For the first time in 2012, Wide-Format Imaging presented a new view of the sign and graphics franchise market, providing sales figures and insights to give both franchised and independent shops a much better view of this segment of the industry. This year we will be able to provide some insights and trends on the market.
We invited all sign and graphics franchises to take part, however, not all decided to participate. Signarama declined once again to be a part of this Review, citing legal counsel prohibitions to providing sales numbers. Additionally, we will not provide information on Image360 franchise, launched in 2013. This new brand will be incorporated in 2014.
In 2012, sign and graphics franchises produced total sales of $601,563,850. In North America, franchise sales represent the bulk of that number at $579,609,292.
While the market may be off to a slow start, there is opportunity for PSPs investing in new technology. “There is great opportunity for those who are equipped with new technologies. It is no longer enough to be a digital print/vinyl shop,” says Teresa Young, president and CEO, Sign Biz, Inc.
“2012 was a record year for FASTSIGNS, in every metric. We exceeded 2007, what had been our best year, in every area. Same center sales growth in 2012 came in at 9.9 percent. Seventy-five percent of our franchise partners experienced sales growth over 2011. And 2013 is off to a strong start. Same center sales are up 9.1 percent for the first quarter on top of a very strong Q1 in 2012,” says Catherine Monson, CEO, FASTSIGNS.
Signs By Tomorrow and Signs Now are also experiencing growth, according to Ray Palmer, Jr., president and CEO of the Sign Division for Alliance Franchise Brands, which includes Signs By Tomorrow, Signs Now, and the new Image360. “As evidenced from our increased sales, I believe the franchise segment of our industry is faring well; maybe even better than 2012,” says Palmer.
It’s All About the Location
There were 1,068 locations in 2012, up 1.4 percent, or 15 shops, over 2011. In 2012, 1,016 were in North America, 20 more than the year prior. Of that total, only one Signs By Tomorrow location is not franchisee owned.
FastSigns is the largest system in our Review with 530 locations in eight countries, increasing by seven locations and one country in 2012. Four-hundred eighty-eight are located in 46 states. According to their reported figures, there were 23 new franchises in 2012. Seven left the system and 23 were re-sold.
Sign Biz, Inc. was next in line with 199 locations in six countries. Of the 194 locations in North America, they are present in 43 states. There were 11 new locations in 2011. One left the system and one was resold.
Signs Now, a division of Allegra Network LLC, can be found in three countries and has a total of 180 locations, down two from 2011. In North America, the 175 locations are in 39 states. In 2012, there were six new locations. Nine left the franchise and an additional six were re-sold.
Signs By Tomorrow has 159 and they are all located in the US in 36 states. During 2012, there were eight new franchises. Seven left the system and four were re-sold.
Show Me the Money
2012 showed a 7.9 percent increase in system-wide sales, increasing from $558,315,609 to $601,563,850 for all the franchise systems. These sales numbers break out into 18 categories, of which the largest segment is Fleet and Vehicle Graphics, which accounts for 12 percent of total jobs and represents $75,195,481 of the total dollars.
What will help grow these franchises in 2013? Technology will be key.
“The advent of environmentally friendly latex ink printing technology makes it possible to produce signs with little or no pollution, using materials that can be recycled,” says Palmer. “With the importance of the ‘green’ movement, I think this casts our industry in a positive light.”
“The most enduring technological advance has been the development of the flatbed device. The flatbed is being incorporated into workflows, minimizing outsourcing. Likewise routing and engraving, along with flatbed finishing devices, are being redesigned with a smaller footprint, allowing the industry to take advantage of equipment that once was too large and industrial to consider. The availability of cost-effective third party inks has allowed a substantial reduction in cost of goods without a significant deterioration in quality,” says Monson.
In addition to dynamic signage, according to Young, there are a host of technological advances that will move the industry forward, including a wider range of media options, allowing for greater versatility, as well as a more environmentally sound approach to sign manufacturing. “And a third development is the growing awareness that signs are vital and valuable. As sound research has emerged regarding electronic signage, we are finding rational and objective sign codes emerge. This is favorable to SMBs and gives the economy one more vaccination against eroding revenues: as signs improve business visibility and product sales, so goes the tax base for those communities,” says Young.
Biggest Issue Right Now
But with new technology, also come new challenges. The franchise systems provide a great deal of resources and education for their members to aid them in attracting and retaining new and exisiting customers.
“With changing technology and great demand for value-added service providers, the number one goal for sign franchises should be to understand client needs, and in turn, answering any call for changes,” says Palmer.
“What we have today is the information-empowered consumer. This might be considered a challenge because they may have no point of differentiation except price. But we recognize that the informed client base is an opportunity. We address the target markets by drawing upon our Market Research Study, which looked at the factors that drive a potential sign buyer to choose a particular company,” says Young. “This opens the door today to marketing efforts that target the individual industries with greater precision.”
“Digital signage is experiencing rapid adoption. If we in the sign and graphics space don’t embrace digital signage and be the ones providing it to our customers and prospects, folks in another industry will be,” says Monson. “Digital signage will replace a percentage of static signage. Unless we master and sell digital signage, it will become a threat. We believe that he who sells the digital signage will likely control (sell) the static signage around it.”