TABLE OF CONTENTS
Industry News
[[HOT TOPIC]] Franchise vs. Independent Sign Shops
It’s lunchtime. You’re starving. Would you rather order a sandwich from the family-owned deli that’s been on the corner for decades, or from the shiny new Subway® hero shop that just opened across the street. Your answer to this question may directly
correlate with your point-of-view regarding this month’s Hot Topic: Franchise vs. independent sign shops.
A handful of franchise sign companies (FASTSIGNS®, Signs By Tomorrow®, SIGN-A-RAMA, etc.) have cropped up these last few years to claim a place in the sign market, often side-by-side with small, independently-owned sign shops. Each business model clearly has its pros and cons, but the old story of corporate vs. independent will always play itself out when the two compete.
Where does each fit in? Is the sign business too individualistic and detail oriented for uniform franchises? Will the appeal of corporate backing and support lure sign makers to the franchise model? Can the two co-exist?
This month, SBI Update spoke with Gary Salomon,
co-founder, president, and CEO of
FASTSIGNS International Inc.
There are currently more than 400 FASTSIGNS
centers across the U.S. As the president and CEO of this Carrollton, Texas-based company, we asked Salomon what he and the FASTSIGNS corporation would want SBI Update subscribers to know about sign franchises:
“Tell your readers we’re not the anti-Christ.”
And he would go on to explain why.
“In the beginning, we were shunned by the National Electric Sign Association, without question. And certainly the sign painters have always looked at us like we didn’t know what
we were doing. But I think over time we’ve earned the respect of not only the industry but also the crafts people. We don’t project that we are sign painters, but at the same time, a lot of sign painters have taken on the technology that we’ve assimilated. So apparently they saw some of the wisdom of what we were trying to do. What we’ve done, basically, is taken people who have good business ethics, taught them the business, taught them how to hire, how to train, took a lot of the burden off
of them, and let them run the business.
We’re not really looking to bring on people who want to be sign makers, we’re looking for people who are going to be rainmakers. We’re looking for people that are willing to grow the business. Granted, they have to learn how to operate this business, but what we want them to do is spend more time being a general manager and going out into the community and spreading the name of FASTSIGNS and being the catalyst for growth. If they are enamored with
the idea of making signs and they want to stay in the sign shop, then they’ve basically lowered themselves to the level of a wage employee, as opposed to someone who is truly going to be an entrepreneur.
There have been a couple of instances, even in our network, of people coming from an independent shop to open a franchise. Sometimes it works out, sometimes it doesn’t. It depends on what they’re really leaving the independent status for. If they’re leaving the independent status
because they really are going to take full advantage of the programs that the franchisor has to offer, than usually they’ll get value out of it. If they go in there, but they’re still not willing to do what they know is in they’re best interest, even though they have a franchisor who kind of acts like a paternal grandfather, so to speak, and they still don’t want to do it because it’s just not in their comfort zone, it’s not going to be worth their while. We can’t force anybody to do anything
that they don’t want to or are reluctant to do.
There are a lot of areas in which we help to accelerate someone’s immersion into the business. One of them is to actually train them from soup to nuts in the business; the other thing is to provide ongoing research and development. One of the biggest things is spending time and money to go to all these shows in order to identify which is the best equipment to buy. And if you go to these shows as someone who is potentially buying for 500
stores, versus one guy buying for one shop, you get a little bit of a different level of attention.
We provide a tremendous amount of advertising and marketing support. We have a $5 million budget with which we do nothing but spend on advertising and marketing materials and programs on behalf of the franchisees. We provide ongoing support. We’re out in their stores two to three times a year, visiting with them and going over their business, identifying what their strengths and weaknesses
are, trying to beef up the areas that they’re losing sight on. We share demonstrated best practices amongst the system. If someone is doing something really well, pass that on to the other folks. We also provide the forum for such discussions with summer meetings, field training sessions, conventions, the ongoing Internet dialogue that takes place on our billboard system, and the development of a Web infrastructure to make doing business simple for our customers.
We don’t restrict people
from marketing in their territory, but we kind of look down on people going after other franchisee’s customers. If they walk into someone’s place of business and they find out, by asking them, that they’re doing business with a fellow franchisee, our code of ethics suggests that they say ‘Thank you very much, we’re glad that you’re working with FASTSIGNS,’ and then get the hell out of there. However, if they’re not doing business with an existing store, and they’re not in their territory (of
course if they’re in their own territory, without question), then we say go for it.
Are sign franchises expanding? It depends on the nature of the sign business. For instance: For us, we have fairly strict criteria in which we’re willing to put a store into a market. If they’ve got a thousand businesses in that market, we’re not going near it, because it’s not going to be able to provide the type of living that we’re looking to provide as an opportunity for our franchisees. So we look
for at least four or five thousand businesses in the immediate area.
The cost effectiveness of a franchise versus an independent sign shop depends on whether they take full advantage of the programs that are available. When you take a look at some of the statistics that we’ve viewed over the years, our average sales are significantly higher than those of the average independent. But, at the same time, if you have a very sharp independent guy who is a good business grower and he’s kept
up with a lot of stuff, then the spread is a little bit different. But if you’ve got an independent cruising along at $100,000 to $250,000 a year, and they’ve been in the business for five years, they are either stuck in the business because they don’t know what to do or they don’t know how to grow it, and maybe they need some guidance, and that’s where we can aid.
I think it is more cost effective to open a franchise. For the discounts we can extract from the suppliers and vendors, I
think we make a pretty good dent in what they would be paying us on our royalty. I’ll give you an example: When we’re buying catalogues for the franchise network, we’re buying 400,000 at one time. We’re getting a unit cost that’s dramatically less than what a local guy is paying for 5,000 of them. So we have the ability to project an image at a fairly low cost, in comparison to what a single would be able to do out on his own.”
All you “independent thinkers” out there, feel free to send
any comments or thoughts on this topic to Associate Editor Chris Ytuarte at cytuarte@sbpub.com. And be sure to keep an eye out for the November issue of SBI Update when this Hot Topic discussion continues with input from independent sign shop owner Butch "Superfrog" Anton.
Océ Buys Imagistics for $754 Million
Dutch printing and document management service provider Océ will acquire Imagistics International, an American printer manufacturer, in a $754 million deal that will create a major
document-imaging company in the United States to challenge such industry giants as Xerox.
Océ will pay $42 per share for all outstanding shares of Imagistics common stock, and will assume the companies debt of $68 million.
“Together, Océ and Imagistics will make a powerful combination, as our companies clearly complement each other,” said Imagistics Chairman Marc C. Breslawsky.
“This acquisition accomplishes Océ’s strategic goal to expand and strengthen distribution power,
in particular in the U.S. market,” said Océ Chairman Rokus van Iperen. “We believe that culturally and strategically, Océ and Imagistics are an excellent fit.”
Imagistics management will remain at the company’s Trumbull, Connecticut headquarters, while Breslawsky joins the Océ board of directors.
“Océ already competes with Xerox,” said Marv Pollack, vice president of corporate communications for Chicago-based Océ North America. “The proposed acquisition of Imagistics greatly
expands our distribution capability in the U.S."
The deal is expected to be completed in the fourth quarter of 2004.
Daktronics to Build World’s Largest Hi-Def LED Display
Daktronics Inc. has been awarded a contract to design and build the world’s largest high definition (HD) light emitting diode (LED) display for Dolphins Stadium in
Miami, Florida, home of the National Football League’s Miami Dolphins and Major League Baseball’s Florida Marlins.
The display will measure approximately 50 feet high by 137 feet wide, with a true resolution of 736 pixels high by 2,112 pixels wide. Full-screen images will be comprised of more than 1.5 million pixels, made from more than 4.6 million red, green, and blue LEDs.
“Daktronics is very excited about the opportunity to bring true HD large screen video to a great venue like
Dolphins Stadium,” said Daktronics President and CEO James Morgan. “With this upgrade, Dolphins Stadium will claim the world’s largest HD video screen, which will be landmark for video display technology.”
The Brookings, South Dakota-based display manufacturer will provide two of its ProStar® video displays, each with true physical pixel resolution exceeding the 720p high definition television standard of 720 pixel by 1,280 pixel resolution. Both screens will incorporate a wider aspect
ratio than the 9: 16 wide screen ratio of HD television. The larger of the two screens will be the largest of its kind in the world, and both are scheduled to be installed in time for the 2006 baseball season.
Department of Defense Asks LED to Lead the Way
Light Waves Concept, Inc., a New York-based light emitting diode (LED) manufacturer, is currently working with the United States Department of Defense on an evacuation
system that utilizes LED technology.
The Department of Defense (DOD) has been seeking ways to cut the nation’s electrical consumption in half by 2025. Part of this plan involves the creation of an evacuation system comprised of LED rope lights, connected to DMX controllers, which would line the hallways of a given structure or building. Light Waves Concept is developing such a system for the DOD that would use the same colors as traffic lights to direct people during an evacuation, with
red for stop, green for go, and yellow for moving cautiously. Biochemical, motion, and temperature sensors feed the controllers data based on the nature and severity of the emergency.
A similar proposal in Canada proved successful, when LED rope lights were used to light underground tunnels for the country’s parliament.
Is the Internet Better Than Billboards?
In the first six months of 2005, companies in England for the first time spent more money on Internet advertising than they did on outdoor signage.
This disturbing trend was
recently reported by the Manchester Evening News, which cited £490 million ($868 million) spent by British companies on Web advertising, up 62% from the same time period in 2004. By comparison, £435 million ($770 million) was spent in those same six months on outdoor signage such as billboards, bus stops, and train stations.
The statistics cited in the report were generated by the Internet Advertising Bureau.
StrandVision and Pacific Signage Enter Joint Marketing Partnership
StrandVision LLC, an online digital signage company, and Pacific Signage, a digital signage hardware supplier, announced they have finalized a joint
marketing agreement.
Under the agreement, StrandVision resellers and customers will be provided with a custom login to the Pacific Signage online catalog where they will receive information that will help them specify, design, and implement digital signage installations. In addition, they will receive special project pricing for hardware products that they purchase from Pacific Signage.
“We believe this will help bridge the gap for information and services that is sometimes
lacking to get projects completed,” said Pacific Signage Founder and CEO Lisa Jachimowicz.
New Appointments
Vitex Systems Inc., a provider of encapsulation films used in the production of organic light emitting diodes (OLED) displays, has hired industry-renowned OLED pioneer Teruo Tohma as an adviser. Tohma, who is well known for
commercializing the first-ever OLED display while employed at Japanese display manufacturer Tohoku Pioneer, will assist in accelerating the adoption of Vitex Systems’ proprietary think-film barrier encapsulation technology, Barix™, among OLED display manufacturers.
Meetings and Events
NOVEMBER 2005
Nov. 10 - 12: The Mid South Sign Association’s Fall Conference will be held in Columbus, Mississippi.
Nov. 14 - 18: Screen Making: Basic to Professional. A five-day workshop offered by the
Screen Printing Technical Foundation, held in Fairfax, Virginia. For more information, call 888/385-3588.
Nov. 15 – 16: “Building Your Successful Digital Signage” Summit, hosted by the Strategy Institute. Eaglewood Resort and Spa, Chicago, Illinois. For more information, call 866/298-9343, or browse www.strategyinstitute.com.
Nov. 30 – Dec. 1: Government Video and Technology Expo (GVExpo), featuring the Digital Signage Zone, hosted by GVExpo and ActiveLight.
Washington D.C. Convention Center. For more information, call 800/294-7605, or check out www.gvexpo.com.
DECEMBER 2005
Dec. 1 - 3: The United States Sign Council’s Sign World 2005 will be held at the Atlantic City Convention Center in Atlantic City, New Jersey. For further information, call 215/785-1922 or browse www.ussc.org.
Dec. 8 - 10: The SGIA Digital Expo will be held at the Phoenix
Convention Center, in Phoenix, Arizona. For more information, browse www.sgia.org.
Sponsored Links
Adaptive Micro Systems LLC -- Milwaukee-based manufacturer of LED EMC on-premise advertising solutions. To visit the Adaptive Micro Systems Web site, click
on the company name above.
ATG Electronics -- We manufacture what we sell! High quality LED Signage Lighting Products.
www.atgelectronics.com
Raster Printers, Inc. -- The most affordable Flatbed UV Printers—72-inch wide, 1-inch thick media.
www.rasterprinters.com
For in-depth coverage of these topics and other sign industry topics, check out
www.signshop.com
ATTENTION SUBSCRIBERS:
Coming up in the November 2005 issue of
Sign Builder Illustrated,
feature articles on:
Dimensional Architectural Signage
Electronics / Plasma
Extrusions
LED Channel Letters
Magnets
Transformers / Power
Supplies
ATTENTION ADVERTISERS and SUBSCRIBERS:
Coming up in the December 2005, USSC Sign World USA issue of
Sign Builder Illustrated,
feature articles on:
Digital Printing Media
Dimensional Routers
LED Lighting
Neon Channel Letters
Service Equipment
Design Software
Large Format Vinyl
Contact your ad sales representative to reserve your space today!
As we shape SBI Update into the premeire
e-newsletter for the sign industry, we encourage our readers to send us feedback on what you like, what you'd like to see, and any other comments you might have. To do so, send an e-mail to Associate Editor Chris Ytuarte at cytuarte@sbpub.com.
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Océ's Big Buy