The document discusses the changing landscape of the collision repair industry, including the increasing consolidation under multi-shop operators (MSOs) and franchises. It presents both the potential advantages and disadvantages of independent shops joining an MSO network. Key questions for shops to consider include the MSO's long-term strategy, increased workload and revenue, improved supplier discounts, level of control maintained, and resources provided for improving operations. The document also stresses the importance of certification programs in ensuring long-term success, as vehicles become more complex and manufacturers require specific training. Shops must adapt to changes in the industry through certification and commitment to remain competitive.

1. 22 Winter 2016 Collision QUARTERLY collisionquarterly.ca
PERSPECTIVES
T
he consolidation of the collision repair industry under multiple
store operations (MSOs) and franchises has been going on for
some time, with the last few years being particularly active. It is
veryexcitingtoseeCanadiancompaniesandCanadiancollision
industryleadersattheforefrontofthismovement.Fromvisionary
Steve Leal, moving forward with the global expansion of Fix World,
to CARSTAR Chief Operating Officer Mike Macaluso, winner of the
Young Leader of the Year award given by the 2015 Young Executive
Society,Canadiansareshapingthefutureofthecollisionrepairindustry
on a global level. Special mention must go to industry pioneer and
true gentleman Sam Mercanti who set the standard in Canada for
those who followed.
“Ourhomegrowncertificationand
accreditationprogramsaretrue
toourCanadianvalues.”
Investmentinthecollisionindustrybyprivateequityfirmsremains
strong. Fix Auto Canada received $8.8 million from the pension fund
LaCaissededépôtetplacementduQuébectohelpspeedupitsstrategic
expansion.ThesaleofCARSTARCanadatoDrivenBrandsInc.,aCharlotte,
North Carolina-based portfolio company of the Roark Capital Group,
came shortly after Driven Brands had purchased CARSTAR in the USA.
AnddonotforgettheOntarioMunicipalEmployeesRetirementSystem
purchase of a controlling stake in Caliber Collision Centers in 2013.
This interest by private equity firms indicates good news for the
collision repair industry, as these firms are viewing the industry as
profitable and as an industry where significant MSO growth is likely to
occur over the next five years.
Butwhatdoesitmeantotheindependentcollisionshop?Should
youjoinanMSO,andifso,whichone?IfyoudonotwanttojoinanMSO,
or the option to join is not available in your area due to MSO saturation,
what are the other options?
JoininganMSO
First, let’s talk about joining an MSO. This may be something you have
been seriously considering. If so, you should try to get clear answers
to some key questions and explore some of the proposed advantages
and potential disadvantages. None of this is rocket science, just good
business practice and common sense.
„What are the MSO long-term strategy and goals? This is probably
the most important question you should ask. With the rapid changes
occurringinvehicledesignandrepairrequirementsandtheincreasein
certificationprograms,MSOsneedtokeepupwiththespeedofchange
iftheyareintendingtobeinthisbusinesslongterm.Awell-articulated
strategicplanwithspecificgoalsandactionsisamust.Findoutwhatthe
MSO’sspecificplansareforhowitwillmeetthechallengesahead.What
doesitslong-termcommitmenttothecollisionrepairindustrylooklike?
„How much work will the MSO bring you? This is one of the first
questions you will want answered. How much work will show up at
yourdoorwhenyou“signup”?Howmuchmorerevenuewillyourshop
generate? Most likely there will be an increase, but you should try to
Is joining an MSO the Holy Grail?
Or is Certification the path to success? Or both?
b y K e i t h J o n e s
Choose Wisely!
Photo:iStock

2. collisionquarterly.ca Collision QUARTERLY Winter 2016 23
findouthowmuchandfromwhere.Howmanydirectrepairprograms
(DRPs)orpreferredsuppliercontractsdoestheMSOhavewithinsurance
companies? Are those contracts exclusive? What about contracts for
company fleets and city and government fleets? Get some numbers,
and get them in writing.
“FindoutwhattheMSO’sspecific
plansareforhowitwillmeet
thechallengesahead.”
„Will you get better discounts on equipment, parts, and supplies?
Theotherlinesonafinancialstatementaremoniesgoingout.Increased
buying power through economies of scale is a definite advantage of
joininganMSOandsomethingthatyoushouldmeasure.TheMSOhas
most likely negotiated greater discounts on the materials, equipment,
consumables,andservicescurrentlyusedbyyourshop.Thismightrequire
you to use different suppliers, which is a choice you might have to be
willing to make. Get the details of the MSO’s supplier deals/discounts,
and do the math.
„Willyoukeepcontrolofyourbusiness? Most MSO networks have a
set of standard operating procedures (SOPs) or guidelines. They might
not be that different from your own SOPs. Realistically, if you do not
have a set of SOPs, or if you have one and have not been following it,
you should have been. Consistency in business processes through a
clear set of SOPs is one of the keys to running a successful business. A
setofSOPsisintendedtohelpyourbusiness,nottakecontrolofit.Find
outiftheMSOhasadocumentedsetofstandardoperatingprocedures
developed for its shops.
„Willyoukeepyourshopnameandbrand?SomeMSOsbringabrand
name instantly recognizable to consumers. The MSO will want you to
rebrand your business to some extent, using its brand and marketing
materials.Thiscanbeadvantageousduetothepowerofalargernational
(orregional)brandidentity.Therebrandingmayoccurindifferentways,
depending on the MSO: 1) amalgamating your brand name with the
MSO’sbrandname,2)acompleterebrandingwiththeMSO’sbrand,or
3) loosely adding the MSO’s brand to yours. You will ultimately have to
decide how valuable your brand or name is in your market area.
„HowcantheMSOimproveyourbusiness? A good MSO can bring a
levelofprofessionalismthroughbusinesscoaching,mentoring,financial
acumen,etc.Yoursmayalreadybeaprofessional,high-performingshop,
but you should ask what other resources the MSO can offer. What kind
of business improvement programs does the MSO bring to the table?
WilltheMSOconductarevieworauditofyourbusinesstolookforareas
of improvement? Does the MSO have support staff such as business
improvement experts? Does the MSO employ Lean or 5S principles?
Does the MSO provide training, and will it help you get certified? Will it
help you get I-CAR Gold Class certification?
„CantheMSOhelpyoufindstaff? We all know of the ongoing trades
shortages.WhatplansdoestheMSOhavetoensuretheviabilityofthe
collision repair trade? What investments is it making to develop staff,
specifically technicians and apprentices?
„WhatistheMSO’stechnologystrategy?Usingcurrenttechnologyto
manageandmeasureyourshop’sperformanceandcommunicatewith
businesspartnersisimportanttoimprovingyourbusiness.Itisa“must
have,”nota“nicetohave.”EnquireabouttheMSO’stechnologystrategy.
Is it using a network-wide management system with scheduling tools
and customer contact software? How is it measuring the performance
of its network using technology?
„Isthereanexitstrategy?SomeMSOsofferanexitstrategywhenyou
are ready to retire or move on. This is worth checking out.
If the MSO path is still of no interest to you, or no longer available
in your community or trading area, can an independent shop still be
successful today? Can it compete? In my opinion, yes!
Theindependentcollisionrepairshopcancompete,but,likeMSOs,
itmustkeepupwiththespeedofchange.Today’sindependentcollision
shopmustberunlikeabusiness,professionalineveryway.Itmustaccept
and adapt to changes in the industry and make whatever changes it
needs to in order to survive. The areas to look at are no different for an
independentshopthanforanMSO.Thedifferenceisthatyouwillhave
to do it for yourself.
GetCertified
Certification,offeredbybothcollisionindustryassociationsandoriginal
equipment manufacturers (OEMs) and by the collision repair industry,
is a game changer.
Getting certified may be one of the most important steps you
can take to ensure the long-term success of your business. The vehicle
manufacturershaveaggressivelypushedtheircollisionrepaircertification
programs. These programs are not just for high-end vehicles anymore.
Starksinventoryisbothlargeanddiverseand
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continued on page 24 

3. 24 Winter 2016 Collision QUARTERLY collisionquarterly.ca
Almost every vehicle manufacturer has developed or is in the process
of developing a collision repair certification program for its brand(s).
As today’s vehicles become more complex and require more specific
trainingandmoreexactprocedurestorepair,itiscriticalthatyougeton
board with OEM certification. Meet the requirements, get the training,
and get on that list of OEM-certified repairers. And realistically, if you
are not trained and certified, should you be repairing these vehicles?
“Whateveryourchosenpath,aninvestment
inyourfutureandacommitmenttothe
collisionrepairindustryisrequired.”
Canadaonceagainisleadingthewaywithcertificationprograms.
The Automotive Retailers Association (ARA) is rolling out its Certified
CollisionRepairprograminBritishColumbia(ara.bc.ca/certified-collision-
repair-program).TheAutomotiveIndustriesAssociation(AIA)isrollingout
aCanada-wideprogram,theCanadianCollisionIndustryAccreditation
Program (cciap.ca/). These programs have great support from the
Canadiancollisionindustry.And,ingoodCanadianfashion,theARAand
AIAareworkingtogethertosynchronizetheprograms.Bothprograms
have been developed to complement the OEM certification programs,
not compete against them.
These industry-driven programs — by Canadians for Canadians
— are accomplishing what the collision industry in the U.S. has been
struggling to accomplish for many years. It is vitally important that we
supporttheseCanadianprograms.ThecollisionrepairindustryinCanada
isunique,andourhomegrowncertificationandaccreditationprograms
are true to our Canadian values.
Attheendoftheday,youwillhavetodosomething.Onlythosewho
adapttochangewillsurvive.Whateveryourchosenpath,aninvestment
in your future and a commitment to the collision repair industry is
required. The industry is at a tipping point. Many shops, both MSOs
and independents, have made that commitment, but there are many
which have not and which have difficult decisions to make in the near
future.Fiveyearsfromnow,Isuspectthattherewillbefewershops.The
remaining shops will be the ones that have made that investment and
commitment and adapted at the speed of change.
“Theindependentcollisionrepairshop
cancompete,but,likeMSOs,itmust
keepupwiththespeedofchange.”
The decisions you make about joining an MSO, remaining an
independent, and/or getting certified/accredited may be the key to
your survival in the collision repair industry. Therefore, remember the
wordsspokenbytheGrailKnightinthemovieIndianaJonesandtheLast
Crusade:“Choosewisely,forasthetrueGrailwillbringyoulife,thefalse
Grail will take it from you.”
KeithJonesisthemanagingappraiserofCrashSpaceAppraisalsLtd.Hecan
bereachedatkeith.jones@crashspace.ca.n
continued from page 23 
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