2011 Sign Franchise Review: Thriving in the New Normal

With increased global competition and industry consolidation, it becomes more and more important for print service providers (PSPs) to stand out in the crowd. While “going it alone” can seem daunting, a sign franchise may offer potential business owners the benefits of entrepreneurship along with the backing of a much larger global organization.

Just like the graphics arts industry as a whole, the sign franchises were under the same intense pressures as their independent counterparts. Convergence and competition is at an all-time high.

“I don’t believe that sign franchise owners face different challenges than the owners of independent sign companies; the challenges faced are industry-wide,” said Catherine Monson, president, FASTSIGNS. “I believe the biggest challenge comes from the ‘new normal’ created by the combination of cyclical and structural change in the market. This ‘new normal’ includes commoditization of many products we sell, overcapacity in the market, pricing pressure, margin pressure, customer’s ordering shorter runs with shorter lead times, less differentiation, and increased competition—both from traditional competitors, new competitors, and new sources, including new media such as mobile marketing.”

Ramon L. Palmer, president, Signs By Tomorrow., added: “The recent recession combined with the decreasing cost of entry into the sign industry has created a convergence of industries. Office supplies, printers, and copy houses, in an effort to differentiate and increase revenue streams, are now investing in the same print technologies as the sign industry. This convergence is blurring the lines between traditional sign providers and other print providers, causing even more saturation within the graphics industry.”

Positive Growth Signs

Looking back, year over year, though, we see some positive signs from his market segment—especially in terms of locations. In last year’s Franchise Review, the US boasted 2,018 franchise locations. This year, the number rose by 95 locations to 2,113. While foreign locations also showed a jump from 370 to 392, Canadian franchise locations were down 27, from 243 to 216.

For SIGNARAMA, the biggest challenge facing its franchisors is business growth. According to Jim Tatem, president of SIGNARAMA, one of the biggest challenges the franchise is facing “is handling the huge surge in business since last year. Businesses across the country are once again spending money on promotion and branding, and they recognize the need for the services our SIGNARAMA stores can offer. Our sign franchise owners are seeing double-digit increases in their business over the same time last year. Franchisees are consistently telling us how busy they are. That’s a challenge that we like to face!”

Steve White, president, Signs Now, added, “Our biggest challenge is helping customers understand everything we can do for them. This is a topic that will always be at the forefront in our industry," White noted. “As times and technologies change, so will the challenges our business owners face. There are so many directions to pursue in this business and, as Sign Now owners are an incredibly diverse group of entrepreneurs, they cannot be grouped in a box in terms of product and service offerings. One thing is clear: We don’t just make banners and yard signs. Our service lines are expanding in multi-faceted ways, and our biggest challenge is educating our customers by helping them understand everything that we can do for them.”

Education is a key aspect of FASTSIGN’s success, as well. “We are working together with our franchise partners to address these [industry] challenges, allowing them to do more than survive—to thrive—in this new normal,” said Monson. “Our approach involves achieving both operational excellence and providing new and better solutions to customers and prospects. Operational excellence involves constant improvement in all areas of the business and outperforming the competition. Providing new and better solutions involves bringing more value to the customer.”