Jim Dillon plans to spend his 48th birthday shaking up the marine retail industry.
The president and CEO of Passport Marine, based in St. Petersburg, Fla., has announced plans to unveil an unprecedented national dealer franchise program. And by the time the Fort Lauderdale International Boat Show begins Oct. 25, the birthday boy says he will have exclusive national distribution agreements in place with 10 major boat brands, in addition to at least 10 dealer franchises in five states.
Affiliate dealers, exclusive dealers and brokers will have access to millions of dollars in boat inventory they don’t have to physically stock, the use of proprietary dealership management software, training programs, attractive financing packages and a national marketing campaign designed to drive customers into dealerships, Dillon says.
Much like the MarineMax chain of more than 80 retail locations under common ownership, or the Brunswick Corp. model of providing a huge variety of boat brands and other products and services under one umbrella, Passport Marine hopes to grow into a nationwide franchise of dealers, with combined buying power and a customer-first focus to get more people into boats at prices they can afford.
“This has never been tried from this particular standpoint,” says Phil Keeter, president of the Marine Retailers Association of America, who was asked to address the general idea of franchising without knowing the identity of the parent company, due to the confidentiality of the information at the time this story was being written. “Getting dealers together as a group has a lot of attraction for our industry because the industry is so fragmented. [But] boy, this is an old industry, with many dealerships having histories of 25 or 30 years. Getting them to buy into these concepts could be tough, though.”
Are you ready?
But Dillon believes the industry is ready for the idea. Dealerships can be difficult to sell or transfer to the next generation for a variety of reasons, but one of which — the lack of long-term dealer-manufacturer contracts — Dillon knows intimately.
More than four years ago, he was evaluating dealers for Formula Boats when he was asked to visit Hi-Lift Marina. The Aventura, Fla.-based business had been purchased by Andrew Sturner, an attorney, entrepreneur and the founder and CEO of Aqua Marine Partners. It was Dillon’s job to determine whether Sturner’s dealership was strong enough to continue to market Formula Boats or if the manufacturer agreement would be terminated.
“During the evaluation, Andrew asked me to become his partner,” Dillon recalls. “It didn’t appeal to me to run one store. I said ‘If I signed up, I wanted to build a national brand,’ and so we did.”
When Dillon joined Hi-Lift Marina, the dealership was selling nearly $2 million in Formula Boats a year. Four years later, sales have grown to nearly $31 million for Formula alone, making Passport Marine the manufacturer’s largest overall dealer.
Starting with Passport Marine @ Hi-Lift Marina, which will be developed into Vertical Yacht Club Thunder Alley soon, the company has grown to include dealerships in St. Petersburg, Tampa, Fort Lauderdale and a dealership currently under construction in Key West, Fla., as well as a location in Norwalk, Conn., and Southhampton, N.Y. In its first three years and during a time when overall new boat sales were flat, Passport Marine has grown sales by about 1,400 percent, and budgeted more than $50 million in top-line revenue from retail sales this year.
As the company grew, Dillon realized that store practices could be boiled down to a complete business system that anticipated market changes so dealers could be proactive in their responses. He started videotaping sales training programs and mapping back-end systems to allow consistent interaction with customers and a way for dealers to communicate with each other.
“In tough economic times, only the best prosper, and the good just survive,” Dillon says. “We’ve seen some of our friends flounder, and I realized it was time to offer this system to the industry.”
The benefits of belonging
Passport Marine @ The Houseboat Store, located near Lake Lanier in Buford, Ga., began a relationship with Passport earlier this year and has signed an agreement to become a franchisee.
“It seemed like becoming a franchised dealer was the way to go, with the ability to sell more and more boats without increasing our inventory,” explains Dean Benamy, president.
Because of its association with Passport, The Houseboat Store has added Formula Boats to the lines it sells in the state of Georgia, in addition to the Fantasy Houseboats, Stardust Yachts and Chris-Craft brands that it stocks.
Benamy established the dealership two years ago and welcomes the opportunity to take advantage of the training programs and marketing support offered by Passport as he grows the business. Another attraction is Passport’s financing options, which may require more cash up front but offer extremely low starting interest rates, so borrowers can pay down principal and possibly buy their next boat without negative equity.
Making boating affordable to more Americans is a common theme Dillon talks about when he discusses the new franchise program.
“Once (boaters) understand the advantages of buying from a national brand, they’ll realize that it’s a really good deal for them,” Benamy says.
Costs associated with becoming affiliated with Passport will vary, depending on whether the relationship is with a broker, an affiliated dealer or an exclusive one, says Dillon, who declined to discuss financial specifics regarding a franchise agreement.
“A Passport Marine affiliate could keep his (boat) lines and have access to our lines,” Dillon says. “They may or may not physically stock those lines but they could broker other lines. It depends largely on whether the dealer wants exclusive territory or wants to stock product.
“An exclusive dealer would have to stock Passport Marine products for which we’re the national distributor but could serve as the hub for other brokers.”
In addition to video training programs, proprietary dealership software, marketing support and national advertising, Passport offers an attractive F&I function. Dillon says that Passport’s centralized F&I component will support all participating dealers and brokers, making F&I available to them without the expense of housing an F&I department. He believes that combined buying power and better rates will allow dealers to make a good profit while still giving buyers an affordable product.
Making customers No. 1
One of the first manufacturers to sign up was Egg Harbor Group, owned by Dr. Ira Trocki, a plastic surgeon in New Jersey. Trocki was developing a direct sales program for his lines, which include Egg Harbor Yachts, Predator Yachts, Davis Yachts and Topaz Boats, and he had begun selling boats through this channel when Dillon contacted him.
“To be honest, I ignored his first few calls, but Dillon was persistent and I finally agreed to meet with him,” Trocki says. “I liked the idea so much that I bought into Jim’s company. The customer gets the best of everything, including a custom-built boat, interest-free loans for some, guaranteed trade-in value, full service and warranty.”
Trocki was trying to emulate the Brunswick model by acquiring a variety of boat lines under one company that would appeal to a diverse audience, albeit on a smaller scale. But he says that many dealers today are more interested in the service and marina parts of the business than selling new boats.
“Most dealers don’t have the great customer service and sales that it takes to make the customer No. 1,” Trocki says. “The Passport concept was basically what I was trying to do on my own, helping customers find the boat they want, the boat they need, financing, insurance, marine and service as one package.”
Trocki especially was taken with Dillon’s success with the Formula line and hopes Passport can recreate that success for Egg Harbor Group.
“If I’m the right hand, I consider Passport my left hand,” Trocki says. “Jim’s done a fantastic job with Formula and I believe he can do the same for us.”
The dealers and brokers who affiliate with Passport Marine hope so, too. Keeter says that dealers should ask tough questions about the terms of any franchise agreement and investigate the parent company fully.
“The cost of buying into a franchise could be a big issue,” Keeter says. “How strong is the company, and who’s providing the financial backing?”
Dillon has answers to those questions and anything else potential dealers, brokers and manufacturers might ask. He firmly believes that the Passport Marine idea will play well to a national audience, benefiting manufacturers, dealers and customers alike.
“We’ll have a national brand name promoted by national advertising, terrific financing on the brand the customer wants and service delivered local dealers,” Dillon says. “We hope to change the way marine dealers operate in this space, attracting the kind of talent that can bring marine dealers to the top of their game. When you reduce the cost to dealers, you increase their ability to make a profit, and boaters get a better price.”