the top items each year.
We would work on those top items and put them into our strategic business plan for the upcoming year and somebody would be responsible for them. I’d report back to the group the next year. That kept them engaged. I went on that boat trip a couple of times after I quit doing it with franchisees. It wasn’t near as much fun as a group whose sole focus is to have fun. In the meantime, there’s a way to make the company a better place and the brand a better brand. The franchisees make more money and all of those things are the right thing to be doing as a franchisor.
Thanks for sharing that, Ken. There is so much wisdom and impactful insight there. That feedback and innovation are coming from the franchise owners and humility as an organization, being willing to hear out those franchise partners that are day in and day out in the business and truly understand how to make it better. I love that you said that kicked off the strategic planning that you would do year in, year out.
It got me thinking about something that is becoming more of a trend. You mentioned different councils. In hearing input from those councils, it’s a franchise advisory council but more and more, there’s a trend of franchise associations growing within the franchise industry. I’m curious about your thoughts. Is that an effective way to gain council from franchise owners and this growing trend of franchise associations? They can have some negative implications if they’re started for some issues within the franchise but if a franchise association started with goodwill and truly to make the organization better, what are your thoughts about franchise associations and franchise councils?
It’s exactly what you said. They can make it better and it depends on what their intent is. If it’s just to gain power, it’s a bad situation. Within our organization, Meineke had a strong council and association and Maaco had none. We took both groups individually onto the boat and both groups worked fine. It depends on what you’re trying to accomplish with the association. I don’t think I can give you a one-size-fits-all answer. It’s another group to manage or encompass, as opposed to managing, in some fashions. You’ve got to figure out how best to do that based on what you know about that organization and those individual people.
It’s about the people and ultimately working collectively to make the business better.
As long as people’s hearts are pure, then nearly anything will work. Often, people have other agendas. If you’re running the organization and you figure out what those other agendas are, that’s okay.
It’s about individuals having their hearts pure and the right intent there which is ultimately the organization in making the company better. Ken, I feel like I could talk to you all day about so many different topics but I’m curious, why do you love franchising so much?
It’s because it works. Here’s what I’ve figured out. There is no way I, as an individual, could put somebody into a franchise in Seattle, Washington that cared as much as I cared in Charlotte. That wouldn’t translate. If I put a franchisee there, he’s doing it for his reasons and it works. There are different levels of organization. If you have a business that can make money hand over fists, maybe the Apple stores, then it’s okay to have company-owned. If it’s one that takes effort, work and thought at the franchisee level, then you better have somebody that’s worrying about it at that level as much as you are at the corporate level.
The consumer is getting a great product because of that dynamic that you explained and I couldn’t agree more. Ken, it’s been an honor and a pleasure to have you on the show. I have most certainly leveled up. I’m sure those that are watching have as well. Ken, thank you for being on the show.
It’s my pleasure.
If anybody is interested in getting in touch with you or learning more about you, how can they do that?
Go through you. You’ve got all the info. I’m not looking for anything else. I’ve already made my mistakes. It’s funny that it’s the mistakes you make that you learn from. Heaven knows I’ve made enough of them.
Through that, Ken, you’ve certainly made a tremendous impact in franchising. I’m incredibly grateful for your leadership and everything you’ve done with the International Franchise Association and Driven Brands. I work with folks that used to be at Driven Brands so I could tell you that I have been impacted by your story and journey and what you shared with us.
I truly am grateful for you as I know many others are. Andy Fuller, the Founder of Mosquito Hunters was gracious enough to help you get on our show. He most certainly is. It’s one testament to many individuals that have been impacted by your wisdom which has come from a career of mistakes and learning. If you have also been inspired, leveled up and learned from this conversation, please give this a like. Most certainly, subscribe to our channel. That’s how we can continue to grow. Share information to help others level up. Most importantly, please drop a comment down below and contribute to this conversation. Give us your thoughts on all the different talking points and themes of the wisdom that Ken shared. As always, level up.
Raised on a dairy farm in Texas before launching a business career that took him across the globe, Ken brings a broad perspective to the board table. Among these diverse experiences, Ken has a deep operating history in both the automotive aftermarket services industry and with the franchising business model – two areas of particular interest to Halifax. Ken served as CEO and Chairman of Meineke Car Care (Fund II investment), which he directed to become a major part of Driven Brands, the world’s largest collection of auto aftermarket services businesses.
During his tenure with Driven Brands, Ken grew system revenue from $350MM to $920MM across brands such as Meineke, Maaco Auto Painting, Econo Lube N Tune, Aero Colours, Auto Qual, Drive N Style and Tortal.net. He has served as the Chairman of the International Franchise Association and continues today as an active member of leadership. Ken also served as the Chairman of the Automotive Warehouse Distributor’s Association and as Vice Chairman of the Auto Car Care Association.
Ken has helped Halifax corral strong results as a board member of Caring Brands International (fka Interim Healthcare, Fund III investment), where he helped to re-imagine the business as the leading global franchisor of home care. Most recently, Ken served as Non-Executive Chairman of Pirtek (Fund III investment), where his insights helped drive impactful changes to the franchising model. Ken and his wife reside in North Carolina and are the proud parents of four kids and joy-filled grandparents of ten grandchildren.