2010 Annual Franchise Review

Neither ICED nor LAZERQUICK opened any new locations in 2009. Minuteman opened 29 shops, AlphaGraphics opened 24, Allegra opened 15, CPrint added 11, and Franchise Services opened four shops. That’s a total of 83 new locations.

Those openings were offset, in most cases, by franchisees leaving the systems for various reasons. Minuteman saw 55 shops leave. ICED bid goodbye to 41 stores. Franchise Services lost 35, and Allegra lost 31. AlphaGraphics and CPrint each dropped 16 locations, and LAZERQUICK closed one corporate location and lost one franchised shop. The total number of shops leaving franchise systems was 196. CPrint president Todd Nuckols points out that five of the 16 businesses reported as leaving that system were sold to new owners.

One of the ways that franchisors stay healthy is by reselling franchise locations to new owners when franchisees depart the system. The total number of shops resold in 2009 was 93. Minuteman is at the top of this category, as always, with 64 shops resold. AlphaGraphics and Franchise Services each resold 10 locations, Allegra resold eight, and ICED resold one.

Box Office
Overall, system-wide sales were down by 17.13% in 2009, with total sales from the franchise segment of the quick/small commercial printing industry being $1,666,453,846. Average system-wide sales came in at $238,269,549; a 20.6% shortfall from the previous year.

Franchise Services reported the highest system-wide sales with $460 million, an 18.17% drop from the previous year. Minuteman, with total sales of $400 million, was down by 13.98% on the year. AlphaGraphics fell by 16.54% to $241,893,547. The $233 million reported by Allegra reflected a 15% shortfall. ICED, with sales of $222,135,254, was down by 26.38%. CPrint reported the shallowest cut of 5.23% to garner total sales of $96,158,045. And LAZERQUICK’s estimated $14.7 million system-wide sales add up to a 13.98% decline.

If there is a bright spot in this year’s Franchise Review, it is that average sales per shop (SPS) was not down nearly as much as system-wide sales. The overall average SPS was $596,227, down by 14.9% on the year.

This year, CPrint is the SPS leader with average sales per shop of $1,012,089. It is also the only system to report an increase in SPS, even if it is only 0.74%. AlphaGraphics, which frequently holds the top spot in this category, saw SPS fall by 18.74% to $948,125. Franchise Services, with SPS of $730,000, slid by 15.75%. Allegra’s average SPS fell 12.55% to $685,000. Minuteman’s franchisees, on average, felt a pinch of 10%, with SPS of $500,000. ICED suffered the greatest SPS loss of 24.05%, with average sales of $486,218.

North American sales for the franchise systems only fared slightly better. Total sales of $1,357,828,486 were off by 17.07%. Allegra, CPrint, and LAZERQUICK have no locations outside the U.S. and Canada, so their system-wide figures are unchanged. Here are the North American sales results for the more global systems. Franchise Services, with total sales of $363 million, was down by 23.73%. Minuteman’s 12.5% shortfall accompanied sales of $350 million. AlphaGraphics’ sales totaled $205,843,753, with a 15.45% decrease from the previous year. And ICED posted a 23.92% decline, with North American sales of $96,559,688.

Average SPS for all North American franchisees was $630,668—considerably better than the worldwide average. However, that did not carry over to individual systems. For AlphaGraphics’ franchisees on this continent, average SPS was $879,674. Franchise Services’ average SPS was $728,915. Minuteman posted average SPS of $432,632. And ICED toted up average SPS of $410,892 on this side of the pond.

Pay the Piper
The benefits of belonging to a franchise system are many. They range in scope from pricing agreements with equipment vendors and training programs to assistance with financial planning and designing business plans. There is also the more intangible benefit of having a built in group of business associates who can be called upon for advice and feedback.

Of course, there is a price for gaining access to those advantages. In 2009, the price paid to join most systems went up. Not all franchisors raised the cost of entry or the total investment required, but most did. And, of course, there are royalties to be paid as well.