(left to right) Richard Wolff (CFO), co-owner Mike Jaberi, Joe Knight, vice president of business development, co-owner Allen Rezapour and co-owner Mark Mirtorabi assemble inside the Fox Rent A Car location serving Los Angeles Airport. Photo by Vincent Taroc.
It started with six 1989 Nissan Sentras. Allen Rezapour, Mike Jaberi and Mark Mirtorabi went out and bought two Sentras each, personally guaranteed. They were already running a large and successful limo service in Los Angeles, but the hotel concierges kept asking about car rentals.
“Most of the hotels were already working with the major [car rental] brands, but the concierges would call us for a lower price,” Jaberi says. “That’s how we thought about becoming a discount brand.”
Fox Rent A Car was born.
Forward 25 years later, and the company now stands at 18 corporate-owned locations in seven U.S. states and 53 affiliate locations in 23 countries across Europe, Latin America and North America. With a corporate-owned fleet of more than 20,000 units and rental revenue of $205 million in 2013, Fox stands as the fourth-largest rental company in the U.S.
While those numbers don’t rival the majors, it shows that Fox has not only survived the continental shifts in the industry, but it has also managed to thrive as an independent and solidify its niche as a low-price alternative for the car renting public.
As the company celebrates its 25th anniversary, the three owners of the company sat down with Auto Rental News to offer a look at Fox’s path to the present, their take on the current landscape and the shape of Fox’s future.
A New Channel
Flash back to the early ‘90s. It was before the era of consolidation, and Fox was just one of many independents in Southern California trying to compete with the majors.
The company was growing, in large part due to the efforts of a marketing department that would contact travel agencies for business. But those were tough nuts to crack, because the agencies were already working with the major brands.
Jaberi remembers visiting a wholesale flower shop next to the office in 1993. The owner pulled him over to his computer monitor and showed him his “banner ad” on this new channel called the Internet. He was selling a lot of flowers this way, he said.
For Jaberi, Rezapour and Mirtorabi, it was a revelation. “We were one of the first companies to jump on the Internet bandwagon,” says Jaberi.
In hindsight, they made the right choice. But back then, it was a leap into the unknown.
“It was risky for us,” Jaberi says. “We disassembled our marketing department and discontinued our print advertising. We put all our money — as a small company — into this new channel that many people weren’t believers in.”
Jaberi recounts meetings with owners of other local car rental companies. “They used to make fun of the Internet,” he says. “They’d say you can do a lot better by investing your money to reach the travel agents.”
“When the new Yellow Pages came out and Fox wasn’t in there, everyone was wondering if something was wrong,” says Rezapour. “They had no idea we were investing that money somewhere else.”
While the Internet became the company’s catalyst for growth, Fox had to weather the coming storms along with the rest of the car rental industry. As a discount brand, however, the ripples were less pronounced. “We actually grew when the economy went bad in 2008 and after 9/11, too,” Rezapour says.
The owners learned a lesson of fleet diversification after the Daewoo collapse in 2001. This helped them during the Chrysler and General Motors bankruptcies and later during the Toyota recalls.
The company wasn’t hurt by the skyrocketing fuel prices in 2008 because the majority of the fleet was small cars.
Fox put a flag in the sand in Florida in 2011, and now counts five locations in the Sunshine State. The leisure markets in the Sun Belt states are naturals for growth, Rezapour says.
While Northeast and Midwest cities don’t make sense right now, an anomaly is Chicago O’Hare, one of the largest travel hubs in the country. Fox will be part of the new intermodal facility when it opens in 2016. In 2012, Fox hired Richard Wolff as chief financial officer. Wolff is in the process of consolidating Fox’s debt to one lender.