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The hottest thing happening in the quick printing franchise segment has actually been a quiet undercurrent of activity for the last few years. It is the merging of the quick printing franchises with sign franchises. Sign-A-Rama was perhaps the model; starting out as a sister company to the Minuteman franchise. Several years ago, Allegra Network acquired Signs Now and is currently integrating the Signs By Tomorrow system into its franchise family. In February, it also announced a new sign brand, Image360. The new brand is designed so that it can be sold as a new start-up Existing Signs Now and Signs By Tomorrow franchisees can adopt the new branding or it can be. At last year’s Franchise Services convention, franchise leaders made several references to being in the market for a sign franchise to buy. I’ve heard FastSigns mentioned at two different franchise conventions, but that may have been only wishful thinking. FastSigns may be particularly tempting as is currently led by former PIP Printing president Catherine Monson.

Why do quick printing franchise systems want to acquire sign franchises? In a word: Growth. While the shop numbers continue to decline and sales tread water in the mature quick printing franchise segment, sign franchises are in a growth cycle. The acquisition of a healthy sign franchise system can perk up a franchisor’s bottom line in a big hurry.

There may come a time when we will consider including the sales from the sign divisions of these franchises, but not this year. At least for now, we will continue to compare apples-to-apples as much as possible. If you would like more in depth information about the sign franchise universe, read Wide-Format Imaging’s “2012 Sign Franchise Review” at http://bit.ly/LsWcwh.

System-wide Sales in Limbo

In 2012, total sales for the franchise segment of the industry were almost unchanged. Slipping by less than one percent (0.87 percent), the franchises produced gross sales of $1,538,383,512. North American sales were also down, but only by 0.42 percent. So, for all practical considerations, sales would be considered flat when compared year-over-year. Individual gains were scattered and rare in survey of 2012 sales.

In 2012, Franchise Services Inc. (FSI) continued to lead in system-wide sales with a total of $439,190,000; up 1.9 percent over 2011 numbers. FSI is the franchisor of Sir Speedy Printing & Marketing Services, PIP Printing & Marketing Services, Signal Graphics Printing & Marketing Services, and Multi Copy. The Multi Copy brand operates outside the US. Its North American sales were $336,270,000; mirroring its overall 1.9 percent growth.

Minuteman, franchisor for Minuteman Press and International Minuteman Press, posted 2012 system-wide sales of $430,000,000. That 2.38 percent increase was the largest reported in this year’s survey. North American sales held steady on the year at $350,000,000.

AlphaGraphics’ system-wide sales were $289,297,603; growing by 1.04 percent on the year. The brand’s North American sales were up by a relatively healthy 3.39 percent to total $239,164,977; the strongest domestic sales growth in the survey.

The Allegra Network is home to Allegra Marketing • Print • Mail, American Speedy Printing, Insty-Prints, and in Canada, Speedy Printing and Zippy Print. Its 2012 system-wide sales dipped by 0.49 percent to $225,000,000. Since the franchise is only in the US and Canada, its North American sales are the same as its system-wide sales.

ICED experienced the toughest year of any system. The franchise family of Kwik Kopy Printing, Kwik Kopy Business Centers, The Ink Well, Franklin’s Printing, and American Wholesale Thermographers suffered a 24.32 percent loss on the year, system-wide, with sales of $100,820,740. North American sales were down to $76,973,249; an 18.17 percent drop.

CPrint International, a non-traditional franchisor that basically provides business services to existing printing companies, is another group that is found only in North America. It’s total sales slid by 1.61 percent to $85,349,109 on the year.

SPS Shows Progress

The one bright spot in this year’s Franchise Review is average sales per shop (SPS), particularly in North America. Even here, there are a few instances of averages falling. Average system-wide sales per shop, across the board, were down by one percent at $624,864. The average North American SPS, however, was $667,730; a gain of 2.7 percent.

CPrint International boasted the highest average SPS of any system at $1,090,184. Even though that was down 3.22 percent on the year, it is still the only system topping $1 million in average SPS in this year’s survey.

Allegra Network reported average SPS of $970,707; reflecting a slight dip of 0.26 percent on the year. It should be noted that the company indicates this average SPS is only for the Allegra Marketing • Print • Mail brand. Working from the numbers provided the full system-wide average SPS is actually closer to $765,306. If that is extrapolated out from the adjusted 2011 sales figures (average SPS of $746,221), the actual difference in system-wide SPS would be up by a little more than 0.2 percent.

AlphaGraphics’ average SPS fell by 4.72 percent to $955,989. That is the first time in several years, including the recessionary years, that the system’s SPS has fallen below $1 million. Its North American average SPS, however was up by 1.72 percent to $964,375.

The FSI brands saw 2012 average system-wide SPS grow by 1.92 percent to $765,700. North American average SPS experienced strong growth of 7.26 percent to $804,474.

Minuteman’s average SPS was reported at an even $500,000; showing a 3.4 percent increase. At $455,729, its average North American SPS was up by 0.52 percent on the year.

The high note for the ICED brands in 2012 was a 0.17 percent increase in system-wide average SPS, which totaled $464,612. Unfortunately, that good news did not carry over to its North American franchisees, which saw average SPS fall by 7.62 percent to $472,229.

Shop Numbers Lose More Ground

The number of franchised quick/small commercial print shops in North America-based systems fell by 2.3 percent in 2012. The total of 2,512 locations reflects a loss of 60 shops. Some of those shops left their franchisors to go independent. Some others consolidated locations, and a few simply went out of business. Shops located in North America number 1,966, or 78 percent of the total.

The vast majority of them are franchisee owned, but five are owned by the franchisors themselves. Allegra, AlphaGraphics, and ICED each claim one company-owned location and FSI has two.

AlphaGraphics was the only system that did not decline in its number of shops in 2012. It added one new location for a total of 285. It has 248 shops in North America; four fewer than in 2011.

Minuteman has the most locations, with a total of 912, and 768 of those are in North America. It lost five shops (0.55 percent) in 2012.

FSI reported a total of 554 locations, 418 of which are in North America. It lost a total of 20 locations (3.61 percent) last year.

ICED saw 17 shops (4.34 percent) leave its system in 2012. It still has 392 shops, with 163 on this continent.

CPrint saw its shop count drop by 10 (13.33 percent) for a total of 75, all in North America. As previously noted, CPrint is a non-traditional franchise and its business model is such that franchisees only sign a two-year agreement and its membership is constantly changing.

Breaking a Sweat

Even in a slow year, it takes a lot of effort to produce sales of nearly $1.57 billion. For the first time, we have asked the franchises to break out Web-based services as a separate category. The move toward adding marketing services, including cross-media campaigns, gets a lot of ink and talk, so it makes sense to begin measuring this crucial element of that mix. In its debut appearance, the category accounted for 1.1 percent of sales, which is equivalent to $17,266,232.

Here is the complete breakout of sales percentages and dollar values

Category         Percentage       Dollar Value

Prepress           7.4%    $116,154,649

1C Offset        3.2%    $50,229,037

Multi-Color Offset      10%     $156,965,742

4C Offset        8.4%    $131,851,223

B/W Digital     8.8%    $138,129,853

Color Digital   27.9%  $437,934,419

Wide-Format   5.3%    $83,191,843

Finishing         8.5%    $133,420,880

Mailing Services          5.7%    $89,470,473

Web Services  1.1%    $17,266,232

Brokered/Other           13.8%  $216,612,723

There was also some slight shifting in the balance of the job mix for the first time in quite a while. Although slight, the change was noticeable, so warrants a breakout of its own. You will notice a couple of places where there is an exact percentage shift between two job categories. For example, the 1.1 percent of sales generated by the newly added Web services exactly mirrors the 1.1 percent of sales that dropped out of the brokered/other category. The offsetting loss and growth, respectively, between multi-color offset and four-color offset are also interesting. While some of this may be attributed to simply categorizing certain types of work differently, any time such symmetry appears in a survey of this type, it catches one’s attention.

Category         2012    2011    Change

Prepress           7.4%    7.1%    +0.3%

1C Offset        3.2%    3%       +0.2%

Multi-Color Offset      10%     13.8%  -3.8%

4C Offset        8.4%    4.6%    +3.8%

B/W Digital     8.8%    10.7%  -1.9%

Color Digital   27.9%  26.7%  +1.2%

Wide-Format   5.3%    5.1%    +0.2%

Finishing         8.5%    8.2%    +0.3%

Mailing Services          5.7%    6%       -0.3%

Web Services  1.1%    0%*     +1.1%

Brokered/Other           13.8%  14.9%  -1.1%

*Not reported in 2011.

It will be particularly interesting to see if any of these patterns of gain/loss between categories is repeated in the future or if they are mirrored by the Top 100, which will be published in the June issue of QP.

Speaking of the Top 100, I have been looking over the preliminary numbers that are coming in as the Franchise Review is being completed. It is encouraging to note that the stagnant sales reported by the franchise segment is not the case for most of the Top 100 companies. How vibrant their growth is remains to be seen.

Entry Fees

The cost of starting up a franchise printing company hasn’t changed very much in recent years. A couple of the systems have lowered some of their fees in order to make it easier for prospective franchisees to join their systems, but they are the exceptions to the rule.

CPrint lowered its required minimum start-up capital fairly significantly, from $5,000 to $3,500. FSI dropped its initial investment from $150,000 to $140,000. Remember that CPrint newbies already have their property and equipment. Prospects for the other franchises must make those purchases in order to do business. All of the other franchises kept their start-up capital requirements the same, but AlphaGraphics lowered its total investment to a maximum of $377,400.

Here is a breakout of what it costs to join each of the major franchises

Franchise         Start-up  Capital          Total Investment

Allegra                        $200,000         $162,464-$516,949

AlphaGraphics            $150,000         $233,950-$377,400

CPrint  $3,500 $3,500-12,579

FSI      $140,000         $288,000

ICED  $65,000           $219,579-$248,626

Minuteman      $50,000           $145,000

Of course, that is only the cost of starting a new franchise agreement. All of the franchises have conversion programs that allow prospective franchisees to buy existing businesses. This provides a more flexible cost of entry to the newcomers and an exit strategy to the existing owners. While there are guidelines, terms and conditions generally vary because each conversion revolves around the status of the individual business that is being transferred.

Finish Line

There are a number of issues that will continue to shape the overall structure of the quick and small commercial printing franchise segment. The continuing interest in acquiring sign companies will have an effect on their general health and ability to grow sales and locations. New players are edging into the market. PostNet, originally a packing and shipping franchise, is becoming more and more print-centered. So much so that it may soon become part of QP’s Annual Franchise Review. (Look for an Executive Q&A interview with CEO Steve Greenbaum this summer.) Even Proforma, a franchise for print brokers, is selling into existing printing companies that have a more comparable business model. I don’t anticipate adding it to this survey any time soon, but if there is one thing we’ve learned in the past few years it is that everything changes.

Is the printing franchise model still viable? In my opinion, yes. I am lucky enough to be invited to most of the franchise conventions. This provides me with the opportunity to talk to the franchisees, many of whom I’ve known for 20 years or more. They share their concerns and frustrations, but also stories about times when being a part of their franchise has made a difference to the health and welfare of their companies. The franchisees who truly take advantage of the support and guidance that they pay for with their franchise royalties are the ones who reap the greatest success. The ones who pony up the money and never use the tools generally gripe and complain and eventually go away—one way or another.

As with any business model, being part of a franchise is not right for everyone. But for those who truly want a strong and supportive partner for their business, it can be an unbeatable choice. 

QP Franchises by the Numbers

Total System-wide Sales

Franchise Services       $439,190,000

Minuteman      $430,000,000

AlphaGraphics            $289,297,603

Allegra Network         $225,000,000

ICED  $100,820,704

CPrint  $85,349,109

Total North American Sales

Minuteman      $350,000,000

Franchise Services       $336,270,000

AlphaGraphics            $239,164,997

Allegra Network         $225,000,000

ICED  $76,973,249

CPrint  $85,349,109

Estimated Sales per Shop

(More than one year old)

CPrint  $1,090,184

AlphaGraphics            $955,989

Franchise Services       $765,700

Allegra Network         $970,707

Minuteman      $500,000

ICED  $464,612

Total Number of Shops

Minuteman      912

Franchise Services       554

ICED  392

Allegra Network         294

AlphaGraphics            285

CPrint  75

North American Shops

Minuteman      768

Franchise Services       418

Allegra Network         294

AlphaGraphics            248

ICED  163

CPrint  75

Minimum Start-up Capital Required

Allegra Network         $200,000

AlphaGraphics            $150,000

Franchise Services       $140,000

ICED  $65,000

Minuteman      $50,000

CPrint  $3,500

Total Investment Required

Allegra Network         $516,949

AlphaGraphics            $377,400

Franchise Services       $288,000

ICED  $248,626

Minuteman      $145,000

CPrint  $12,579

Percent of Sales by Job Type

(JOHN: Please make a pie chart)

Prepress           7.4%

1C Offset        3.2%

Multi-Color Offset      10%

4C Offset        8.4%

B/W Digital     8.8%

Color Digital   27.9%

Finishing         8.5%

Mailing Services          5.7%

Brokered/Other           13.8%