Profile: Vern Buchanan
Vernon Buchanan of Sarasota has built one of the largest auto dealership chains in the nation in only 12 years. In the 1980s he built a printing empire with similar speed — and got out just before it crashed.
When Vern Buchanan moved to Florida in January 1990, one of the first phone calls he made was to the local chapter of the Young Presidents' Organization, a membership group for corporate chief executives under 45.
Vernon Gale Buchanan
Born: May 8, 1951, Detroit
Family: Married Sandy in 1976; sons James, 23, and Matthew, 21
Home: Longboat Key
Retreat: Beaver Creek, Colo., home overlooking the famous Gore Range
Toys: Harleys; a jet, "Legacy"; 110-foot yacht, "Entrepreneur"
On his iPod: Motown
Recommended reading: Thomas L. Friedman's book on globalization: "The World is Flat: A brief history of the 21st Century"
Businesses:Buchanan Enterprises, chairman and CEO
Buchanan Automotive Group, founder and CEODealership cities:
Florida: Avon Park, Cocoa, Jacksonville, Melbourne, Ocala, Port Richey, Sarasota, St. Augustine, Tampa, Venice
North Carolina: Black Mountain, Elizabeth City
Kentucky: Bowling GreenReal estate development and investments
U.S. Chamber of Commerce, board of directors
Enterprise Florida, board of directors
Florida Chamber of Commerce, chairman of the board
Greater Sarasota Chamber of Commerce, executive committee
SunTrust Bank, board of directors
Florida Council of 100
World Presidents' Organization
Chief Executive Organization
Ringling Museum of Art, foundation board chairman
Mote Marine Laboratory, board of trustees
Community Foundation of Sarasota County, board of directors
Boys & Girls Clubs of Sarasota County, foundation board
WEDU/PBS Channel 3, board of trustees
Florida Winefest, board of trustees
Walk to Cure Juvenile Diabetes, corporate chairmanThe YPO, as members call it, had served Buchanan well back home in the Detroit suburb of Bloomfield Hills. In Michigan, Buchanan was an entrepreneurial prodigy who founded a quick-print franchising corporation called American Speedy Printing Centers. Through a social network he built with no small help from YPO and other organizations, Buchanan sold more than 700 American Speedy franchises between 1976 and 1989 -- all before he turned 40.
Through the Florida YPO, Buchanan became good friends with a chapter officer named Carl Lindell Jr., a successful Tampa auto dealer. The two men took their families on vacation to Alaska in 1991. During the flight to Anchorage, Buchanan prodded Lindell for details about the car business.
Lindell's financials, he says, astounded him. "I thought that this was something I could really grow with the same concept of owner-operators," says Buchanan, now 54. He bought his first dealership in 1992 and today has 20 car franchises throughout the Southeast. "I just got a vision of being the largest private car retailer in the industry."
Buchanan is a big believer in vision. His other key business strategy is finding the right people to invest with: Hard-working owner-operators willing to put up their own money. As he built American Speedy and became wealthy, some of those owner-operators got rich with him. Others sued him when the business went sour and they lost their investments.
Buchanan tweaked his tactics, he says, as a result of his quick-printing years. But he hasn't changed his think-big strategy. "It was never about printing, and it was never about cars. I've never worked at a printing store a day in my life, and I couldn't tell you how to write up a car deal," he says. "It's about giving people the opportunity to be an owner."
Vernon Gale Buchanan was first-born in a family of six kids who grew up in a Detroit suburb called Inkster. His dad was an assembly worker for the Burroughs office machine company for 32 years. Jess Buchanan almost always had a second job as well, like driving a bus. His kids didn't see much of him.
Buchanan describes a typical suburban upbringing: Sports, a Detroit News paper route and his first car, a three-speed, 1963 Ford Galaxy 390. One unusual experience: His class was one of the first groups of white students bused to an all-black high school. He says it doesn't seem unusual to him now. "You learn to make friends," he says. "After a while, you don't see color."
When he graduated from high school in 1969, Buchanan joined the Michigan Air National Guard. While the other airmen liked to bowl and drink beer at night, Buchanan wanted something more physical. (Buchanan says to this day he's never sipped a brew.) He saw a bulletin board flier for karate and started taking lessons. When he got home three months later, he found a local karate teacher named Sang Ku Shim, an eighth-degree black belt in Tae Kwon Do, a style of martial arts that features flying kicks.
As much guru as self-defense instructor, Shim drilled Buchanan in mind over matter and the value of positive expectations. As Buchanan earned his black belt, Shim taught him to balance "supreme self-confidence and humility." When Buchanan started classes at nearby Cleary College, he says, Shim demanded to see his grades.
Buchanan put himself through Cleary's bachelor's degree program working as an instructor at Shim's studio. He went from being a mediocre student to earning straight A's. He studied business. He became class president. "From then on, I was like a different person," Buchanan says. "I started believing that I could do anything I wanted to do."
Buchanan took a job as a marketing representative for Burroughs, his dad's employer, but says he hated the corporate politics. About a year into the position, he responded to an ad in an airline magazine from a Texas company called SMI -- Success Motivational Institute. SMI was looking for franchisees to sell motivational and training materials to small companies. Buchanan borrowed $6,000 from his dad, went to Waco, took out a $5,000 loan from SMI and bought a franchise.
Buchanan found his business passion in the world of franchising, and in the mottos that reminded him of Shim: "You're in business for yourself -- but not by yourself." Within his first year with SMI, Buchanan was the company's top distributor, with 100 salespeople working for him on commission.
Buchanan got his first look at the quick-print business through an SMI client called Quickie Duplicating. His client had franchised 30 stores but didn't want to grow further. Buchanan persuaded one of Quickie Duplicating's franchisees to set up a new company that Buchanan could market around the country. They founded American Speedy Printing in May 1976 with $1,500. That October, he married Sandra Cudnohufsky, whom he'd met in class at Cleary College and had dated for four years. Sandy, also from a large, blue-collar Michigan family, was a devout Christian and disciplined student, qualities Buchanan admired. The two worked together to build American Speedy for its first five years until Sandy turned to full-time motherhood. Their first son, James, was born in 1982, and a second, Matthew, in 1984.
Buchanan picked the right time to get into quick printing. Technological advances meant small companies could provide services such as desktop publishing and color copying that until then had been the purview of big, commercial printers. Buchanan bought out his partner to become sole owner. With his sales savvy, good looks and extensive social contacts through charities and such business organizations as YPO, Buchanan became a boy wonder in Michigan business circles. During the 1980s, he sold an average of 80 franchises a year. He made the most sales in Michigan and Florida, where he had homes and spent considerable time with his owner-operators. His motivational skills, former owners say, were remarkable. Then as now, Buchanan delivered a non-stop supply of inspirational sayings: "You can go for a life of plenty with a teaspoon," he says, "or with a steam shovel."
In interviews, company bios and campaign material for his bid for the U.S. House District 13 seat now held by Katherine Harris, Buchanan recounts the story of how he built American Speedy to success and sold the company for a small fortune in 1989. The tale is considerably more complicated, as reflected in dozens of franchisee lawsuits against the company and Buchanan and American Speedy's Chapter 11 bankruptcy files.
In the 1980s, Buchanan wanted to grow his company more aggressively. He added two affiliated franchises, Business Card Express and American Fast Photo and Camera, and started "master franchising" American Speedy. For
$1 million or more, an investor could buy exclusive rights to sell and service stores in a specific area. The company sold 13 master franchises. It moved into a new 25,000-sq.-ft. office space and built a training center. Sales peaked in 1988, with 141 new franchises sold that year.
BUSINESS INTERESTS: Buchanan started American Speedy Printing in 1976 and grew the company aggressively. It filed for bankruptcy in 1992 and has since been bought by a group that includes former Detroit Pistons star Isiah Thomas. After moving to Florida, Buchanan turned his interest to car dealerships -- he now owns 20 -- and politics.
The company relied heavily on the anticipated success of master franchisees and the new affiliated businesses to fund its overhead. But the master franchisees achieved only marginal success. One sued American Speedy and Buchanan for fraud in 1989. Numerous other franchisees filed lawsuits around this time, too, claiming that Buchanan was putting too many stores in some markets or overselling returns or not offering the support promised in the franchise agreements.
The July 1989 transaction that Buchanan characterizes as the sale of the company was in fact a personal loan for $15.4 million made to him by Merrill Lynch that was secured by Buchanan's stock in American Speedy. The deal included a $3-million loan for American Speedy, with the company to make the interest payments on both loans. In a company press release at the time, Buchanan said the deal would "provide us with a financial source to pursue future acquisitions and expansions" and that he looked forward to Merrill Lynch's role as strategic adviser "as we achieve our aggressive growth objectives."
Buchanan says his lawyers advised him to structure his sale as a leveraged buyout. In hindsight, he wishes he would have sold it outright and made a clean break. "Looking back on it, I gave up control and I shouldn't have," he says. "When there is a change in (ownership) control, 95% of the time it doesn't work out."
Instead, Buchanan remained president and chief executive officer, earning $400,000 a year. From July 1989 to January 1991, the company also paid him $2.1 million in dividends to cover interest on his loan.
In 1990, American Speedy posted record earnings, with net income of $3 million on sales of almost $26 million. But the litigation and the failure of the two affiliates and the master franchisee strategy were beginning to drain the company. At the same time, recession hit. New franchise sales plunged to 37 in 1991. Sixty stores closed. Franchisee fees and printing equipment leases -- the company's lifeblood -- dropped 70%.
Buchanan resigned from American Speedy effective January 1992. The same month, the master franchisee who'd sued for fraud agreed to settle his case for $816,000. Weeks later, American Speedy filed for Chapter 11 reorganization.
From his new home base in Florida, Buchanan made a bid to reorganize the company. But the creditors approved a reorganization plan led by computer investor Joseph Inatome and Detroit Pistons basketball star Isiah Thomas.
American Speedy's reorganization dragged on for years as creditors claimed the company's interest payments on Buchanan's loan had been illegal. In 1999, Buchanan agreed to repay the company $1.5 million for "excess compensation" in a settlement that closed the case.
Today, the company, known as Allegra, is again successful. Buchanan takes pride in it. "It's not like I got in for a year or two and took the money. I built it up for 14 years. The company I created with $1,500 has done very, very well. It created thousands of jobs and opportunities."
The civil lawsuits continued through the 1990s. In one, a dozen franchisees who claimed that Buchanan had falsely represented business opportunities accepted a $1.8-million settlement. Several plaintiffs contacted by Florida Trend said they had agreed not to discuss the case under the settlement terms. Other former franchisees contacted by Trend say Buchanan made them millionaires, and that they don't fault him for the company's troubles. "The ones who failed would have failed selling ice cream cones," says Harvey Johnson of Kalamazoo, Mich., who meets regularly with retired American Speedy franchisees who are big fans of Buchanan. "They wanted to blame it on him, but it wasn't his fault. He gave everyone the same tools, and some ran with us and some did not."
Buchanan, typically, responds with an inspirational saying: "You only fail in life if you get knocked down and you don't get back up," he says of his last years with American Speedy. "I think it's made me a much better business executive and a better person the next go-round."
New breed of dealerships
His next go-round began in 1992, when he bought an Ocala Honda-Acura dealership. After opening a few more stores, he brought in a longtime Tampa dealership manager named Don Jenkins as a part-owner who would help run the growing business. Buchanan's partners in Florida describe Buchanan as exceedingly generous, "careful to make sure he is not outdoing you on the terms of the deal," says one. Jenkins partnered with Buchanan for about $400,000. Today, he owns his own five-dealership automotive group worth up to $20 million.
Buchanan's typical deal with operating partners is 75% ownership for him and 25% for them. In a strategy molded by experience, he sells the business outright anytime one of his partners wants more than 49% ownership. "It's my capital, my credit, my reputation, and I've seen what happens when you give up control," he says.
AT HOME: Vern Buchanan and wife Sandy -- married for 29 years -- ran American Speedy Printing together until their first child was born in 1982.In scouting out dealerships, Buchanan concentrates on a dozen top brands, including BMW, Ford, Honda, Lexus and Mercedes, in growing markets. Then he looks for partners with longtime management experience. Buchanan Automotive Group this year was ranked 27th-largest among the nation's 22,000 new-car dealerships. Its 20 franchises posted almost $800 million in sales last year.
Despite upheaval in the auto business, analysts say Buchanan's diversification into multiple brands bodes well for the future. Buying a car is "the second-largest purchase that people make, and that's not going to change," says Alex Kurkin, a Miami lawyer who represents private and publicly owned automobile dealers across the country as well as the Florida Automobile Dealers Association. The popularity of particular car brands ebbs and flows, Kurkin says, but the other ways dealerships make money -- from financing to real estate investment in high-traffic areas -- offer steady income streams.
Ernie Parisi, an operating partner at Buchanan Jenkins Hyundai in Bradenton, says Buchanan's model is unusual for the car industry, where general managers are highly paid but don't often have ownership stakes. "He understands that the franchisees who put up the biggest investments do the best in the business."
In addition to his dealerships, Buchanan has ownership stakes in some 50 Florida companies, with partners in everything from real estate development to a swanky day spa on Sarasota's St. Armand's Circle. Many businesses serve a joint purpose. For example, private yacht and jet-leasing companies allow him to earn income from his biggest toys, such as his 110-foot yacht, named "Entrepreneur."
Buchanan also is a significant player in southwest Florida's philanthropic community. When he arrived in Sarasota, he knew little of the arts. Now, he's a major patron, says Margaret Wise, a Sarasota resident who is on the executive committee of the State Arts Council. Wise has tapped Buchanan for numerous arts endeavors. "Art is good business here, and he understands that very well," she says. Buchanan is known for giving both his time and his money to charitable causes such as Mote Marine, Boys & Girls Clubs, Cardinal Mooney High School and the Ringling Museum, which he recently gave $1 million.
Buchanan says he puts at least 10% of his earnings back into the communities where he does business. He and his wife give to a broad array of charities, as well as to missionary and other Christian causes around the world. He describes himself and Sandy as deeply religious. They are members of First Baptist Church in downtown Sarasota. They will celebrate their 30th anniversary next year.
In both business and civic life, Buchanan is described as a blue-sky visionary who leaves details to others. "Vern Buchanan is one of the only guys I know who will still do a multimillion-dollar business deal on a napkin," says Parisi. "There is no status quo about him. He's always dreaming up the next big thing."
True to form, Buchanan's foray into politics is starting at the top. When Sen. Bob Graham retired, Buchanan considered a run for the seat but ended up serving as Mel Martinez's Florida finance chairman. Buchanan helped Martinez raise $14 million for the race. Since then, he has widened both his national and Florida political circles, serving as an officer in the U.S. Chamber of Commerce and as chairman of the Florida Chamber. During last year's Republican National Convention, he floated "Entrepreneur" into New York Harbor to host chamber parties for lawmakers.
Buchanan enters the congressional race a presumptive favorite in a heavily Republican district that has elected Harris to the state Senate and Congress. If elected, he'd immediately be one of Florida's wealthiest congressional representatives ["Congressional Holdings," September, FloridaTrend.com], and one of the few true entrepreneurs in the delegation. It may seem unusual for an entrepreneur to seek national office, he says, but he sees both his business and political goals as helping people get into business for themselves. "I feel like we're coming into a new era in world competition, and this country has got to elevate its game," Buchanan says. "I think the more people we can get into business for themselves, the better our country can compete in a world economy."
Each December, Buchanan carries out an exercise he began 30 years ago at SMI. He makes a written plan for the year to come -- and ponders the one he made the year before. He divides his plan into six areas: Mind, body, spirit, family, business and community. Big on this year's list are reducing his body fat and spending more time with his college-age sons. True to his motivational-speaker roots, Buchanan downloads his plan into his PDA and studies it in free moments. "If you combine continuous improvement with vision and goals, you can own the world," he says. "Life is a self-fulfilling prophecy," he says. "So think big."