Annual Franchise Review: More New Blood, Outside Sales Representation, Mailing, Wide-format Print Services, and Other Trends for 2015

“We see clear evidence that the depressed market of the past few years is definitely on the upswing,” proclaimed Jay Groot, president of the International Center for Entrepreneurial Development, which includes Kwik Kopy. Indeed, the five major quick-print franchises posted modest to double-digit growth in 2014 among their 2, 164 print sites worldwide; 1,801 in North America. Global sales totaled nearly $1.9 billion, while in North America the sum was $1.2 billion. Separately, network sales for Franchise Services, Inc. (FSI) were up more than 3 percent (see adjacent table), and nine of 10 long-term contracts were renewed, reported Rich Lowe, president and COO.

For its Allegra Network members, the past year slowly but ended with significant growth, according to Bob Milroy, president of the Marketing & Print Division of parent Alliance Franchise Brands, “even as overall demand for printing remained essentially flat. More than half of our members registered gains for the year, with more than a quarter of our centers posting greater than 10 percent gains for the year. Six of our eight regions posted sales gains in 2014,” Milroy said.

Notably, digital color printing, accounting for 25 percent of overall sales, surpassed 4- and 1-color offset printing (19.3 percent) in 2014. Brokered services, while down slightly to 17.4 percent (from 20.8 percent in 2013), still represents a substantial amount of business being conducted. (See pie chart.)

While AlphaGraphics’ new leader, Aaron Grohs, did not chime in for this report, watch for an “Executive Q&A” with the former Consolidated Graphics executive coming up in QP’s June issue.

Alliance Franchise Brands: Allegra, American Speedy Printing, Insty-Prints, Speedy Printing, and Zippy Print

Sales representation is a main focus for Allegra/Alliance. “Our outlook for 2015 is more optimistic than in recent years, largely because our members have embraced diversification and our ‘sales driven, solutions provider model,” Milroy continued. “We enter 2015 with more than six dozen new outside salespeople within our ranks, resulting in more than 70 percent of our members now with reported outside sales effort. Training, onboarding, coaching, and mentoring programs have all received high participation and new hire-performance is improving markedly.”

On the diversification front, more than half of Alliance members now are involved with mailing services and the large-format printing of signs, banners, and experiential graphics, Milroy reported. (See pie chart for breakdown.) “A majority are also now adept at launching multichannel marketing campaigns that integrate print with the Web,” he continued. “A majority are also capable of executing highly personalized and/or versioned projects to drive higher response rates to these efforts.”

Several Alliance members have dual-branded with the purchase of an Image360 franchise from Allegra Network’s sister company, Sign & Graphics Operations in their effort to take advantage of strong growth in the broader signage and graphics industry. “We anticipate more of our members taking this route to drive growth in areas involving corporate art projects, wayfinding sign systems, and total signage solutions for larger buildings and organizations,” Milroy said.

More than one-quarter of Alliance members also have sold and executed digital services including website development, mobile websites, search engine optimization services, email campaigns, online referral systems, and online document purchasing and management systems (web-to-print portals). Yet, industry-wide among franchises, web services accounted for less than 1 percent of overall sales, down from more than 3 percent in 2013. In the case of Alliance, “the majority of these projects and campaigns involved our Marketing Resource Center (MRC) for creative services: creative strategy, copywriting, design, web programming, etc.,” Milroy said. “The MRC includes a centralized staff of marketing planners, creative staff and web marketing and social media professionals. 

“To create the time and financial resources that allow adoption of our sales driven model, we remain dedicated to our Profit Mastery program based on our long-standing Operating Ratio Study (ORS) of financial and operating efficiency benchmarks,” Milroy explained. “This information, when used as guidance within our Performance Groups, allows small groups to serve as each other’s boards of directors. Group members compare financials against norms for top profit performance and devise specific plans for profit improvement and growth.”

FSI (Franchise Services, Inc.): PIP, Sir Speedy, and Multicopy

“We had a good year in 2014 with comparable network sales up 3.2 percent while the printing industry was essentially flat,” Lowe said. “We renewed over 90 percent of the franchise contracts at the end of their 20-year term in 2014. We believe this demonstrates the strong partnership we share with our franchisees.”

Customers have many alternative ways to communicate with their prospects and customers, Lowe added, which means that FSI members need to continue to evolve their product and service offering to remain relevant and valuable.

“Our marketing services strategy remains on point,” he added. “We approach each interaction with a customer trying to help them better communicate with their prospects and customers. We offer a broad range of products and services to help them reach their goals.”

While wide-format print overall is down 1.5 percent this year among franchises (see pie chart), Lowe pointed out that signs have been a go-to product for FSI since 2012. “We have doubled our sign business in the past two years to more than 10 percent of our overall sales,” he said. “Selling signs fits perfectly into the marketing services strategy and plays on our strengths of creativity and manufacturing. I expect us to continue to grow our sign business substantially.”

Like Alliance, Lowe said that FSI’s real strength is its strong outside sales presence, with more than 200 full-time, outside sales people on the street. “We recently had a franchisee come back to our network to run the family business after eight years in another industry,” he shared. “He told me the biggest change since he has been gone is this business changed from a manufacturing business to a sales and marketing business, and he could not be more right. Today you have to have a consistent and aggressive outside sales effort to provide value to your customers and grow your business, there is no longer a choice.”

ICED: Kwik Kopy Printing, Kwik Kopy Business Centers, The Ink Well, Franklin’s Printing, and American Wholesale Thermography (AWT)

“This past year has been exciting for the ICED family of franchises,” added Groot. “Our two-year Marketing Certification program was a rousing success, thanks to Kate Dunn and Barb Pellow from InfoTrends. Graduates of that program can now use the knowledge gained to truly be Marketing Service Providers. Participants, including those who were only able to attend part of the series, proclaimed it a valuable experience.”

Because ICED recognizes that dozens of its domestic locations have been operating under the same ownership for 20 years or more, it invested efforts in a more robust resale program. “Bringing in new owners with a fresh outlook and eager to embrace sales and marketing is proving to be a good strategy, as we have welcomed several new owners into our franchise family in the past year,” he said.

“3D printing … is not a gimmick; it is a viable profit center, and we are offering an opportunity to our center owners to sell 3D printing as an outsourced product line.” – ICED president Jay Groot

In addition, ICED’s annual conference and trade show was well-attended, made even more successful by vendor partners, according to Groot. “They continue to provide innovative ideas for marketing their products and services, no longer content to ‘just sell.’ Because of the strength of our vendor providers, outsourced work continues to trend upward, adding to the bottom line without straining the in-house resources. 3D printing, for instance, is not a gimmick, it is a viable profit center, and we are offering an opportunity to our center owners to sell 3D printing as an outsourced product line.

“Web solutions are another high priority with us and with our owners, and it fits in well with our move toward marketing services. No one can be successful these days without a strong Web presence, and we have a continued commitment to a strong push in that direction for 2015, thanks again to strong vendor support,” he noted. “To that end, we are revamping our own websites and Intranet to make them more functional and more attractive.”

ICED also undertook a major restructuring of its franchise family late in 2014 with the sale of the Parcel Plus group. “That will allow us to focus our efforts on our five print franchises – returning to our roots that began in 1967,” Groot commented. “While it was a tough decision, it was a good one, not only for ICED, but certainly for our Parcel Plus franchises. We wish them well in their new franchise home.”

The year 2014 ended on a high note for ICED, with domestic sales figures exceeding 2013 figures. “We consider that a portend of good things to come in 2015 as we either launch new initiatives, or continue building on several of our ongoing programs,” he concluded. “We are encouraged by our prospects.”

Minuteman Press International, Inc.

“As we come into our 40th Anniversary there has been a lot to reflect on,” said Bob Titus, president of Minuteman. “We have seen our industry change tremendously over that time and as we see it, the changes have been for the better. For example, we have never been better able to produce the variety of products and services for our customers that we can today. Our owners have been able to take advantage of a system that has been refined, tested, and proven by years of experience. That shows in our growth and our longevity.”

Minuteman’s system-wide gross sales and average sales per center saw “nice increases this year,” according to Titus. “Also, it was great to see that our Presidents Million Dollar Circle [which is made up of centers that do over $1 million in gross sales] increased by 16 percent as well. I always take great joy in welcoming and congratulating our new members, as well as seeing owners who have been with us since the beginning; some of whom are even on the second generation in that group.

“Seeing our owners pass their business on to their children is something that both my father, Roy Titus, and I hold very closely,” he continued. “There is no better compliment than to work with an owner and help them build a business that is so successful that not only can they retire on it, but that they can give something to their children to continue to build.”

The home office of Minuteman Press International is on its third generation, with Titus’s son and daughter now working actively in the business. “We look forward to seeing some of our centers reach that level in the very near future as well,” he added.