Owings Mills businessman Kenneth L. Blum has been named chairman of Rent-A-Wreck, the car rental company that leases used cars largely to customers who don't want to pay higher corporate rates.
The Los Angeles-based company announced yesterday that Mr. Blum's management consulting firm was given a five-year contract to operate Rent-A-Wreck. The principal compensation will be a five-year option to purchase 2.25 million common shares at $1 each if designated earnings and stock prices are reached.
In addition, the company said, a group headed by Mr. Blum has purchased 333,000 shares of newly issued common stock for $250,000 and has bought a new Rent-A-Wreck franchise, which will be located in Towson.
Rent-A-Wreck was founded in 1969 in Hollywood by a used-car salesman. The tongue-in-cheek name evolved after an actress who liked to rent used cars wrote a check to "Rent-A-Wreck" as a joke.
Since then, the company has grown to more than 350 neighborhood franchises located largely in small towns in 46 states and nine countries.
There are three franchises in the Baltimore area.
While franchises reportedly have made money, revenues for the parent company have remained flat, and it has rarely turned a profit.
"It's an unusual situation where the franchises do well, but the parent struggles," said William L. Richter, vice chairman and controlling stockholder. "That's why Ken Blum has been brought in to fix it."
In a statement released by the company yesterday, Mr. Blum said he will try to capitalize on Rent-A-Wreck's name recognition and its unique market position.
Mr. Blum founded United HealthCare Inc. in 1974 and headed that company until he sold it in 1990. Since then, he has been a management consultant to various businesses.
He attended Johns Hopkins University and received an MBA at Loyola College in 1979.