By Nick Fortuna

Acquiring Royal Car Wash’s 14 locations gave GO Car Wash a total of 80 washes across six states – New York, Kansas, Missouri, Nevada, Texas and Virginia – and increased the company’s payroll to about 850 employees.

The two businesses said they’d partner to build 10 additional car washes in upstate New York. And Rochester, New York-based Royal Car Wash announced that it would share profits from the sale with all of its shift leaders and above, disbursing almost $2 million among 35 to 40 loyal workers, according to the company.

But a month after the deal, another significant number had emerged for Gilbert, Arizona-based GO Car Wash: zero. Royal Car Wash had about 300 employees, and every single one had decided to remain with the new owner. Convincing all that talent to stay aboard marked a major victory for GO Car Wash, especially since more Americans have been quitting their jobs than ever before. A record 4.4 million Americans, or 3% of the workforce, voluntarily left their jobs last September, according to the U.S. Bureau of Labor Statistics.

Chris Andersen, vice president of business development for GO Car Wash, said the worker shortage and high turnover rates make it more important than ever for car washes to retain hardworking employees following a merger or acquisition. That’s especially true when the company being acquired is thriving, he said.

“It was our intention to keep everybody,” Andersen said. “I mean, the talent is what got the company to the place where it is. I think a big part of why we’re able to keep so many team members is that we recognize them for what they do well. Royal Car Wash is very successful, so when we came in, we told them that those best practices weren’t going to change. I think if you walked into those sites today, they would tell you nothing’s changed.”

Danny J. Daniele, president of Daniele Family Cos., which owned Royal Car Wash, said his family intended to keep growing its car wash business through 2025 before exploring a sale. GO Car Wash aggressively pursued the company, however, leading the family to sell – but not before it had secured jobs for all its employees.

Daniele said GO Car Wash’s positive corporate culture was similar to that of Royal Car Wash, so he had confidence that the employees who had helped to build his family’s business would be in good hands.

“These team members, they brought their passion,” Daniele said. “They brought their blood, sweat and tears every day, and they’re the ones who really helped us get to where we got. We were able to structure the terms of the deal so that it made sense for us to accelerate our exit strategy, and part of that was ensuring that our team retained their jobs and had a pathway for continued success and growth.”

The Power of Sellers

Car wash operators who are selling their business can have a great deal of influence over what happens to their staff, said Harry Caruso, founder and chief executive of New York City-based Car Wash Advisory, which acts as a sales broker for car washes.

Some operators simply want the highest possible sales price for their car washes, while others are willing to take a bit less in exchange for assurances that employees will retain their jobs, he said. Every sale is different, so each seller must decide how important it is for staffers to be taken care of, Caruso said.

“The biggest question – the proverbial 800-pound gorilla in the room – is whether the buyer is going to keep your staff, and that’s on a case-by-case basis,” Caruso said. “A lot of times, they’ll just fire everybody. There’s a sound argument to be made that I’d rather start with a clean slate than start halfway through somebody else’s problems.

“At the other end of the spectrum, sometimes the acquirer is essentially buying the employees more so than the wash itself, and I think that’s often true in single- and double-site acquisitions,” he said. “For single-site operators, their primary asset, or their differentiator, is their team.”

Andersen said that when trying to retain employees after an acquisition, it helps to have something to sell. GO Car Wash prides itself on building a corporate culture centered around five values – teamwork, integrity, caring, fun and continuous improvement – with an emphasis on treating employees and customers with respect, he said.

In addition, GO Car Wash offers competitive pay and generous benefits, and with 80 locations, workers will have more opportunities for advancement than they would with a smaller outfit, Andersen said. Car washes that are acquiring smaller chains tend to be in a strong financial position, so they typically can find a spot for a talented worker.

Andersen pointed to Salvatore Belfonte, GO Car Wash’s marketing director. His family owned the Belfonte’s Mirror Image car wash chain, which primarily served the Kansas City market, before it was acquired by GO Car Wash. Belfonte and his three brothers joined GO Car Wash, and after wearing many hats for his family business, he was finally able to focus solely on marketing, the aspect of the business that interested him most.

“When you have a small organization with 10 sites or fewer, you really can’t focus on one functional area, but when you have 80, you can,” Andersen said.

Breaking the News to Workers

Daniele said Royal Car Wash told its executive team about the potential sale a month before it closed, and the rest of the employees found out two weeks beforehand. He said the company wanted to be transparent, fearing that employees would hear about the sale from the local newspaper. But at the same time, complex business deals that involve due diligence and extensive negotiations break down all the time, so he had to wait until the signatures were dry.

“The last thing you want to do is share with your staff that you’re being acquired and then it doesn’t happen, because that just kills the culture,” Daniele said.

Daniele said car wash operators who are considering selling should remember to stay focused on growing their companies, which will preserve their business’s valuation in case a deal falls through.

“Pretend like you’re never going to get acquired, and continue to make every business decision based on what’s best for your company and your team,” he said. “Then, if you happen to get acquired, great. But if you start thinking that you’re not going to replace this piece of equipment or things like that, that’s when you start going downhill. Your value goes down, and you start losing people.”

The day after the sale closed, all Royal Car Wash employees technically were terminated, but only momentarily. About a dozen human resources professionals from GO Car Wash visited the acquired sites to guide employees through a streamlined onboarding process, Daniele said. They just needed their driver’s license and Social Security card to enroll in the company’s payroll system, and they had to pass a background check, he said. Salaries remained unchanged.

Andersen said it was important for GO Car Wash to educate its new employees about the company’s vision, culture and standards so that they would know what was expected of them, and what the company could do for them.

“It’s good to talk about those values, but what new team members really look for is do we actually walk the talk?” Andersen said. “We talk a lot about caring about our employees, and when they see that we really mean it, they typically come along with us.”

A month after the changeover, Daniele said his company remained in close contact with GO Car Wash, discussing operational and staffing issues in addition to plans for building more car washes.

“We’re remaining involved from a light consultancy position,” he said. “The only reason I wanted to remain on as a resource was for the benefit of our team.”

A Flurry of Deals

Like GO Car Wash, Scottsdale, Arizona-based True Blue Car Wash is a rapidly growing brand, and CEO Stu Crum said that in most cases, the company wants to keep workers from the chains it acquires.

In October 2021, True Blue purchased a Rinse n Ride location in Chandler, Arizona, after trying to buy the entire five-wash chain. All told, Crum said he expected True Blue to finish 2021 having acquired 22 car washes, including a deal announced last July to buy eight Extreme Clean locations in suburban Chicago. He was hoping to nail down a deal for four more car washes in December, expanding the company’s portfolio to about 70 locations.

“I’ve stopped putting out press releases because I can’t even keep track of them anymore,” Crum said.

According to Crum, several months after the Extreme Clean acquisition, six of that company’s eight site managers had chosen to remain with True Blue. One manager never transitioned over to True Blue, and another returned to his family overseas a month after the deal.

When True Blue acquires successful locations, the goal is to keep those car washes operating as is by retaining the staff, Crum said. As soon as practical, the company meets with the managers as a group and then meets one-on-one with rank-and-file employees, detailing True Blue’s standards, its robust employment package and the opportunities for growth.

“Some sellers don’t want to tell their staff anything until about two days before the sale, and that creates a really difficult environment for us because we’d like to do a complete onboarding,” Crum said. “If we’re given two weeks before a close, we’re typically fairly successful in keeping people on board. We like to think that we’re a better place to work, but we’ve got to have an opportunity to show people before the acquisition happens.”

Crum said True Blue generally takes a patient approach with new employees, allowing them to adjust to any changes that are implemented. But within the first month, the company usually knows who will stick around.

“We give people time to adapt because change is hard,” he said.

For some owners, including the one with four locations that Crum was targeting in November 2021, the top priority is taking care of their staffers, and Crum said he sees that as a positive.

“That’s a situation where we’ll be sure to spend a lot of time with those employees, trying to make them comfortable with us,” Crum said. “If he has that much concern for his team, that means he’s spent a lot of time nurturing those relationships, and we don’t want to throw that away just because we’re the new owner.”

In some cases, however, Crum said it’s best to clean house. He pointed to one car wash that was in a great location but was being poorly managed, with employees smoking cigarettes at the entrance to the tunnel and the landscaping on the lot growing out of control. True Blue saw that car wash as an unpolished gem, just waiting for an ownership upgrade.