Sir Speedy Celebrates Its 50th Anniversary

Franchise Services, Inc. is pretty proud of the fact that Sir Speedy is 50 years young and growing. Don Lowe, CEO at Franchise Services, points out that the average business in the U.S. only lives for seven years. In this interview, he and his son, Richard, President and COO, talk about the history of the company, its current state, and what they are looking for in the future.

WhatTheyThink: Don, perhaps we could start with an overview of the various components of the Franchise Services business.

Don Lowe: Sure. Sir Speedy is our largest and has the highest average volume and number of centers. Sir Speedy is 50 years old this month. PIP, which I believe is the oldest brand in the industry, has been in the business for 53 years. And Signal Graphics, which is mostly in the Colorado area and has 12 centers left, is the third component of the U.S. business. It’s small, but it was a good investment for us. In The Netherlands, we have MultiCopy which has 67 locations in the country. And our fastest growing franchise is TeamLogic IT, a computer services business. There are 147 centers today, but we will be opening five more each in August and September and should be at 170 centers by year end. These franchises are growing at a rate of 31% per year and have been doing so for the last three or four years. The top volume there is in the $5.5 to $6 million range.

WTT: So you got into the print franchise business with Sir Speedy. What’s the story there?

DL: Sir Speedy was formed in 1968 by Jim Merriam in Costa Mesa, Calif. Before we bought the company in 1977, he had gone through bankruptcy and it was being operated by a bankruptcy trustee. At the time, we were operating the Kampgrounds of America (KOA) franchise. It was a public company and a very seasonal business. The analysts always crucified us in the first quarter, since revenue would drop off, and the stock would go down. We also had a gasoline embargo going on, and we thought that when gasoline got to a dollar a gallon, people would stop camping—we were not visionaries, or we would have invested in oil company stocks! We were looking for a way to even out our revenue stream and were looking for something in business services. We realized we were not in the camping business; we were in the franchise business. And we wanted a business that was in the #1 or #2 market share spot. At that time, we tried to acquire PIP, but Bill Levine was not interested in selling. He suggested we go south of Los Angeles and talk to the bankruptcy trustee that was running Sir Speedy. We bought the company out of bankruptcy in 1977 and took total control of the stock in 1978. In 1981, we took KOA private, and it has been private ever since. I’m still a director and shareholder.

WTT: Taking a company out of bankruptcy isn’t easy. How did you approach that?

DL: The first thing we did was work to deliver on the promise to franchisees who had invested in the business and who had been mistreated because of lack of focus. We put together a very aggressive sales program, and as a result there were three years where we opened 133 locations per year. We had one December when we opened 33 locations in one month. Once the franchise sales activity flattened out, we changed our strategy and worked on two things. First, we worked to drive revenue at the franchise locations. We devoted more resources to building their revenue, and we were successful in doing that. Today, we are close to $1 million average revenue per center, and our top volume producer is at $11 million.

The second initiative, after building volume at franchise locations, was to acquire other networks we could run separately or tuck in to our existing network. We bought both PIP and MultiCopy 22 years ago, and then we bought Signal Graphics from Steve Morris later. All three of those still operate with their original branding. We also tucked in and rebranded two or three smaller networks.

WTT: Why MultiCopy?

DL: It’s the most recognized brand in their market, dominant in The Netherlands. We have 67 locations, and The Netherlands population is about the same as the state of Georgia. We liked their mentality; it is much like Americans’. They understand the commercial side of the business world. In fact, the Dutch were one of the original traders in the world. There is a separate management team in Holland reporting to Richard. In the U.S., we have common management for the three brands located here.

WTT: What about TeamLogic IT?

DL: We started that business 14 years ago. Its headquarters are located in our building and it reports up through Richard and me.

WTT: Looking back, what are a few of the things you are most proud of?

DL: First, I am very proud of our relationship with our franchisees. I think we have the best group in the world, and they have been very kind to us. They are quick to adapt to new technology, and they are not afraid to take calculated risks. We still have the largest number of salespeople in the printing industry, more than 200 out on the street every day. That’s a credit to our network.

Richard Lowe: We needed to have a sales culture in our company, and we have been presenting that to our franchise group. They bought in, and they have spent their own money to put sales on the street. One of our franchisees has 11 salespeople, but several have two or three. There are a handful of sales reps delivering over $3 million in sales per year. Our largest Sir Speedy location, George Coriaty in Whittier, is a $3 million seller himself, plus he has four salespeople. His largest account is actually in New York City. That’s been one of the biggest changes for us—in the early days, most of our business came from a two-mile radius of the location. In fact, a delivery truck in those days was a hand cart. It was easier to market. You could walk by most of your customers every day.

WTT: What are some of the other changes you have led the organization through?

DL: We spent several years moving from analog to digital technology. We were first in the U.S. to have a Xeikon, and first with Indigo. And we had the first Heidelberg QMDI in the world.

RL: We set up an R&D operation we called Digital Quickcolor. We saw early on color digital printing would be a growth industry. It was a rodeo in the beginning. We pride ourselves on being on the leading edge of technology and adoption. Going through the analog-to-digital migration we thought was monumental from a technology change perspective. But then we went back to our franchisees and said, forget about the technology; we are going to do marketing services. And that was a much bigger change than analog-to-digital. You needed to approach customers in an entirely different way.

WTT: So what’s on the table now?

RL: We are working to expand the products and services we sell. For many of our locations, signage has been the growth engine in their revenue. We are also spending a lot of time on labels and getting our arms around packaging. We were selling labels before, but it was reactive rather than strategic. Now we are focusing on that activity, and it is a growth area as well.

DL: Interestingly, for the last two years, our biggest growth in labels has been labels for the marijuana business. They are required to have specific labels by various state governments, and we have done well with that. In signage, we have bought a lot of equipment, much of it HP. We think that will soon represent 25% of our revenue; it’s about 16% or 17% now. Before, that was all stuff that we sold and vended out. Now we are producing it ourselves. One of our locations does over 60% of its volume in signage today, and they didn’t get a piece of technology until two years ago. This includes entire packages for trade show booths and signage. We have a couple of salespeople that only sell monument signs. We are trying to break into electronic signage, but that is more of a challenge than we thought. There is no margin in hardware; it’s a content business. So we are working through that model.

WTT: What’s the strategy for the future?

RL: We will continue to evolve in the sign space, and wherever there is a growth application. The strategy is simple: we are looking at markets and products that are growing and not being replaced by digital technology. Commercial print is flat at best. But other segments are growing at high single or low double-digit rates.

DL: There are two things that drive volume in our network: one is the expansion of products and services we just talked about. For example, the franchise owner decides he will be in the signage business, sometimes starting with one customer. The early adopters have been the early adopters with everything; it is a mindset. Then their testimonials encourage others to enter those markets.

The second thing that drives revenue is the personality of the owner. We have people that are persistent, knowledgeable, and customer-centric. They deliver in minutes when the customer has to have it. They turn work on a weekend when the customer has to have it. If you look at the top 100 franchisees in our network, to a person, it is their personality that drives the big growth.

WTT: I’m sure the good leadership helps as well!

DL: We take no credit for that. But we have been doing it for a long time. I still think about Richard as new leadership, but he’s been with the company for 30 years, so I guess he’s not the new guy anymore!

WTT: And now you have the third generation coming on board.

RL: Yes, my son Zach interned with us for two summers and recently graduated from college. We had a job opening for a project manager-type person, and he said he wanted to interview for it. He helps us on convention and a number of other projects.

DL: At its heart, it’s a family business, and that mirrors our franchisee organizations. They feel comfortable with that family orientation. Most of theirs are family, and ours being so builds some empathy.

WTT: Anything else you would like to add?

RL: We’re still bullish on the business. It’s a large industry with lots of opportunity. We’re having a fabulous year—up 6% year-to-date over last year. We feel good about that, since overall printing is flat. It’s a testament to our owners, their tenacity, their willingness to change, and their hard work.

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