2014 Franchise Review: Mixing Things Up

Convergence is happening all around us, with food, music, ideas, and technology. As Mike Zimmer, president of large enterprise operations at Xerox, put it. “Remember the first time you saw a smartphone? It just made sense,” Zimmer wrote in Chief Optimist magazine, which itself is an example of convergence between Xerox and Forbes magazine. “One device for phone calls, texting, email, pictures, GPS directions, and music. So powerful, yet so simple. That’s what convergence is all about.” Blending marketing into the print mix is not so different. Just ask Denise Spalding and Jennifer Eberle, co-owners of Allegra Marketing Services of Louisville-East Kentucky. With annual sales of $6.46 million last year, the dynamic duo is Alliance Franchise Brands’ “Sales Excellence” award winner for 2013. (Annual sales within the Alliance network averaged slightly more than $1 million per shop last year.)

Akin to a broad investment portfolio, diversification can build print-related profits, too. In addition to the old-standby services of color and monochrome offset and digital printing, there are other revenue streams popping up more and growing in print shops across the country: prepress/premedia, binding/finishing, and mailing services are among the largest ancillary offerings. Demand for Internet/web services tripled last year to more than 3.3 percent, which translates to nearly $40 million in franchise system-wide sales.

Interestingly, for 2013, one-color and multi-color offset printing increased nearly 19 percent, while color digital was down some five percent. Demand for “other,” brokered services was huge, rising more than seven percent, to nearly 21 percent, over 2012. (See table.)

The franchise set-up is ideally suited for many business owners. For the 21st time, Minuteman Press International has been rated the No. 1 printing franchise by Entrepreneur magazine (January 2014). Sir Speedy president and COO Rich Lowe said, “Our franchisees have embraced the opportunities as full-service printing and marketing services providers and are adding offerings such as signage, online storefronts, and more.” Based in Mission Viejo, CA, the Franchise Services brand has more than 400 locations worldwide.

“Strategies that apply to franchises apply to the printing industry as a whole,” observed Tom Crouser, chairman of CPrint International and founder, principal, and president of consultancy Crouser & Associates, Charleston, WV. However, the diversity of adding services such as embroidery, sign-making, wide format printing, websites, and marketing services can make it difficult to develop an encompassing marketing brand, believes Crouser, who has seen his share of change as a 29-year print industry veteran. That is why CPrint issued its last franchise agreement some two years ago, after “backing in” to the franchise game eight years before.

“We saw less potential for affiliates to market as a group,” Crouser explained. “That’s because of the rapidly expanding non-uniform services adopted by independents, which wasn’t the case in 2004 when we launched the brand.” Crouser believes the new structure allows his former print franchise to adapt faster to the changing business needs of print shops and sign companies.

 

‘Blue Ocean’ Strategy

Within Alliance Franchise Brands, “Our message to our members is to transition from catchers of commodity print projects that someone else created to pitchers of high-value solutions that they recommend,” explained Bob Milroy, president of Alliance’s Marketing & Print Division based in Plymouth, MI.

Alliance represents more than 600 centers with overall sales approaching $380 million. Its major brands include Allegra, Insty-Prints, and American Speedy Printing Centers. “This past year was typified by decreasing print industry demand overall but sales of our 285 franchise members were up marginally over the prior year,” Milroy reported.

“We tell our franchise owners to deliver business outcomes, not just quality printing at a competitive price, which everybody can do,” Milroy continued. “We encourage them to become ‘sales-driven’ solution providers, which we’ve identified as our Blue Ocean strategy.” The gist is to get out and offer solutions, he added, “because nearly all independent printers are not doing this. Many are still trying to win on speed, price, and service; as a result, they are not differentiated.”

To support its franchises in this quest, Alliance has built an internal tool called the Marketing Resource Center to coach them on selling marketing projects and helping to execute them. “This is a complete internal marketing services group with planners, copywriters, designers, web developers, and web marketing and social media experts,” Milroy noted. “We’ve also put together extensive training on marketing strategy and tactics, including a certification program for our members.

“The outlook for 2014 is essentially more of the same for commodity print demand, but much more optimistic for our centers who have strategically diversified into digital color, mailing services, large-format graphics, and marketing services,” Milroy concluded.

 

Certified Marketing

Reporting similar results was Jay Groot, president of the Cypress, TX-based International Center for Entrepreneurial Development (ICED) print brands: Kwik Kopy Printing, Kwik Kopy Business Centers (KKBC), The Ink Well, Franklin’s Printing, and American Wholesale Thermography (AWT). “Of our five print brands, the Kwik Kopy Business Center system has had steady, albeit not remarkable, growth, despite the depressed economy,” Groot said. “Several centers from our other franchises have rebranded to KKBC, or plan to in the coming year, further strengthening that brand.”

In 2013 ICED was down 50 stores (to 341 from 392), which either closed or left the system; 154 still are in North America, where annual sales were $67 million. System-wide sales were $86 million, down from $101 million in 2012. “Wide-format is a strong profit center for our franchises,” Groot added, “and we are expanding other opportunities, such as ad specialties, as part of our mix of in-house production and outsourcing.

“Our owners want to learn more about marketing, not just selling,” he continued. “Most have embraced our Marketing Certification program.” Working with Kate Dunn and Barb Pellow at InfoTrends, ICED offered a four-part series that began in late spring of 2013 and will wrap-up in September 2014. Along the way, Dunn reinforces the concepts through webinars for the members. “The response from our owners has been extremely enthusiastic,” Groot reported.

Nearly 50 of ICED’s domestic locations have operated under the same ownership for 20 years or longer. “Our focus in the immediate future is to help those centers transition to new ownership,” he said. “Toward that end, we have invested our efforts in a more robust resale program.

“As ICED approaches our 47th year, we remain committed to helping our franchisees achieve success in the rapidly and ever-changing communications industry,” Groot concluded.

He noted that the ICED was shaken in 2013 with the sudden death of Mary Hadfield, who founded Kwik Kopy Corp. in 1967 with her husband, Bud, who passed away three years ago.

“Bud and Mary built a strong company with an equally strong company culture. So while we may have been shaken, that strength allows us to continue moving forward for the sake of our franchise family,” Groot said.

Want More Details?

Be sure to check out our expanded coverage on MyPRINTResource.com. View detailed breakdowns of franchise financials, including charts and infographics.

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