Gunning for Growth: Young Multi-Unit Franchisee is Expansion-Minded

In the mid-1990s, when the stock market was on fire and Darrell Lamb spent most of his days on the phone in an unending quest for new investors, he had a chance to invest in an Express Oil Change franchise. Lamb had some great advisers to rely on. His uncle was president of the company and his dad, an Alabama optometrist with a keen interest in growing ventures, was an investor.

"I saw it as a sideline," says Lamb. "I didn't really think of it as a career." But that's what it became.

"My dad always preached that you had to be in a business that made money whether you were there or not," says Lamb. "My family did well in Express Oil. And I was burned out on dialing for dollars, so I thought about owning the asset, building assets. In '97 I started looking for real estate. I built two and bought a third in Gainesville. From there I agreed to take over the operation of four more stores so a franchisee could get out. I parted with my existing investors, my parents, in that deal.

"My parents still owned part of the company," says Lamb, "but they were done. I partnered with an investment group after the other owner-operator was ready to get out. The operation wasn't doing well. The owner had lost his drive. He had left a job where he was making good money and needed to go back to his old career, but the investors were on the hook with the debt. I came in with no salary but got half of the action. Several years later I bought most of the partners out."

Five years ago, he made a fateful connection. He began working with Adam Fuller, a fellow entrepreneur and kindred spirit. A year later the two formed LF Management and now operate 24 Express Oil franchises under that group. And Lamb couldn't be happier with the way it's turned out.

"Some locations we own 50/50, some we each own 100 percent," he says. "But we operate as a group." It's a team approach that Lamb clearly enjoys. He's also grateful that he chose to buy into a franchise for a service that people truly need.

"Just look at luxury businesses," he says. "There's no need for what they sell. It's just a want."

Name: Darrell Lamb
Title: Owner/partner with Adam Fuller
Company: LF Management Group

PERSONAL

Age: 37
Family: Wife of 12 years; daughter
Years in current position: 12
Years in franchising: 12

Key accomplishments: When I'm 50 I'll be able to answer that question.

Biggest mistake: I did not pull the trigger on two acquisitions and I really regret it. I just didn't have the confidence at the time.

Smartest mistake: We had a situation with an employee leasing company I didn't oversee well, and I had a lot of headaches crop up. This was in 2004. I had to dig out of some bad accounting practices. That's when I formed my relationship with Adam Fuller. I thought it was going to cost a ton of money, but I learned a ton. It was at that time Adam and I realized we had a lot of areas of common ground. We formed a partnership and since that time we've acquired seven stores together, and it's been the best deal I ever had. I have a partner who pushes me, who I respect, and who genuinely cares.

How do you spend a day, typically? On the phone a lot. But it varies. I travel a lot too.

Work week: Monday mornings are conference calls with my top managers. We review last week's numbers in detail, discuss what challenges are out there. Tuesday mornings are a bookkeeping day when I sign checks. Tuesday and Wednesday I travel. I'm in four states: Florida, Georgia, Louisiana, and Alabama. Thursday is catch-up day, just trying to put my foot back down on things that crop up. And Friday is just paperwork, looking at financials. It's a numbers day.

Favorite fun activities: I'm learning to fly. I'm a real segmented person. I have family life and I have a work life. Work is probably more hours. But I travel with my family. We have a lake house I own with Adam. We try to spend as much quality time as possible with my family. Thank goodness for PDAs and email.

Exercise/workout: It's on my agenda. My partner exercises every day and it's on my to-do list.

Favorite stuff/tech toys: I could not imagine my life without my BlackBerry. I have three batteries for it so it never dies.

What are you reading? I read business-related self-help books. I'm a Christian. And I try to find time to read those books that make me reflect on what's really important in life. Most of my free time now goes to learning how to fly.

Favorite quote or advice? "We're not in the oil change business; we're in the people business." The guys will focus on what you talk about, so whatever I'm talking about is what team members tend to think about. My mother always said that you pay now or pay later. I worked very, very hard in the early days, and sometimes wondered if it was ever going to pay off. But you pay now or later. If I'm in town, I put my daughter to bed. We read together. Those are the rewards of paying at an early age.

Best advice you ever got: Joe Watson, my uncle, would always say we're not in the oil change business, it's a people business. It's hiring, retaining, attracting the best people. If I do that well, and those guys go out at the floor level, we all win.

Formative influences/events: My parents always discussed business with us at the dinner table at night. My parents are doctors but also investors. I was brought up in an environment where we always talked about business. And my Uncle Joe revolutionized our industry with his foresight. He passed away in May of this year, but he always focused on the basics: taking care of people and making sure they're taking care of customers.

How do you balance life and work? I think I'm better at it now than I used to be. With cell phones and PDAs, I'm never unreachable. I can do something with family and take 20 minutes to take care of things at work. I'm good at keeping a calendar, with my family and daughter's events blocked out.

MANAGEMENT

Business philosophy: I'm in the people business.

Would you say you are in the franchising, real estate, or customer service business? I think it's a percentage. Obviously, I own my real estate. But when you make those decisions, they take about an hour. Whether you rent or buy, that's a one-time decision. So it's never on top of my mind. But it is a large part of my net worth. I make that decision and then I don't revisit it. I don't think I'm in franchising. I think my franchisor developed a superior system and I'm in the customer service business.

What gets you out of bed in the morning? I have the attention span of a four-year-old. My day is never the same. I always have different challenges, and I like the challenges. I like trying to improve. When I lose focus, my business suffers. As an entrepreneur, it's very difficult to stay focused all the time. That's where I get in trouble. When I'm focused on building or buying a store, my operations suffer. I can always do better and my partner pushes me. We push each other.

What's your passion in business? The people I work with. I have different challenges every day and I work for myself.

Management method or style: It's always evolving. I'm too much of a cajoler, trying to convince people to get on the same page as me. But I let people know where they stand, set clear expectations, and follow up on goals.

Greatest challenge: I'm not as good as I should be and I'm working on it.

How close are you to operations? It has to do with the stage of the game they are. Atlanta is our most mature market. and when we have a market large enough to have senior managers I try to manage through them. But if I'm in there they think I'm the "say so," not the senior managers. In Auburn, Destin, Florida, and Baton Rouge, I just have one store in each market. I'm extremely involved where I don't have a senior manager.

Personality: I'm always going in a million different directions. I'm relatively high energy, passionate, but going in 10 different directions.

How do others describe you? Same way.

How do you hire and fire? We have two ways. At any new market we're doing a hiring seminar where we give the good, bad, and ugly about working with us and then sit down and talk to people. Our business is not for everybody. If someone doesn't think they're right we don't want them to waste time with us. And then we cull through the ones who do think they're right. We use a recruiter in Georgia. He'll cull through the masses and we use him extensively.

How do you train and retain? Training is hands-on. We have a set training program for managers where they're going through as much as a 12-week program; when we have a new store in a new market, it's a 12-week program. If I hire a guy to manage a store, we'll train them in-house with a mentor, with maybe a two-week training course with corporate.

How do you deal with problem employees? You sit them down, tell them where they are, have an honest conversation, set out clearly defined goals, and spell out the time to do it. And if they don't do those things, you need to move on. Early in the business, every franchisee I've seen is just too slow to say, "You're just not right." I terminate much quicker today than when I started in this business, but I'm having harder, more specific conversations about what they need to do. The right people will always respond.

BOTTOM LINE

Annual revenue: Approximately $20 million

2010 goals: Probably I'd like to add one new development store. We're always looking for an acquisition that makes a good fit. I talk to existing franchisees on an ongoing basis. Acquisitions are the fastest way to grow.

Growth meter: How do you measure your growth? Same-store sales. That's your benchmark.

Vision meter: Where do you want to be in 5 years? 10 years? We're at 25 stores now. In 5 years I'd like to see us at 35 stores with $50 million in sales.

How has the current economic cycle affected you, your employees, your customers? It's provided opportunities to develop that we would not have seen before. Land prices and construction costs have fallen. But we're in a steady business. People are driving less, which is affecting oil changes. But people are keeping their cars longer. We're seeing more repairs. Same store sales have slightly increased, but it's nothing huge. We're in a relatively sweet spot in the market.

Are you experiencing economic growth/recovery in your market? We're having to do a better job. We're hiring better technicians and more qualified workers.

What have you changed or done differently that you plan to continue in the future? We're trying to create better management systems, to set goals for my guys with a clear evaluation.

How do you forecast in today's economy? We try to stay very informed on the macro world of economics and banks, but I think if I was a great forecaster I'd be in a different business. I can only control what I can control. If we go in, provide superlative service with the right people, I can limit my downside regardless of what the economy does.

Where do you find capital for expansion? Five years ago, if you had a good regional bank you could finance everything. That's not the case anymore. I'm with five banks, five relationships.

Is capital getting easier to access? Financing in the last four months seems to have increasingly become more difficult. Six months ago we weren't having any trouble and it's tougher today than I've ever seen it.

Have you used private equity, local banks, national banks, other institutions? When I started I was exclusively with regional banks, and we developed a relationship with a national bank in the last seven or eight years. I have loans at local banks. On a macro trend side, local banks are stepping up to the plate for Express Oil franchisee owners. Regional banks have pulled back in some, but we just did a deal with a regional bank.

What kind of exit strategy do you have in place? My exit strategy, and I don't know when it will be, is to sell the business and hold the real estate. I think in terms of five years and I'm not going anywhere in five years.