Start your engines! PEP secures automotive repair franchise

Posted: August 23, 2013 by Prison Entrepreneurship Program (PEP) in Communitas Auto Group, Communitas Ventures, From Our CEO
Tags: , , , , , , , , , , , , ,

auto-lab texas  autolabDear Friends:

As many of you know, the Prison Entrepreneurship Program has spent the past three years focused on two important initiatives: expanding our core programs and strengthening our long-term sustainability.

As our recent annual reports have demonstrated, we have made great progress on the first of these. PEP is now graduating more men than ever before while maintaining or improving our already best-in-class results in the areas of post-release employment, small business development and prevention of recidivism. This is attributable to the prayers and tremendous support that many of you have provided to PEP, as well as the prayers and hard work of our board, staff, volunteers and especially our participants.

Today, we are very excited to announce a major milestone on the second of these two primary initiatives:

PEP’s for-profit subsidiary, Communitas Auto Group LLC, has purchased the rights to become the exclusive master franchisee for Auto-Lab Complete Car Care Centers for the State of Texas.

We are working with Auto-Lab on the official press release, but I wanted you to be among the first to know about this significant development.  I also want you to understand the particular implications for PEP.

As the master franchisee for Texas, PEP’s Communitas Auto Group (“CAG”) will build and operate general auto repair shops under the Auto-Lab of Texas brand.  We will also promote the growth of the franchise throughout the state and will provide support to franchises sold anywhere in Texas. Immediate plans call for opening two locations within the first year, likely both within the Houston area. Once these stores are established, CAG will then look to expand to other major metro markets in Texas.

Throughout this process, we have been guided by Dr. Ben Litalien, Certified Franchise Executive. Ben is the Founder & Principal of FranchiseWell, LLC, a consulting practice dedicated to the improvement and enhancement of franchising.  In 2009, Ben also formed the Social Franchise Institute, a 501(c)(3) dedicated to providing education on franchising to the nonprofit sector where he serves as President and Director.  Previously, Ben devoted 20 years to developing several very successful franchised businesses, including On the Run markets for Exxon Mobil.  As Ben says, “There are only about 100 franchises owned by nonprofits around the country. This agreement will allow PEP to become the industry leader in this area within a few years.”

Auto-Lab, in operation since 1989, is a growing auto repair franchise business with an emphasis on being a complete car care alternative to the dealer. The company’s competitive advantage is its dual focus on delivering exceptional customer service while utilizing state-of-the-art diagnostic and repair technology to meet the evolving needs of modern cars and drivers. The company currently operates or supports about 30 locations in Michigan, Indiana, Iowa and Florida. Each repair comes complete with a 12 month/ 12,000 mile warranty on all parts and labor, which is honored at any location in the country. You can learn more about the company at www.AutoLabUSA.com.

Frank Brandenburg, CEO of Auto-Lab, sees the partnership with CAG as a natural fit for his rapidly growing company. As he recently told our team, “There is enormous potential for Auto-Lab in Texas. We are delighted to partner with such an innovative, entrepreneurial group that has such a broad network of supporters and potential customers and that is led by an impressive team of professionals.”

Both parties are very clear on the goals for this venture. While qualified graduates of PEP’s rigorous, values-based entrepreneurship program will be eligible for jobs created by these new stores, the primary purpose of CAG is to operate as a successful business, providing not only quality opportunities for graduates but a significant revenue stream to PEP.

We believe that this development will serve as a game-changer not only for PEP, but for the world of philanthropy. We will demonstrate how nonprofits can partner with successful franchisors to run a successful and scalable business that meets both their charitable mission and their financial goals.

As Dr. Litalien told me: “I applaud the PEP leadership for their vision in developing and implementing a significant social franchise strategy. More importantly, the model that we have crafted could well become a template for how other charitable organizations can align their mission with profitable ventures that enhance their sustainability.”

The initial capitalization of Communitas has been underwritten with a significant equity investment by Mike and Janene Humphrey.  Mike is Chairman of the Governing Board of PEP and a partner in Tanglewood Investments, a 17-year old private equity firm that has developed and sold several significant businesses.  Tanglewood sold its last major holding, Ameriforge Group, in December 2012, after 13 years of development during which it grew from $40 million to $750 million in sales.

One of CAG’s major accomplishments during the acquisition of this franchise was the development of a highly innovative capital structure that provides that the company will buy out the initial investors over time, providing them with a reasonable return while transitioning full equity ownership to PEP (which obtained a significant carried interest in the company at nominal cost).  The terms of Mike and Janene’s investment were considered carefully and unanimously approved by all other members of PEP’s Governing Board.

As Mike shared during a presentation to the Philanthropy Roundtable earlier this year, “Janene and I feel blessed to have the opportunity to further strengthen PEP by helping to build this new business, in effect harnessing capitalism to create jobs, new business opportunities and sustainable financial support for PEP.”

CAG is seeking other experienced, mission-minded investors to co-invest.  We are also actively seeking locations in the Houston area for the launch of the first two stores. Future stores are expected to open in the Dallas market, where PEP operates additional re-entry services.

I welcome the chance to speak with you about this venture, its impact on PEP and/or any questions you have about ways to get involved. Please feel free to contact me at any time, or click here to download our list of FAQ’s.

Sincerely,

Bert Smith, CEO
bsmith@pep.org

Comments
  1. messagesftls says:

    Congratulations on this outstanding initiative! May it exceed even the wildest expectations of the Board, investors and especially the PEP community (inside and out).

    Best of luck,

      Karen Vander Molen

    “When you forgive, you in no way change the past – but you sure do change the future.” ~Bernard Meltzer

    >________________________________ > From: I Was in Prison… >To: kvandermolen@yahoo.com >Sent: Friday, August 23, 2013 1:40 PM >Subject: [New post] Start your engines! PEP secures automotive repair franchise > > > > WordPress.com >Prison Entrepreneurship Program (PEP) posted: “Dear Friends: As many of you know, the Prison Entrepreneurship Program has spent the past three years focused on two important initiatives: expanding our core programs and strengthening our long-term sustainability. As our recent annual reports have” >

  2. […] the leadership team in the launch of a social enterprise that could provide long-term financial stability to the […]

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