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.”


Technology Continues to Drive Market Growth

Technical innovation—equipment, software, and supplies—continues to drive this market forward, enabling franchisees to provide state-of-the art graphics and solutions for their customers. All of the franchisors are proactive, developing special programs and opportunities to help their franchisees grow and thrive.

“Although technological advancements have caused some challenges for the traditional sign industry, the innovations being presented by our vendors are opening doors for our franchisees,” said Palmer. “Technologies that were once unattainable, e.g. flatbed, grand-format, and dye-sublimation printers, are becoming more affordable and easily accessible. The addition of unique technologies allows our franchisees to expand into market segments that were once unserviceable.”

“Rapid changes in technology allow us to offer better products and services than we could have even imagined in the past,” said Tatem. “SIGNARAMA first found success by using cutting-edge industry software programs to provide a full range of sign and graphic services. That’s never truer than today, when we offer our customers many advances in the way that we print our products and even the way customers can purchase…whether it’s in one of our stores around the globe, or on our website where they can design and purchase a sign right online. Staying on top of technology innovations gives us a great advantage and many new opportunities to excel.


Taking Success to the Next Step

Sign franchisees need to tackle the “new normal” head on—just as their independent counterparts do. Through various business and education programs, franchisors are making sure their franchisees are not left to figure it out for themselves. Peer-to-peer networking and information exchange helps to strengthen individual locations while building the network as a whole.

“The biggest opportunity for sign franchise owners today applies across the board with most sign businesses, whether independent or franchise,” said White. “With this in mind, I do believe there are specific advantages sign franchise owners do have when it comes to growth opportunities. Our centers are part of a family of valuable experts and fellow business owners with a boundless training system and extensive trade knowledge, creating a dynamic combination of extensive local service and worldwide support. As a result, our owners are never left with the feeling of being ‘alone on an island’, so to speak. They receive an unparalleled level of support in every aspect of their business; and regardless of the situation they find themselves in, they can always find peers facing similar situations who they can collaborate with.”

Monson concurs. “Our franchise partners succeed in this environment by focusing both on operational excellence and bringing more and better solutions to their customers,” she added. “ We are working with our franchise partners to improve all areas of their business. In regards to operational excellence, we have programs and processes to help them be ‘brilliant with the basics’ in all areas of their operations. We are focused on constantly improving efficiency and minimizing complexity. There is also a focus on managing and improving margins as well as delivering exceptional customer service. Of course, in order to accomplish this, we need to help our franchise partners develop exceptional staff; the University of FASTSIGNS, our online learning management system, contains learning tracks for all positions within their organization.

“We need to focus on helping customers grow their businesses and achieve their objectives,“ Monson continued. “We need to go beyond being order takers and begin to really understand our customer’s businesses and what they are trying to achieve. From there, we need to respond more comprehensively to our customer’s marketing challenges. We also need to expand the range of products and services we provide. We are also looking for ways to find new revenue before and after production of the image. If we wait for the customer to ask for a price, we have waited too long to maximize our opportunity. We need to get involved with the customers earlier in the process, before sign types and designs have been specified. And we need to look for new opportunities and unique applications. To accomplish this, we need to be at the customer’s place of business, asking open-ended questions and then coming back to them with comprehensive solutions to their business challenges.”