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Success, Like Striking Oil

An Oil Change In Boston Led Two Brothers To Greater Hartford And A Lucrative Career Change

By JANICE PODSADA, Courant Staff Writer

September 12, 2007

Eleven years ago, Michael Ferri and Paul John Ferri, two brothers from Boston, decided to venture into business on their own.

But what kind of enterprise wasn't clear.

They compiled a list of businesses they didn't want to be involved in: No high tech. No product development, and nothing that would take them away from the Northeast.

They mulled over their options as they commuted to and from work - Michael worked for a real estate development company and Paul worked for a software design company. They thought it over as they drove to the grocery store, and once as Michael Ferri waited for his Chevy Blazer to be serviced at a Valvoline Instant Oil Change in Boston, where Paul also was a customer.

Maybe that was a subconscious moment of truth. Michael, 44, and Paul, 42, co-owners of Hartford-based Galena Associates, say they can't quite remember the exact moment when the idea of purchasing a Valvoline franchise hit. But when it did, they began researching the Valvoline chain and its competitors.

The quick-lube industry, they thought, appeared recession-proof.

"In boom times, people maintain their cars; in hard times, they're trying to extend the life of their vehicle," Michael Ferri said.

So they chose Valvoline.

"The math worked. They offered a lot of support," Michael Ferri said. In 1996, the brothers purchased 12 Valvoline Instant Oil Change franchises in Greater Hartford that employed about 80 people, and they moved to Connecticut.

They named their company after a ski lodge in the Canadian Rockies, Galena, and moved into an office above their Bristol service center. The brothers did not want to talk about financial matters - how they raised their initial pool of capital, their startup costs or their current revenues.

Today, the brothers said, they're profitable and growing. They employ more than 750 people and own 35 stores in Connecticut, 26 in New York, eight in Pennsylvania and two in Rhode Island, for a total of 81.

The brothers have called Connecticut home for the past 11 years, in Simsbury and Farmington.

Four years ago, they purchased a four-story brick building on Main Street in Hartford, and moved their main office to that location.

Based in Lexington, Ky., Valvoline has more than 820 stores nationwide, of which more than 500 are franchises. Its parent company, Ashland Inc., based in Covington, Ky., is a Fortune 500 company. It is the second-largest franchise and company-owned quick-lube chain in the United States, said Barry Bronson, a Valvoline spokesman

The Valvoline name, registered in 1873, is the oldest trademark in the petroleum industry.

The company's founder, Dr. John Ellis, hoped to discover a medicinal use for the new oil, which had been found in Pennsylvania. "He didn't find a medical use, but he discovered it made a great valve lubricant for industrial steam engines," Bronson said.

According to Valvoline Instant Oil Change Franchising Inc., an initial investment of $130,000 to $1.5 million for a single store is now required. The amount varies based on the store's location and whether the franchise owner elects to lease or purchase the property and equipment. And Valvoline wants multiple store owners. "It's a much more efficient model," Bronson said.

Franchise owners pay 6 percent of adjusted gross revenues to Valvoline. The company generally requires that individuals show a net worth of $1 million, exclusive of equity in his or her primary residence, and have $800,000 in liquid assets.

This spring, Galena became one of Valvoline's largest franchise owners when it acquired Expressway Lube Centers, a chain of 23 quick lube service centers in Connecticut, New York and Rhode Island.

The brothers said that the transaction was one of the largest quick lube acquisitions in the Northeast in the past 10 years. Galena did not disclose the purchase price of Expressway, a privately owned company based in Norwalk.

Galena immediately changed Expressways' product line to Valvoline. This month, the company began rebranding the stores, a process it hopes to finish by January.

Most of Galena's growth has come from buying existing independents.

Being a family business has been an advantage.

"It makes the trust easier. ... I can't tell you how many businesses we've picked up where a partner has had their hand in the till," Paul Ferri said.

"We have very different skill sets," said Michael, who is 14 months older than his brother. "Paul does all the accounting, all the human resources. He handles all the computers. I handle all the operations and the marketing. We have defined roles. If you don't have that in a family business, you have chaos."

Many of Galena's technicians and store managers don't come from the automotive industry.

"We've hired people from The Gap and Wal-Mart - people with a retail background," Michael said. "Knowledge of cars is easier to teach than customer service."

At their new store in Plainville, employees who are stationed topside or in the pit, work together to ensure each other's safety and to ensure that customers get in and out of the store in 20 minutes or less. Michael Ferri said the cost of constructing the new service center, which opened in December 2006, was about $700,000. "We lease the property," he said.

In the pit, a technician positions the rolling catch pan in place. With a flick of his wrench, the used motor oil pours out of the engine at a temperature of 200 degrees. The waste oil will be used to heat the store and the remainder is recycled. Used oil filters are also recycled, crushed and readied for use in steel smelting plants.

A conventional oil change, which includes a comprehensive check of vehicle fluid levels and up to 5 quarts of Valvoline oil, costs $30.99 at the Plainville service center.

"Their growth has been a model for the whole system," Bronson said. "They're aggressive on the acquisition side, but they also pay attention to their business. They are not growing faster than they can serve their customer."