2012 Annual Franchise Review: Slow and Steady, Recovery Continues

SPS for North American shops more than one year old rose by 3.7 percent to an overall average of $650,021. Allegra Network’s and CPrint’s average North American SPS are the same as their system-wide figures because they have no overseas locations. AlphaGraphics’ average SPS for its North American locations was $948,076. Next is Franchise Services with $750,000, followed by ICED with $511,204 and Minuteman with $453,368.

All Over the Map

The number of locations that are part of US-based printing franchises continues to decline, with a total of 2,572 shops in 2011. That is 86 fewer than 2010, representing a 3.2 percent loss. Out of that total, 2,028 shops—78 percent—are located in North America. All but three of them are franchisee owned. Allegra has one company-owned location and Franchise Services has two.

Every system but one declined in numbers during the past year. The sole exception is AlphaGraphics, which added 12 locations to post a total of 284 shops in 2011. That’s a 4.23 percent gain.

Minuteman is still the largest system with 917 locations; down from 926 (0.98 percent) in 2010. Franchise Services has 574 shops; falling by 4.18 percent from the 598 it had in our last report. ICED, which lost 43 shops (10.51 percent) now maintains 409 locations. And Allegra, with 303 locations, is down by 16, or 5.28 percent.

CPrint went from 91 to 85 locations; a dip of 4.18 percent, but the nature of that non-traditional franchise dictates that its numbers will fluctuate more often than the others. It is not a franchise that fosters start-ups, but rather a stepping stone to higher performance for established printing companies. That is also why its entry and total investment costs are far lower than those of the traditional franchises. CPrint affiliates don’t have pony up the cash for new equipment or real estate when they join the franchise. It operates more like a conversion program, but even in that it differs from the other systems because it fully expects its franchisees to leave the system once they reach a certain level in sales performance.

As mentioned before Allegra and CPrint are located only in North America, although Allegra has Canadian franchisees and CPrint is currently operating only in the US. Franchise Services has locations in 13 countries, ICED affiliates can be found in 10 nations, AlphaGraphics is in seven, and Minuteman is in six. None of the systems operates in all 50 states. Minuteman is in 45, Allegra is in 44, AlphaGraphics is in 42, Franchise Services is in 40, and ICED can be found in 25 states.

Working Hard for the Money

Any way you slice it, $1.58 billion is a lot of money. Even single-color offset printing, which has been in decline for years and counted for only three percent of sales, brought in more than $47 million. Here is the complete breakout of sales percentages and dollar values:

Category        Percent of Sales         Dollar Value

Prepress           7.1%    $112,420,229

1C Offset        3%       $47,501,505

Multi-Color Offset      13.8%  $218,506,925

4C Offset        4.6%    $72,835,642

B/W Digital     10.7%  $169,422,036

Color Digital   26.7%  $422,763,398

Wide-Format   5.1%    $80,752,559

Finishing         8.2%    $129,837,448

Mailing Services          6%       $95,003,011

Brokered/Other           14.9%  $235,924,143

These numbers are even more impressive when we remember that these sales amounts are spread between only 2,572 locations. This is why we consider the franchise segment to be such a significant microcosm of small commercial printing in general. This small corner of our industry is identifiable and quantifiable, which makes these statistics invaluable for anyone who wishes to gauge the overall health of the larger industry segment.

In on the Ground Floor

So how can you get in on all the benefits of belonging to a franchise system? While start-ups are not unheard of, they are not nearly so common or plentiful as they once were. The most prevalent way that franchises keep fresh energy flowing into their systems today is through reselling existing franchises and bringing in independent printers via conversion programs.