2011 Annual Franchise Review: The Dawn of Recovery

Economists assure us that the recession ended in late 2009. And there are signs that in 2010 a slow recovery cycle began. The first step in the recovery was to stop the worst of the bleeding. That may not necessarily look like recovery—unless you’re the one doing the bleeding. Indeed, many printers still feel as if they are waiting for a transfusion. So we turn to the microcosm of the franchise segment to get a better idea of what actually took place in 2010.Before delving into the numbers, let me explain a few adjustments that have been made to this year’s study. LAZERQUICK was not included in the calculations. The system has not been actively franchising for several years and did not report last year. It seemed more realistic to adjust its numbers out of last year’s figures and work with the six remaining franchise organizations on a level playing field.

You may notice that ICED has reported more shops in North American than it did last year. This is because it previously only reported U.S. shops and now has added those in Canada for better accuracy. Accordingly, last year’s figure has been corrected in order to prevent skewing the statistics.

And finally, if you find that the numbers are not adding up the way they should, you’ll need to adjust for the CPrint duplicates. There are two companies that are members of both CPrint International and another franchise (two different franchise systems, in case you’re interested). They are counted in each system’s totals, but the duplication is backed out of the overall totals so that they are not counted twice. Therefore, I have subtracted two from the total number of shops. I have also subtracted their combined sales of $1.35 million from the totals of system-wide sales and North American sales.

Squaring Accounts

In 2010, the franchise segment of the industry produced $1,639,412,515 in system-wide sales. That was down 0.79% from 2009. That may not sound very encouraging until you recall that the previous year saw sales freefall by more than 17%. That is what I meant by stopping the bleeding. North American sales slid by 2.52% to a total of $1,309,289,088.

Average system-wide sales were $273,249,253, down by a mere 0.7%. Once again, Franchise Services posted the highest system-wide sales at $442 million, down 3.91% on the year. Minuteman Press International was hard on its heels with sales of $424 million, marking a 6% increase. AlphaGraphics reported sales up by 8.86% to $263,321,927. Allegra Network, with total sales of $231.2 million was off a scant 0.77% on the year. ICED saw sales dip by 11.53% to $196,519,439. And CPrint’s sales fell by 12.85% to $83,804,149.

Average North American system-wide sales dipped by 2.6% to $218,228,681. Allegra and CPrint have no franchises located outside North America, so their system-wide and North American sales are the same. Of the other four systems, Minuteman had the highest North American sales at $370 million. Franchise Services reported $342 million. AlphaGraphics’ sales grew to $214,205,939. And ICED’s North American sales slid to $69,512,000.

The good news is that sales per shop (SPS) were up for shops that have been in business for more than one year. The average sales per shop, system-wide, was up 3.7% to $617,248. Average SPS for North American franchisees was up by 2.5% to $625,895.

CPrint is the only system that continues to report average SPS in excess of $1 million. Its franchisees averaged $1,065,246 per shop. AlphaGraphics’ average SPS was $973,013. Franchise Services and Allegra Network were in the same neighborhood with SPS of $740,000 and $719,000, respectively. Minuteman franchisees saw an average SPS of $480,000, and those who call ICED home reported SPS of $434,778.

Location, Location, Location

U.S. based quick printing franchise systems operated 2,656 locations worldwide in 2010. That is a loss of 122 shops, or 6.3%, from the previous year. Of those shops, 2,092 (79%) are located in North America. All but two of them are franchisee owned. Franchise Services is now the only system that maintains company owned locations.