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Rental company to loosen its grip

Enterprise to allow franchises overseas


– Enterprise Holdings managed to become the world’s largest rental-car company by sales without actually spanning the globe. The chief executive officer says he knows that has to change.

Until recently, there wasn’t an Enterprise rental counter in China, Spain or France. Malaysia and Korea, a couple of the world’s fastest-growing markets, remain untapped.

So to meet the global needs of international corporations, Chief Executive Officer Andy Taylor, son of founder Jack Taylor, has had to do something they have been loath to try in the 56 years they’ve controlled the closely held St. Louis-area company: franchising.

“Years ago, the thought of licensing was absolutely abhorrent,” Andy Taylor, 65, said in an interview. “We want to control that customer experience. We want our people taking care of customers. But we’re learning that if we’re going to be a global brand, and we need to be competitive in the future, we’ll have to do it a different way.”

Just not too different. While he’s willing to give up a little control over customer contact to gain local insights, Enterprise isn’t interested in going public or making other radical changes after the merger of Hertz Global Holdings and Dollar Thrifty Automotive Group last year or the rise of Zipcar and its acquisition by Avis Budget Group, announced in January.

With a strong family culture and tight control over practices that set the industry’s benchmarks, Enterprise has called its own shots. It even set off this latest, and presumably last, round of major industry consolidation with its acquisition of the Alamo and National brands before the economic downturn.

While those additions made Enterprise bigger, they didn’t make it global. That’s what Taylor is addressing now. He discussed the company’s outlook in an interview at his fourth-floor office in the St. Louis suburb of Clayton, near where his dad started the company more than a half-century ago.

These days, Enterprise’s corporate customers want a rental-car company with a matching footprint, Taylor said. Avis operates in 175 countries and Hertz, the second-largest U.S. rental-car chain, is in 150. Enterprise is in about 40.

Some corporate customers want Enterprise in every corner of the world, others just in the biggest countries, Taylor said. He aims to get Enterprise in as many as 90 in three to five years.

In December, Enterprise signed its first franchisee, Guerin Car Rental Solutions, in Portugal, expanding the brand’s European presence to six countries. It has since added a franchisee in Italy, Locauto Rent, and another in Greece, and it acquired local chains Citer, in France, and Spain’s Atesa.

Enterprise entered China in March 2012, taking a 15 percent stake in eHi AutoServices.

The company’s main global brand will be Enterprise, said Greg Stubblefield, chief strategy officer, in an interview. The new locations in France and Spain will take the Enterprise name, while counters in China, Italy and Portugal will use the Enterprise brand in conjunction with local brands.

“We realized that maybe our start-from-scratch business model that worked in the U.S. maybe isn’t going to work in another country,” Taylor said.

“It’s not a question of capital, it’s about home turf. If you’re going into Poland or Finland or Brazil, you need a hometown team of locals who understand the rules.”

Family business

Enterprise has been led by a Taylor since 1957, when Jack began leasing a seven-car fleet out of an office at Lindburg Cadillac.

Now 90, he ranks 63rd on the Bloomberg Billionaires Index, with an estimated net worth of about $14.2 billion. Jack splits time between St. Louis and Palm Beach, Fla.

Andy entered the business at 16, going full-time in 1973 and becoming CEO in 1991. Andy Taylor, who said he has no plans to retire, says it’s no certainty that his successor will be a Taylor. Of the 13 directors who eventually would choose the next CEO, four are members of the family, and directors can’t vote for themselves, he said. Jack and his ex-wife, Mary Ann, also have a daughter, Jo Ann, and five granddaughters.

Enterprise, named for the Navy ship on which Jack served in World War II, started slowly on its journey. The business didn’t reach beyond St. Louis until 1969. It expanded to Canada in 1993 and England a year later.

In 2007, Enterprise added the National and Alamo brands, rapidly expanding its business and leisure operations, making it the world’s largest rental-car company.

Revenue rose from $78 million in 1980 to $6.5 billion in 2002 and $15.4 billion last year, all as a closely held company.

Based on valuations of Hertz, which trades at about 80 percent of estimated 2013 revenue, Enterprise is valued at about $13.5 billion, according to Fred Lowrance, a Nashville, Tenn.-based analyst at Avondale Partners. The Bloomberg Billionaires Index estimates the company’s value at $14.2 billion.

Keeping control in the family has been critical to helping the company and its 74,000 employees stick to the four-part Taylor family business philosophy of customer service, employee development, expansion and, the lowest priority, a “reasonable” bottom line.

“I love to compete with companies, particularly the ones who are public, who have our balance reversed,” Taylor said.

With that approach to service first, Enterprise has topped J.D. Power & Associates’ North American rental-car satisfaction study for eight of the past nine years.