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Franchise Lfr

Ever considered buying a sign franchise? How about converting your existing sign shop into a franschised operation? LFR feature writer Caroline Jones takes a closer look at the leading sign franchise options.

Anyone who has ever decided to work for themselves will tell you that running a business is a very different thing to working for a business. You could be the best sign-maker for a hundred miles, but if you don’t have a handle on marketing, health and safety, employment law and bookkeeping, you could be setting yourself up for a fall. So if you’re thinking about setting up your own sign-making business, do you take the risk and go it alone? Or do you partner with one of the UK’s sign-making franchise networks?

“The majority of people that come into franchising are those that want to run their own businesses but don’t have the experience of doing so and they want the comfort of an organisation around them that will help them succeed,” explains Tony Marsh, sales director at Signs Express. The challenge, he adds, is finding a proven business model that you can commit to long-term and that offers all the support you need.

Sounds easy enough, but it’s not cheap. Signs Express, the UK’s largest sign-making franchise network, asks hopeful franchisees to put up at least a third of the estimated £90,000 start-up cost before they take out a loan for the rest. And even if you have £30,000 burning a hole in your pocket, franchising isn’t for everyone. Marsh cites managerial skills, commercial awareness, people skills, computer literacy and technical know-how as particularly desirable traits, but also notes that whether a business is franchised or not it is down to the individual business owner to make it a success.

US-based franchisee Clint Ehlers, who has two Fastsigns shops to his name, had no sign-making experience prior to opening his first shop in California in 2007, just before the global financial climate nose-dived. He credits the levels of support and training from the franchisor and his fellow franchisees with his success: “I have a whole network of people that I can go to and say, ‘I’m having a problem with this type of sign, what would you do?’ There’s so much knowledge there.”

Signarama’s franchisee recruiter Suzie McCafferty suggests the sign franchise model is like someone else having already made the mistakes so you don't have to. “This provides a faster run up the ladder of success,” she says. “Built with a continued desire to bring even more success to business owners, the network has developed today where successful owners share good practice and mentor other store owners – this proposition has now taken hold so strongly that it really is a family-run business even though it has spread globally through independent ownership.”

It’s arguable that franchised businesses have in general weathered the financial storms better than their independent counterparts, too. Both Marsh and McCafferty point to the British Franchise Association’s (BFA) annual report, which this year found that 92% of franchised businesses were running profitably, and are worth £13.7 billion to the UK economy. “Even during the severe recent recession the numbers stating profitability showed in the 80s,” Marsh adds. “Like any other network of businesses Signs Express have not been immune to the recession, but what we see now is a much stronger network of businesses throughout the UK and Ireland.”

Centralised procurement is another benefit franchisors are keen to promote. By bulk-buying consumables and other supplies at head office level, the franchise operators can secure significant discounts to pass on to their franchisees, which lowers prices for their customers. “And,” notes Catherine Monson, Fastsigns’ CEO, “as we increase the number of Fastsigns, we’ll have even greater buying power.”

With greater buying power also comes favourable relationships with suppliers. Ehlers explains that Fastsigns has an arrangement with HP whereby the manufacturer sends its new kit to be beta-tested in the franchise’s Texas-based R&D labs long before it goes to market. HP gets the benefit of constructive feedback from people who use its machines day in, day out, and Fastsigns franchisees get the lowdown on whether the new printer is a worthwhile investment for their needs.

One of the paradoxes of the sign-making industry is that although a large part of its business lies in producing marketing and advertising materials for other businesses, individual sign shops often aren’t so great at marketing themselves. Although having a head office with a marketing department doesn’t negate the need for a franchised sign business to promote itself, it certainly takes some of the pressure off. Ehlers describes it thus: “I have 100 employees in Dallas that every day get up and work towards things that will help me be more successful.” Something no independent sign shop could even dream of.

All the major UK sign-making franchise networks have big plans for expansion, meaning there are plenty of opportunities for new franchisees. Fastsigns currently boasts 20 locations in the UK and has plans to grow that number to 60 outlets, Monson says, while Signs Express is looking to add another 10 to 15 centres to more than 70 already operating.

McCafferty says that Signarama expects more people to look to starting their own business in the coming years. “There are specific geographical areas we are keen to develop the Signarama brand and we have a proactive franchisee recruitment strategy in place to attract the right franchise partners to local areas throughout the UK,” she explains. “Our network globally continues to grow with store revenues also growing; the UK market stands at the forefront of that anticipated growth for many years to come.”

But opening a shiny new shop isn’t the only way you can become a franchisee. Some operators offer the option to ‘convert’ your existing business to fly under the franchise’s flag. Fastsigns is keen to promote this strategy – Monson describes it a ‘great business choice’ for those sign-makers who want to reap the benefits of greater margins and administrative back-up, provided that their location doesn’t infringe on an existing franchisee’s territory.

Signs Express also announced earlier this year that it would introduce a new ‘dual branding’ opportunity, whereby it would help commercial printers and other related businesses to expand into the sign and graphics space by operating a Signs Express ‘concession’ within their existing business. It’s an interesting premise, and although the company hasn’t yet found the right candidate for a pilot location, Marsh says he would welcome informal discussions with businesses who feel it might benefit them.

So what’s the advice for those considering starting up for themselves? Monson and Ehlers suggest talking to other business owners, both independent and franchised, and weighing up the options. “Prospective franchisees need to do their research and ask sensible questions,” advises Marsh.

McCafferty sums up her advice simply: “Why take on odds that are stacked against you?” She recommends that those thinking about setting up a sign-making business take their ego out of the equation and do their due diligence. “If a franchise opportunity still doesn’t make sense to you then by all means, go it alone.”

 

Further reading:

Signs Express website - http://www.signsexpress.co.uk/

Fastsigns website - http://www.fastsigns.co.uk/

Signarama website - http://www.signarama.co.uk/

British Franchise Association - http://www.thebfa.org/