2017 Sign Franchise Review: The Progress Continues

How important are franchises to the US economy? According to the International Franchise Association’s “Franchise Business Economic Outlook for 2017,” franchise businesses accounted for approximately $416 billion last year, or about 3% of US private GDP. And, projects IHS Markit Economics (which aided the IFA in its report), franchises will boost that number in 2017, actually exceeding the US GDP growth rate this year.

Overall, the report indicates, general franchise output – that is, revenues from goods and services sold – was on a 5.8% growth rate in 2016, and IHS Markit projects that this will dip ever so slightly, to 5.3%, in 2017.

Sign franchises, it’s important to note, are typically exceeding that growth rate, according to the companies we surveyed for our annual Sign Franchise Review. In fact, total system-wide sales for sign franchises grew at nearly 11%, on average, for all companies, in 2016 versus 2015. And companies indicated that, on average, their number of shops grew approximately 5% in 2016 versus the previous year (both in the US and internationally).

A highly successful past 12 months

“In 2016, SpeedPro Imaging experienced stellar growth in system-wide sales,” says SpeedPro Imaging president and CEO Boris Katsnelson. “We welcomed eight new franchise partners into our system. We continued to grow our home office team to provide top notch support and systems for our franchisees. Our growth stems from our strong franchisee support and a customer-centric business model. We teach our franchise partners all aspects of the wide-format business [and we] continuously look to new strategies and implement the best solutions … in collaboration with franchisees.”

The past year was also an exceptional one for FASTSIGNS, says CEO Catherine Monson: “It was another record year – we opened 35 new centers in new and existing markets and had a record signing of 63 new franchise agreements. Our network generated more than $453 million in sales with strong sales growth in all regions and countries. Our franchisees continue to lead the industry in advanced products and services and provide comprehensive visual-communications solutions. Our US centers have increased their average unit volume to $765,300 in 2016. We’re also experiencing higher average invoice, higher profitability, and are selling more complex comprehensive solutions including architectural signage, interior décor, wayfinding, digital signage, and digital signage content. Technology has helped us print better and faster, and in some cases, reduce labor.”

Signarama saw a significant growth in wall décor, digital signage, and content, along with growth in store sales and niche products, says A.J. Titus, United Franchise Group operations manager. “In 2016, we saw an increase in rebranding – many corporations are investing in new visual identities to better engage with their customers. Conversions were also on the rise as the sign industry focuses on new technologies and products.” A stronger economy and offering more robust solutions to the market were primary reasons behind the growth, he says, as was “increased consumer education within the market.”

“We continue to see growth in our Image360 brand,” says Ray Palmer, president, Sign & Graphics Division, Alliance Franchise Brands (which comprises Image360 as well as Signs by Tomorrow and Signs Now). “And with the number of centers climbing, we’re able to leverage our network on a wider scale. “We have a good mix of seasoned franchise owners and new centers, which makes collaboration much more effective.

Growth in the need for signage plus an increased focus on target marketing were two primary reasons for Signworld’s success in 2016, says Dan Werner, VP of Operations. As a result, he says, “We had an increase in overall organizational revenue as well as individual location revenue.“

For Sign Biz Inc., 2016 brought with it “a migration – a matriculation – much like before, from cut vinyl to digital output, and then from digital output to dynamic signage,” says president and CEO Teresa M. Young. “Cut vinyl has its place, static output has its place, and now dynamic signage will become commonplace. Dynamic digital signage for interior HD displays has been part of our industry for a dozen years, but only a tiny percentage of sign professionals ventured into this new territory. We built an easy-to-use system back in 2006, and it has evolved dramatically to meet the needs of sign trade professionals. We invested heavily in training, code development, and education, to give sign industry partners the confidence to sell and install dynamic signs, and that approach is working.”

Growing in 2017

What strategies are franchises pursuing to further grow their business in 2017?

“A few of the areas we are ‘aiming’ for this year include better leveraging new and existing technologies, growing our system, fostering new Center sales growth, and increasing our member engagement,” says Alliance’s Palmer.

“We understand fully why a sign shop would not want to move out of their comfort zone,” says Sign Biz’s Young, “so we decided to bring the comfort zone to the shops, by continuing to expand on our LobbyPOP dynamic sign platform. In addition, shops are in need of qualified employees, and our strength lies in education, always has. Therefore, we’re expanding the services we provide – both before and after a new staff member is brought on board in our shops.”

FASTSIGNS indicates it will continue to implement its strategic plan “with a continued focus on ‘More Than’ products and services, as well as an increased emphasis on outside sales implementation,” says Monson. In addition, she says, they’ll focus “on providing smart marketing solutions and solving customers’ communications challenges; selling comprehensive solutions vs. selling just a sign; and using a mix of products including more digital signage, more environmental graphics and bigger installations. We have added a new TV network and will be launching new TV spots to reach a broader buying target. We have plans to open 50+ new locations in the US and Canada.”

Katsnelson notes that SpeedPro put several infrastructure components in place last year that will continue to benefit franchisees in 2017: “We implemented Corebridge, a software program that allows their studios to manage customers and workflow more effectively; we also revamped our operations manual to provide franchisees with updated guidelines and recommendations for running a SpeedPro studio; we revamped speedpro.com – enhancing the brand’s online image and providing franchisees and customers with more information and tools than ever before. We expect to once again see double digit system-wide sales growth at the franchisee level in 2017 and add many new franchise locations, as we've invested heavily in our franchise sales team.”

Meanwhile, says Werner, Signworld will pursue “an increase in target marketing and a continued focus on customer service.” And Signarama will build on its 2016 success by “leveraging vendor partnerships for greater growth of the stores,” says Titus.

New markets, products, and services

Of particular interest: the markets and specific opportunities for growth that franchises are seeing (and seeking):

“The healthcare market has a huge opportunity for growth in 2017,” says Titus at Signarama, “with the offering of digital signage and content delivery, wall murals, wraps (walls, vehicles, windows, floors, etc.), wayfinding, and ADA signage.”

Says SignBiz’s Young: “We see something we’ve labeled ‘Extreme 3D’ – which can outfit experiential spaces with carved fixtures that tower up to 200 feet – as a great niche for our members. Vehicle wraps are always a hot commodity, and car sales and lease volumes continue to build steam for this customization. In addition, EMC (electronic message center) signage sales are on the rise, with nearly 80% of our members bidding on large projects – new manufacturers, streamlined software, and content providers make this a rich ecosystem that supports great growth. Plus, the LobbyPOP platform is open to sign trade professionals who complete certain qualifications, and we’ve seen a four-fold increase, year over year, in participants; this will continue to grow at a nominal, but steady, pace.”

For Signworld, all markets in the sign industry offer opportunity for growth, says Werner. “We’re not as interested in going after a particular vertical market as we are in going after customers who have a high level of repeat purchasing on a global level.”

“We’re focusing on our niche of the market, which is wide-format printing,” says Katsnelson with SpeedPro. “While other printers are trying to expand their offering beyond the wide-format segment, we believe it’s the most profitable, as it’s growing at 7.9% annually and presents the best opportunity for our franchise partners to grow their businesses.”

At Signarama, “We’re always looking to add new products and services to offer our franchisees to market to their customers,” says Titus. “Our R&D department researches the latest technologies, methods, and equipment to offer our franchisees for growing and improving their businesses.”

Industries that have companies or segments that are expanding, remodeling, and rebranding themselves to attract boomers (lifestyle properties, healthcare) and millennials are prime targets, says Monson at FASTSIGNS. “Also, as retailers look for more ways to differentiate themselves, we’ll see an increase in digital signage and experiential graphics. Manufacturing and logistics companies also provide an opportunity to use more visual graphics to market their product, use more safety signage, and create more employee engagement. We continue to see growth in wayfinding, architectural signage, fleet graphics, and interior décor. We’ll continue to sell comprehensive solutions using the latest technologies and materials. We’ll also look at augmented reality as it is a part of the future of graphics, but is not yet mainstream.”

Global ambitions

Several franchises are looking to make news beyond the US and North America this coming year and beyond.

“In 2016, we finalized a master agreement to continue to expand in the Caribbean, the Dominican Republic, and the US Virgin Islands,” says Monson at FASTSIGNS. “We expect to announce expansion in Mexico, Latin America, and Southeast Asia in 2017. We continue to see robust international growth in our existing markets of Canada, the United Kingdom, Australia, and the Middle East.”

Signarama has “a great network of very highly trained print professionals reaching across 72-plus countries,” says A.J. Titus. “We plan to expand even further: Our international department has an aggressive growth plan developed and is currently seeking out new global opportunities for Master Partners and Global Units.”

“We have members in Bahamas, Mexico, Philippines, and other countries, including Canada – and it is Canada that has our attention at this time for continued expansion of our footprint there,” says Sign Biz’s Young.

While printing companies can print and ship their products across the globe, says SpeedPro’s Katsnelson, “our local franchise partners are often more responsive to client needs in their area. “Every day, people enter our franchise partner’s studios with an emergency or impossible deadline that only a local printer could fulfill. In the long term, we do have plans to expand internationally, but we’re currently focusing on growing our business the US.”

“Our independent business owners have unlimited sales fences, so each of them have the ability to focus on customers with a global footprint,” says Signworld’s Werner.