Strength in Numbers: The Franchise Formula
Is franchising in your future? Or perhaps better put: Should franchising figure into your future? That’s a question many independent sign shop owners may entertain at some point in their management careers. For some, it’s the least likely of strategic options. But for others, franchising holds out the promise of a proven formula for success.
“Many of the conversions we do are from people who feel they’ve just taken their business as far as they can on their own,” says Jim Tatem, president of SIGNARAMA (www.signarama.com), one of the industry’s leading franchisors with more than 850 locations worldwide. “They see our brand growing and recognize there are many advantages and benefits to joining a franchise.”
At FASTSIGNS (www.fastsigns.com), Vice President Brian Wieters says franchising inquiries often follow an independent operator’s honest assessment of their business and challenges. “They want to take their business to the next level but realize either they don’t have the time or the expertise to do the things we can do,” he says.
Last year, FASTSIGNS launched a development campaign aimed at convincing independents to join its global network of 530 company franchises. “When they come and talk to us, we ask them, ‘What are the things that keep you up at night?’ Those are the areas where we can help,” says Wieters.
Cost of Entry
Of course, there’s a price for the privilege of joining a franchise. It typically entails a fee and ongoing royalties. In return, franchisors say their affiliates enjoy multiple benefits, starting with the power of a nationally recognized brand name and the marketing behind it.
“Franchising is really a matter of scale and working together,” says Andrew Akers, vice president of operations for Signs By Tomorrow (www.signsbytomorrow.com), with more than 180 locations nationwide. “As a franchise system, we can negotiate with consumable and equipment vendors as one entity.”
The network of affiliated shops brings negotiating and buying power not available to an independent. Then there’s the impact of national advertising and brand-building campaigns on promoting services and attracting business in every local market.
Franchise companies also get first crack at new technology. With so many outlets, vendors use them to field test their latest offerings with the hope that an endorsement will lead to a large order.
Becoming a franchisee also brings access to company-wide intranets and forums where members can pose questions, share experiences, and find answers. “When you can call on the experiences of hundreds of franchisees, there aren’t many issues that are going to come up that someone hasn’t dealt with already,” says Gary Schellerer, vice president of a Signs By Tomorrow in Bloomingdale, Illinois (www.bloomingdalesigns.com).
Schellerer’s family was new to the business when it purchased its franchise in 1991. “Their program enabled us to start a business with advice from experts in the industry,” he says. “And over the years, they allowed us the flexibility to take our business in new directions, like getting involved with digital printing very early on while still taking advantage of all the features of their program.” (Note: Today Schellerer’s franchise also serves as a wholesaler of digital services to other Signs By Tomorrow franchisees who can’t yet afford systems for services like grand format printing.)
Faster Growth, More Support
Curt Brey, owner of a SIGNARAMA franchise in Wallingford, Connecticut (www.ctsignarama.com) and former executive director of digital solutions at Gerber Scientific Products, was eager to strike out on his own when he decided a sign printing venture might be the best place to apply his insight and expertise. “I studied purchasing an independent sign shop or a franchise for some time, trying to understand which would be better,” he says. “The statistics indicated franchises can grow faster, and the support available from a franchising program has tremendous value.”
Brey purchased two franchises, which he’s combined into one full-service location. To date, the venture has met his expectations, although he has faced challenges no franchise program can eliminate. “It’s harder work than I expected at times, but what isn’t that pays well?” he reasons. “Dealing with difficult customers can be draining, and sometimes it can be more challenging to attract new business than I realized.”
Brey is confident franchising was the right decision: “As a small business owner, there’s a lot of comfort in knowing the company you’re with can help you make smart decisions based on a business model that’s been proven over twenty years in hundreds of locations.”
Some Concerns for Independents
Successful independent operators already have their own way of doing things and their own experiences to draw on. For them, the core concern about franchising can be adopting someone else’s approach to a business they already know. Depending on the program and approach, such fears can be overplayed.
“Before joining a franchise, many people think they’ll have to do this and not do that,” says Tatem. “But they need to understand they’ll enjoy a lot of the same freedom they enjoy as an independent. We can give them recommendations, but we want our franchisees to have the flexibility to succeed. They bring their experience and knowledge and can combine it with a system we spent twenty-four years developing.”
Staffing is often the biggest issue for independent operators who convert into a franchise location. “They’ve already got the equipment and know-how, but they’ve been doing everything themselves,” says Wieters. “They need to add a staff person or two to expand their business, and that’s a big change.”
Akers says an independent owner must be willing to adapt his or her strengths. “Independent owners can take their strengths in developing great signage and use these [franchise] resources to expand their business and increase business value and profitability,” he says.
So who are the best candidates for franchising? “In our experience, [those] with drive, ambition, and who like to connect with people generally succeed in our industry. The other skills necessary to successfully operate the business can be learned,” Akers says.
Wieters notices that successful franchises are the ones that make sure their client doesn’t go anywhere else for signage. “They work to become their full-line supplier and continue to go deeper and deeper into their client’s companies for new business,” he says.
For Tatem, the ideal candidate is a good communicator and a hard worker. “They’re open-minded to new ways to generate and build business, and they understand the value of good marketing,” he says.
Akers cautions those considering a franchise conversion to thoroughly research all options before deciding which offers the best match for professional goals and personal style. “Individuals who want to be part of a franchise system must also feel good about the partnership and the culture and philosophy of the franchise company,” he says.
When the franchise is a good fit, it can be prosperous. “If someone can give you a proven model for success and has the statistics to back it up, you’ll do well to follow it,” says Brey.