Back in the business, Dobbs ready to grow dealership holdings

John Dobbs Jr. was in his early 30s when the longtime family business Dobbs Management Service exited auto retail after more than 75 years, selling its more than 20 dealerships to Republic Industries Inc., which later became auto retail giant AutoNation.

"The day we sold, I was thinking about getting back in because I knew we had a brand name in the business," said Dobbs, now 56, noting he spent some of his formative years working in the group's dealerships.

The original auto retail business started with Dobbs' grandfather James Dobbs opening a Ford dealership in 1921 in Memphis, Tenn., with his business partner, Horace Hull. The duo quickly built an automotive empire that at one point had over 60 locations from Hawaii to Puerto Rico. And even Elvis Presley reportedly bought a Ford Thunderbird in the early 1960s from a Hull Dobbs dealership.

Today, Dobbs is indeed back in auto retail. And he wants to significantly build his dealership holdings, aiming to triple the store count in the next five years and fivefold over the next seven years.

In late 2016, Dobbs, through his Memphis family office Dobbs Equity Partners, bought a Ford dealership southwest of Kansas City in Kansas.

The family office's automotive platform, Dobbs Family Automotive, has since grown to 10 new-vehicle dealerships and one used-vehicle store across Kansas, Arkansas, Texas, Connecticut, Indiana and Alabama.

"We have a lot of capital that we want to deploy," Dobbs, CEO of Dobbs Equity Partners, told Automotive News. "My goal is to have maybe 35 stores in five years and maybe 50 stores in seven years."

Dobbs said the group has the capital to reach his goals but that "it's just a matter of finding the right opportunities."

And there is significant funding to do so. COO Rick Greene said Dobbs Equity Partners has "several hundred million dollars to invest in operating businesses, and dealerships will garner a majority of our investable capital."

The group in 2021 bought two dealerships, has purchased two stores so far this year and is hunting for more. In July, Dobbs Family Automotive bought Iron City Ford in Birmingham, Ala., from Hanania Automotive Group. It renamed the store Hull Dobbs Ford.

And last month, the group bought Kia of East Hartford in Connecticut from K & W Enterprises. That dealership's name was retained. LMP Automotive Holdings Inc. initially was set to purchase that dealership, agreeing in July 2021 to buy the store for more than $9 million, but the deal was later terminated.

In its dealership purchases, Dobbs Family Automotive uses a model in which a partner has equity. That amount varies on a store-by-store basis, executives noted.

"We want our partners to have equity in the stores, and we allow them to buy in and create wealth themselves," said Dobbs, also president of Dobbs Family Automotive. "That goes back to the original era with us. Everyone knew if you wanted to get rich, you went to work for the Dobbs family because they allowed you to become partners."

Greene said the partner model also separates the company from many other dealership groups.

"There aren't a lot of people out there who are offering general managers or operating partners the opportunity to be an equity investor in the store," Greene said. "And so that's a little bit different than obviously the publics and some of the other big dealership groups."

When it comes to acquisitions, Greene said the group has found dealerships first and the partner second, while in other instances, Dobbs Family Automotive has sought acquisition opportunities for existing partners.

Greene told Automotive News in an email that the group wants to grow in the mid-South and Southeast of the U.S. but also likes the Midwest.

Greene said the closer the prospective acquisitions are in proximity to Dobbs Family Automotive's Memphis headquarters, the more aggressive the group will be.

"But honestly if a great opportunity presented itself farther away, we would definitely want to strongly consider that," Greene said in an interview. "That's the reason we've got the two stores in Connecticut. We thought those were good opportunities for us to enhance the business and grow."

James Dobbs and Hull also were known for their shrewd business decisions with lasting impacts.

In 1942, as U.S. new-vehicle production was paused for tanks, planes and other machines for World War II, the retailer borrowed $6.5 million and bought more than 3,000 new and used vehicles and stored them in warehouses across the country. When the war was over and soldiers returned home, it became a boon for the company, as inventory elsewhere was nonexistent.

And in the 1970s, the group added two budding import brands, Toyota and Honda, to its portfolio.

But as Dobbs Management Service expanded in auto retail, it also diversified into other industries.

Dobbs' food businesses were nationwide and boasted ownership of some 400 restaurants, including the popular Hull-Dobbs Houses. The company once said it was the largest airline caterer in the world.

John Dobbs Jr. also has a diversified portfolio as the leader of Dobbs Equity Partners.

In addition to the dealership platform, Dobbs Equity has investments in an insurance firm, an orthopedic metal finishing company and a replacement parts company that specializes in leaf springs and related suspension components for heavy-, medium- and light-duty trucks.

Dobbs said when he looks at his portfolio, he'd like to have 40 to 50 percent of his assets in dealerships, around 30 percent in other operating companies and the remainder in secondary investments and private portfolio.

"The dealership business is something we want to be in the rest of my lifetime, probably my kids' lifetime," Dobbs said.