The Product Paid Best When It Failed
The company built a franchise network to sell its own factory output. In 2012, after the product stopped failing, it was acquired for roughly $310 million.
The Bay Doors Were Always Open
The air wrench had a high, stuttering whine that carried across the parking lot before you reached the door.
Your car sat up on the lift, a length of rusted pipe hanging beneath it, while a mechanic worked underneath. A replacement part, painted gold, waited on the concrete floor.
The waiting room had plastic chairs and a television on a shelf. The smell of exhaust and hot metal drifted through from the open bay.
Your father kept the warranty card in the glove compartment, tucked inside a paper envelope with the company name on the front.
Gold parts hung in rows on the wall behind the counter. The sign outside said Midas.
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The Shops Sold What the Factory Made
Customers drove in with a rattling exhaust system and drove out with a quiet one, usually in under an hour. That was the repair.
Nate Sherman had been manufacturing mufflers in Chicago since the late 1930s. In 1956, he opened the first franchise shop in Macon, Georgia, not to start a repair business but to build a distribution channel for his factory's output. It was a muffler factory that built a thousand shops to guarantee its own parts would need replacing.
Within a year of the first shop, there were 100 locations in 40 states, each stocking only the factory's parts. Manufacturing plants in Bedford Park, Illinois, and Hartford, Wisconsin, supplied them all. By 1989, those plants had produced their 100 millionth muffler.
A muffler made of mild steel lasted roughly two years. The company guaranteed every one it installed for as long as the customer owned the car. So the customer returned, paid for labor and surrounding parts each time, and every visit moved another factory-made muffler through the system.
Every Broken Muffler Came Back to the Same Counter
By 1985, more than 1,400 franchise shops operated across the United States, three times the count of the nearest competitor. The chain held roughly 12 percent of the exhaust repair outlets in the country but captured roughly 25 percent of the business. The factory controlled the parts, the shop controlled the visit, and the guarantee controlled the return.
The chain opened its 2,000th shop in 1986. Sales across the United States surpassed $1 billion in 1993.
"Trust the Midas Touch," introduced in the early 1980s, ran on national television for more than a decade. The slogan worked because the name already carried a promise. No other name in the category carried the same weight.
The Part Stopped Failing
In the mid-1980s, automakers began building exhaust systems from stainless steel instead of mild steel. A mild-steel muffler lasted roughly two years. A stainless-steel system lasted ten or more.
In 1999, the exhaust replacement market declined by 20 percent in a single year. By 2005, muffler sales represented just 17 percent of the company's revenues.
The chain tried adding brakes, tires, and general maintenance to its shops. But a thousand competitors already did that work without the overhead of a factory that had nothing left to make.
The Factory Closed Before the Shops Did
The parent company spun Midas off as an independent public company in January 1998. That same year, the chain sold its European operations for $100 million and its South American operations for an additional sum.
In 2005, the last muffler plant closed in Hartford, Wisconsin. The 125 employees there had been making the product the entire franchise was built to sell.
In 2012, an automotive parts distributor acquired the chain for roughly $310 million, including debt and pension liabilities. Revenue had fallen to about $184 million.
The Guarantee Outlived the Part
Tire manufacturers today run franchise service centers to move their own factory product and bring the driver back on a warranty cycle. The play is the same one Sherman drew up in 1956.
The lifetime parts guarantee, once radical, is now standard on everything from brake pads to alternators. A warranty still drives the next visit.
The part that broke built the business. The part that lasted ended it.
