2010 Annual Franchise Review

1. Transition our franchise members from printing/sign centers to true added value marketing services providers. Last year we welcomed Bob Milroy as our chief marketing officer to oversee execution of the effort. Bob was CEO of a perennial Top 50 B2B marketing services firm, has been an outstanding addition to our executive team, and recently became an investor in the company.
2. Accelerate this transition through the Marketing Central certification of our members via Allegra University webinars and on campus training.
3. Rebrand our centers. For example, Allegra Print & Imaging will now be branded Allegra Marketing • Print • Mail.
4. Establish a Marketing Resource Center to assist our members as they provide their customers with “agency” quality marketing services.

As a franchise committed to the long term success of our members and the company overall, we are able to provide the needed resources to facilitate this transition.

Like much of the industry, our network experienced the closing and consolidation of printing firms as a result of the impact from the recession, but a large number of our lost/closed centers were consolidated with other locations.

We continue with strong emphasis on growth through new locations with three initiatives for both divisions:

1. Acquire independent businesses via our successful MatchMaker program. We continue to have many entrepreneurs interested in buying these businesses and converting them to Allegra/Signs Now. Despite financing challenges, we still opened 12 new locations in 2009 and helped our members complete 17 acquisitions.
2. Introduce Allegra Advantage, a program whereby independents can join Allegra Network and benefit from our programs such as Marketing Central, Profit Mastery, and ownership transition.
3. Rollout the new Allegra Marketing • Print • Mail startup franchise that focuses on providing comprehensive marketing services to small-medium size businesses.

As Andy Paparozzi, chief economist for NAPL, says, we can look upon industry change as either “an historic opportunity or profound threat.” We see it as an opportunity of historic proportions and are excited about the new decade.

AlphaGraphics
Kevin Cushing, CEO

News flash for 2009! The AlphaGraphics network grew during 2009! Our network was comprised of 267 locations at the end of 2009, an increase of eight locations over last year. We did it by adding quality new franchisees to our system one at a time and not by acquiring another chain of businesses.

Now in our 40th year, we have provided quality products and services to our customers with great success, whether times were good or bad. We have adapted, grown, and persevered, and together we have built a network of which we are proud. While the recession brought challenges in terms of sales, the momentum we built over the years allowed us to emerge stronger and to deliver industry leading performance numbers. We have prepared ourselves to take advantage of the opportunities presented to us by the recessionary period. Our recent National Sales Blitz resulted in 8,574 calls and more than 500 appointments set. That’s the power of a network!

Clients of all sizes are doing more with less; looking to grow revenues and stretch their dollars further. The AlphaGraphics network has become the vital connection needed to boost the effectiveness and efficiency of our clients. With capabilities like our industry leading agOnline e-commerce offering through to direct marketing services backed by agDirect Marketing, we are ensuring that the AlphaGraphics brand builds off of our 40 year legacy of “high tech, high touch” and stays relevant and energized.

How “vital” is the AlphaGraphics brand?

• Our location count is growing in the most trying economic period in many decades
• 10 of the Top 100 Quick Printing companies in the U.S operate under the AlphaGraphics banner
• 100% of our qualified and invited franchisees have re-newed their franchise agreements at term end
• Our monthly Discovery Days bring diverse, qualified prospects from across the country and all walks of life, including independent printers
• Our international operations showed fantastic growth in Brazil as well as solid growth in Saudi Arabia
• This past year, 12 independent printers chose to operate their businesses under our brand. They appreciate our strategic vision, the support and the approach to business development, and marketing that is hard to achieve alone.

Congratulations to those of you who, like AlphaGraphics, have persevered and strengthened your fundamentals during these times. There may be more rough seas ahead of us before this storm calms, but how fast we’ll sail with some wind at our back!

CPrint International
Todd Nuckols, President