Q&A with Spotless Brands: “We’re focused on becoming the N.1 car wash brand in the U.S.”

We speak with Josh Finifter, Private Equity Principal at Access Holdings, which owns car wash platform Spotless Brands, about the growing interest of investment companies in the sector and the opportunities that these partnerships can bring to brands and operators.

Josh Finifter, Principal on the Investment Team | © Access Holdings

Access Holdings is quickly becoming an important player in the North American car wash sector through its Spotless Brands platform, unifying operators under a single banner. Established in 2019, the project falls under the recent trend of private equity firms acquiring car wash networks throughout the United States. PetrolPlaza talks to Josh Finifter, Principal on the Investment Team, to know more about the opportunities that Spotless brings to partners, the development of its network and the potential of the car wash market.

Spotless closed its first partnership with Cobblestone Auto Spa one month after being established, with 27 locations at the time. Despite the difficulties that the pandemic brought to the market in the last two years, the firm managed to quadruple its reach across the country. It's network currently consists of over 140 car wash locations and it aims to operate 250 sites by the end of next year.

Q. When did Access Holdings’ interest in the car wash sector begin? What spiked the interest?

A. Access Holdings is a lower-middle market private equity firm focused on building essential service-based businesses into market leaders. As part of our platform research journey, we conduct extensive market diligence, with a goal of meeting and learning from successful operators. In the case of Spotless Brands, our car wash platform, we began researching the category in 2018 and grew increasingly interested in the car wash market’s durable consumer demand; constrained and fragmented supply; and opportunity to be a transformative, innovative, and enduring market leader in a space that is benefitting from a shift from the ‘Do-It-Yourself’ to the ‘Do-It-For-Me’ trend.

As we continued to learn, we were attracted to the car wash industry’s market size and growth rate, increasingly prevalent subscription/membership model, high level of fragmentation, recession-resistant nature, and the extremely attractive unit economics within the express model car wash concept specifically. We entered the market in 2020.

Q. What services do you offer partners?

A. We prioritize relationships and provide owners access to people, processes, and playbooks needed to drive outsized, enduring growth while protecting and furthering their local legacy. Beyond capital, we bring extensive experience professionalizing and growing multi-unit business models; local market relationships to enhance development and growth initiatives; centralized shared services around finance, M&A/Corporate Development, group purchasing, etc.; as well as significant capabilities around driving tech-enablement.

Partners are also provided access to a unique network composed of premium operators in premium markets that are aligned to promote best practices and enhance growth. All partner operators are also guaranteed career development and training opportunities with robust career advancement potential for all employees, no matter their tenure or experience.

Q. What opportunities does the shift to subscriptions-based models bring to private firms?

A. The recurring subscription model is extremely attractive. It provides opportunity for increased brand loyalty and increased value in market densification. The shift toward a subscription model also allows us to further enhance the customer experience and provide the same, consistent experience across the company’s various geographies – clean, dry and shiny with a smile. Additionally, the shift allows for a recurring revenue business model, which drives customer loyalty as well as sustained growth in the business and the opportunity to expand into new markets and adjacent product and service offerings.

Q. How important is real estate when discussing potential partnerships?

A. Spotless has taken a purposeful approach to owning the real estate on which our locations sit. This gives us the flexibility to fuel growth in the business by monetizing these assets through sale leaseback transactions. Today, Spotless owns more than 90% of all the real estate across its locations, allowing the platform and its operators’ control over the future of their business. While Spotless values brands that own the land on which they operate, we’re open to partnering with those that do not own the land as well.

Q. What’s your aim when researching for a new partner to join the network?

A. As with all our partnerships, we are first focused on ensuring there is an aligned vision to work towards. We’re primarily focused on express car wash model brands and locations that sit within our existing markets, as well as new markets, and are looking for a value-add partner to support them in growing their businesses. When researching partners, we look at the attractiveness of their geography, market position and ability to build this position into market leadership, and historical financial success.

Q. How do you complement each new brand with the rest of the network?

A. Due to network effects and scaled membership programs, new brands will enjoy customer growth from nearby Spotless owned locations. Spotless Brands’ corporate teams provide playbooks and industry best practices compiled from its network of 140+ national locations, allowing new brands to benefit from best-in-class operators while maintaining their individual brands.

Q. What are your plans for the future of Spotless Brands and its partners?

A. We’re focused on growing the business to become the #1 car wash brand in the country by providing a best in class service offering to customers while expanding in our existing markets as well as new geographies. Building enduring businesses does not solely apply to profits. Giving back to our communities through best in class services, increased employment opportunities, and responsible and accountable ESG practices is incredibly important. We look forward to continued partnership with new and existing operators, and are excited to continue to serve as a market innovator.

Interview by Gonzalo Solanot