The Letterville BullBoard: Franchise or not to franchise...opinions please.

This is topic Franchise or not to franchise...opinions please. in forum Old Archives at The Letterville BullBoard.

To visit this topic, use this URL:
http://www.letterville.com/ubb/ultimatebb.php/topic/13/5281.html

Posted by Mark M. Kottwitz (Member # 1764) on :

Greetings, Heads...

Ok, It is time for me to make a major decision, and I am interested in opinions, stories, rants, and general observations.

First, a little bit of information. I am 29, about to turn 30 next month, and I have been in the sign business for the last 10 years. I have done everything from install lettering, to install large signs, billboards, to repairing and installing neon. I have driven and operated a 100' Skyhook, designed load structures, and everything in between.

I have an opportunity to purchase a 1 1/2 year old vinyl sign shop outside of Nashville, with about 300 “customers”, and have been looking at the area, and at the business in general. To make a long story short, and to keep from rambling on, I am not 100% sure this is the best deal, considering they are "asking" $80,000 (25,000 down and the rest financed over 5 yrs @ 11% interest). I have been looking at the falling interest rates, and thinking that a conventional lending institution will give better rates, and now is the time to do something if anything.

I also have been thinking that with that kind of money, I could start my own, but the idea of struggling with a new sign shop is less than appealing. I will admit that I am somewhat clueless when it comes to the accounting and marketing aspect, and I am thinking that a franchise will help with "the business plan", marketing, and other various aspects that I don't know. But the question is, is it worth it for the amount of money they require?

Any thoughts on why or why not to franchise is appreciated.

Posted by kevinlandry (Member # 1352) on :

Get an accountant and let him go over the books. Find out if it is making enough money to sustain your lifestyle. Ask what kind of advertising is in place. Talk to some of the customers about the business and see how they feel about present and future owners.
Nobody sells a business unless they are retiring or are not making enough money.
300 customers sound good but are they really buying enough product

Kevin Landry
KnL Signs
Halifax NS

Posted by Mike McCloud (Member # 766) on :

They have probably given away sticky letters till their life savings are gone, and now the machine is for sale to someone else. This is generally the way of the franchise. Basically they are going to sell you $15,000 worth of equipment and a long term horribly expensive lease. If I were a youngster, I would learn to use a brush, both quill and striper, then augment the service with vinyl. Not make the machine the business. Most franchise operations,not all, can't lay out their own name. There is nothing magic about a franchise except how quickly that they can get your money into their pocket. Look this deal over very closely. There are franchise operations on ever corner and in every stripmall. How many pieces can the pie in your neighborhood be cut into. Maybe what you already do will keep you living well till you can learn to do something that the machine can't do, then add a machine to aid in the production of the product. That is, once you have leaned what is in the Mike Stevens book. Just a thought from an old guy who's seen the stuff hit the fan...... And yes I do have computers, plotters, large format printers and all the rest of the stuff that pass's for a sign business these days. The plain truth is that a person who is really going to be in the sign business should be able to finish a job when there is a power or equipment failure,by reaching for another tool in the arcenal. I wish you the best in your future and with your decision.

Posted by David Wright (Member # 111) on :

300 customers eh? How many of these "customers" will return to this shop and are not just one time buyers?
My database of customers would reveal a small percentage of returning sales on a regular basis. A lot of these do not need to buy again or have failed or will not need signs for years to come, so a database of say 300 means nothing.
Build your own base and the money you would have paid this company, put it into equipment and advertising for your own shop.

Posted by Dave Draper (Member # 102) on :

Hi Heads,

I think I had this very same rant a couple years ago. I was asking if it was worth it to go the way of a franchise.

If you are going to spend all that money upfront going franchize, wouldn't it just make more sense to get some TV and Radio and News Paper ADs going?
Because you are just going to have to do that any way!

So you are basically paying out the nose for a "Name" on the shop, right? Not smart.

Lots of sign people suck at keeping the books. It doesn't cost that much for an accountant as mentioned above. You can spend your time better by getting the work in and getting it done and the extra jobs you bring in will pay for the accountant...and you might get his signwork too.

The above is what I discovered for myself in this area of the country. If I were in Las Vegas or some other big city, it might make sense to go with a franchise. You do realize you are going to need to spend 80 hours a week and you will have to hire some low pay employees, who will up and quit you on a moments notice.
Lots of pitfalls.

Posted by Mikes Mischeif (Member # 1744) on :

You can take business classes in the evening for one year, or pull your hair out for 5 paying for "the education" a franchise is going to give you.

As a former tech rep for a major franchise, I saw 3 go bust for every one that made it. You've got better odds in Vegas.

It's all about work. You can make it. A franchise will let you talk to successful shops during your "dating" period. Go talk to the ones they don't lead you to.

I've seen the successful franchise shops set up a second shop to get away from sending that "royalty" check in every month and enjoy the independence of running thier own business.

Posted by Rob Clark (Member # 787) on :

You are only BUYING yourself a job....................
Think about that.

Rob

Posted by Joe Endicott (Member # 628) on :

It's really up to you, You are the only one who knows the area/business. After about eight years in the sign business, myself and a partner bought the shop we have rather than starting one up. But we bought an independent shop that had been in business in the same area for nearly twenty years. We also worked at that shop for about 18 months before it changed hands. That gave us a chance to meet his customers, and for them to become comfortable with us. The monthly payment is there, yes, but because of the steady customers we have never had to worry about paying it or ourselves.

With over 65 sign shops listed in our phone book, just adding your name to the bunch doesn't guarantee anything. Especially since most of those are quicy-sticky shops. And I definately don't mean to say that vnyl only sign shops automatcally produce crap (I don't hand-letter at all) It's all in the design. If you can design a good looking sign it doesn't matter if its paint or vinyl.

You mention you have a lot of install experience, but most people (sign people excluded) don't drive past a sign and say "Wow! What a well installed sign!" We don't install any of our big signs (by big I mean anything more than a couple of treated posts) but there is a shop in town where the guy only does big lighted signs and the like. He doesn't really handle much design, just the mechanical aspects, and does a nice job of it. So we can work together on a lot of jobs. That might be something you may check out.

Design-wise....the afor mentioned Mike Stevens book is a great start. Then supplement by sticking your nose into every issue of SignCraft you can get your hands on.

Don't let anybody tell you that painting is a necessity. It can be a big plus, but not a necessity. Design capability, in my opinion is much more important.

Look at the quality of work this company does. Look at the quality of customer this shop has. Definately sit down with an accountant and a lawyer before you make any decisions. 11% interest is rather high. It's your call.

Good Luck!

[ October 06, 2001: Message edited by: Joe Endicott ]

Posted by Doug Allan (Member # 2247) on :

I too, like Joe, bought an existing independant sign company that had been in operation in the area for 20 years. Also I had worked for the company for over a year, and had some contact with clients. I had 5 years prior sign experience, but much less extensive as yourself, Mark.

With no business experience I would have had a lot of fear starting from scratch, but in reality I couldn't have done that because of $. I came in with bad credit, & no savings so this buying opportunity was a gift. I can say now though that as much help as the existing client base was, If I had some start-up capital, minus the fear, I could have done it no problem.

Compared to the work I see in Sign Craft, or here, my design skill are a good mediocre, but I have run my business 5 years now, & good customer service goes a long way. I see clients shop around even after being satisfied somewhere once. Some clients have left, some left and came back (some left again), many have come from my competitors and stayed loyal because of friendly honest service. Besides being mediocre compared to our trade mags, is expert to 99% of your clients.

I think you could make it on your own with your experience, & the 25K you would have put down. The other possibility is a smaller independent shop that only costs 25K (thats what I paid here) even if the equip. is only worth half that, if you take over a location that has had "SIGNS" written on the door for a few years, & comes with a name & phone number that has floated around on business cards, peoples roledex's, and this years phone book that will really help the first year while you get your own reputation & new client base.

The former owner did 80K in his best year in 20, and had a slight reputation for not answering the phone or returning calls, or getting jobs out on time. He got enough work to get by, have a life, and surf. (not neccessarily in that order) My point here is that I took a business that was 95% silkscreen & 5% other with a marginal reputation, and it evolved to 5% silkscreen 95% vinyl/digital/other & improved the customer service. I'll exceed 100K for my second year this year, but I give a lot of credit to the jumpstart of having his old clients calling me up that first year. Also having a life & surfing are still down the road for me. That 80 hours a week is no joke.

Posted by old paint (Member # 549) on :

if i hear you correctly...you did a lot of "sign labor" not sign design, vinyl or layout. correct me if iam wrong. ive been in this full time since 86.....and before that i was part timin it. doin a little job here and there while i kept a full time "paycheck" job.
i started painting signs as a youngin, do draw and paint in other mediums and did 2 years at penn state as an art major. also iam a draftman, went to school for it outa high school and worked as one for a while. building signs and layout and design are easy for me and iam also a computer geek so the computer is a lot of help to me...but it wont swing a brush or just wing it like i do on some paint work.
as for buying an existing shop for that kinda money....like someone else said your buyin a job.
if i were you i would start out doin some work on my own, see if you can design and follow thru on the jobs....and see how much time you invest in each job...as the old saying goes time is money...and if it takes you a week to complete a $200 job....you didnt make any money!
i work outa my house, and i have a mobile shop( step van with cutter and computer) and all my paint also, so i can do either if the need arises.
so my overhead is low and most money i make goes in my pocket...lets see if i had $80,000 i could buy this...that...and even this thing....see what i mean?

Posted by Brad Farha (Member # 931) on :

Franchise? In 98% of the scenarios I can imagine I'd say no way! Lots of good points mentioned, here's the two that stuck out to me:

quote:
Originally posted by Mike McCloud:
They have probably given away sticky letters till their life savings are gone, and now the machine is for sale to someone else. This is generally the way of the franchise. Basically they are going to sell you $15,000 worth of equipment and a long term horribly expensive lease.

Amen. Their "customers" are probably of the "I need two fifteen dollar signs right now" variety. They got into a business they knew nothing about and want someone to bail them out of a bad investment. Phooey.

quote:
Originally posted by old paint:
if i hear you correctly...you did a lot of "sign labor" not sign design, vinyl or layout. correct me if i am wrong.

Good point, Joe. Knowing installation qualifies you to.... install. Keep looking.

Posted by Mark M. Kottwitz (Member # 1764) on :

Thanks for the input from everyone.

Allow me to be a little more clear. I am currently the art department supervisor at my current employer. I have started out designing signs at a small trophy and sign shop, but I learned many good design ideas at my second employer, including negative spacing and kerning. I do own Mike Stevens’s book, and refer back to it every couple of months. Design is not a major problem (although spelling is, lol) in my case.

As far as the shop I am looking at, I am not doing it alone. My Dad, who understands the intricacies of business better than I can ever hope to, has looked over the "information packet" that I received. I had already spent some time going over it, and making my own notes, concerns, and questions, then I send it to him to look over. I will be in back in contact with the selling 3rd party this week to ask for additional info. It seems they are selling "to be closer to family", which would be nice to buy considering that would put both me and my wife closer to our families.

Mike: " "Basically they are going to sell you $15,000 worth of equipment and a long term horribly expensive lease". That is a major concern to me, considering their equipment lists don't make much sense to me. It almost looks like they have a "wish" price and are trying to "back into" it.

David: "300 customers eh? How many of these "customers" will return to this shop and are not just one time buyers?". Also a major concern. I would expect this to be 300 sales, maybe not customers? I don't know, also something else I am going to ask about.

Dave "Lots of sign people suck at keeping the books. It doesn't cost that much for an accountant as mentioned above. You can spend your time better by getting the work in and getting it done and the extra jobs you bring in will pay for the accountant...and you might get his signwork too." Great advice, I had thought about it briefly, but now it's not a major concern.

Joe, I agree that 11% is high, but that is owner leased. I am going to try SBA, I think they may be able to help. Like I said earlier, I feel now is the time to do something, both with falling interest rates, and to "stimulate" the economy. I read just about sign publication I can get my hands on, including SignCraft, Signs of the Times, and Sign Business. Your point of the well-installed sign is well taken.

Old Paint, I value your advice because you, like so many here, have skills that I envy, and will learn. I have done a little bit of painting, but I am not proficient. I try to practice at least every day, but most of the time its every 3 days or so.

I have a list of things that I want to learn, like hand painting proficiently, leafing, and neon bending.

Not to ramble on, but I was inspired several years ago by a true craftsman. I answered an ad and went on a job interview to Custom Craftsman in Pigeon Forge, TN. When I walked in to Brother Zanks shop, I was in total awe at his level of expertise. When I walked in he had a 6' diameter x 6" thick HDU sign that was hand carved, lettered, and leafed ( Signs of the Times, June 2000, page 52 ) that just left me breathless.

Thanks for everyone’s input,

Posted by Monte Jumper (Member # 1106) on :

Here's an offer...come work with me for 1 year...I will charge you nothing for the education...you will in turn pay your self $40,000. and have $40,000. left to open your own business (anywhere you want to)

just a thought!

I started mine on $47.00 15 years ago(see chat pals bio)...we're in the process now of building our own shop.Property has been aquired...sewer has been laid...contractors have been lined up ...bank has approved our loan...next step is building permits .

We live well enough, eat well and drive nice vehicles. Not rich but still tryin!

Franchise? Ever notice they are located in the highest rent districts have the least square footage and no capabilties to produce anything but pre prepped materials.

Sorry my friend I for one could never recommend a franchise...unless it were a Schlotzkys Deli
now there's a franchise.

[ October 06, 2001: Message edited by: Monte Jumper ]

Posted by Stephen Bolin (Member # 2234) on :

Mark,

I have been waiting for a "Franchise" post to come up, and just as I thought, the sentiment is running about 10 to 0 against franchises.

I have been visiting this board frequently for about 6 months, and have posted different times, mostly to help others. I have also noted a general disgust or ill will against franchise sign shops.

I own a franchise store. We did over $100K in sales our first year. Do we have higher expenses than those of you working out of your homes? Of course we do. Do we expect a higher and quicker return on our investment? Yes we do. Do we perhaps have a different clientel who prefer to shop at retail locations, and not deal with home based shops? I don't know, but it seems that way.

What I do know, is I try to produce a quality product that meets or exceeds my customers expectations. Do I paint (i.e. "letter") signs? NO. But neither do about 40% of the members of this board. Do I have NO capability to produce anything but by using pre-prepped materials, like Monty suggested? I should say not! And besides, what does that (WHO PREPS IT) have to do with producing a quality product?

I use a lot of vinyl, I use Gerber Edge output, I have a 54" wide inkjet printer, we paint a lot of MDO, we do many small installs and a lot of vehicle lettering. We also are very good at realizing our limitations, and we sub out anything our customer requires, that we can't or don't want, to produce in house. (this sends work to Non Franchise shops).

Why the antagonism against shops like mine? Am I a threat to your livelihood? Do you think all franchise shops only produce crap? Or is it a manifestation of the 'scarcity' mentality that sees only a limited "pie" to divide?

I recommend a book by Michael E. Gerber entitled:
"The E Myth Revisited"--Why most small businesses don't work, and what to do about it."

In a nutshell, Mr. Gerber shows that what is lacking is a "system." He also points out that franchises have developed a 'system' that works, and he encourages small business owners to at least adopt a similar system for survival.

Mark, please buy this paperback, read it, and then make a decision. The support I get from my franchisor and other franchisees is well worth the royalty I pay. Again, we have a system.

A franchise is not the right decision for everyone, but someone with your background has a leg-up, so to speak over many others.

And to all of you who have a hate/disgust attitude toward franchise shops, perhaps if you approached us and offered some of your services to us, we might give you some business--(things like Edge work, router work, sand blast signs, installations, wall painting)

I remain a visitor, don't know if I belong in this anti franchise crowd.

Stephen

Posted by old paint (Member # 549) on :

stephen...all i can say is you may have "handled" 100k...but your take of that gross ....is way down from that....i had a shop for 20 months...and i made money, paid the landlord $10,000, utilities, materials and all that stuff, by the time i got done payin everybody else...i didnt make crap..but i "handled" a lot of money.
as for some people to buy "into" a trade...its ok..but not for me....i now have a $4000 vehicle that serves the same purpose as the shop did, and i can park it anywhere i want to and do the same work outa it as i did in the "shop". no landlord, no utilities, yes i got gas and insurance and some maintenance ...but what i make goes in my pocket...and thats why iam self employeed.....

Posted by Wayne Berry (Member # 1327) on :

This might be heading a bit off topic but...

We have two franchise shops in town and I must say they seem to be making money. Now don't get me wrong, I don't like a lot of the work they turn out but then I'm not the one that's buying it. They fill a niche and fill it well it seems.

I've been in business for over 15 and have seen a lot of folks come and go in this trade, in this town. One of these franchises has been here for 10 years now. Love them or hate 'em or don't care, but this shop turns out a ton of work. I don't care how deep your pockets are, if your still in it for 10 years you must be making some money. How much? I don't have a clue.

So, if you can walk into a turn key deal and add your own talents and make the books work out this may be right for you and for the area your to service. I think that if you give good service & value to your customers in a timely manner you could make it in almost any market.

Wayne

OK, back to lurking...

Posted by Ace (Member # 1723) on :

I thought about opening a shop in 88 and did alot of looking at the different franchises available..
My boss at the time found out and gave me a promotion and a healthy raise to stay put so I did. I gave my sister all the info I had collected and she opened a shop in 94..she bought into a franchise since she didn't know much about signs or running a business so she felt it was the jump start that she needed. She ended up with a lot of useless equipment and not all the support she felt she would get. Luckily everything worked out for her and she has a good business today. It's not an upfront franchise, meaning their name is not on her front door but she now knows what kind of support she needs and is using their services to her advantage.
In 95 I was unexpectedly downsized and decided to look into opening a shop again. At that point I was convinced a franchise wasn't for me so I decided to go it alone. The banks nor SBA were willing to help so I did the only thing I could do, I pulled my 401 and went for it. The first years were lean and the taxes because of using my 401 were staggering but we made it through and are now doing ok..no new cars or vacations in Mexico yet but ok...the shop provides a living for my wife and I and our 25 year old son. We're may not be the best but we're as busy as we need to be and we keep learning and trying..I'm blown away by some of the work I see being produced by the folks on this board and keep on improving what we do..
I just recently saw two franchise operations go under because they said they weren't supported as promised, maybe they had unrealistic expectations..pay the franchise fee hire a few minimum wage employees and make a million..
Personally I have nothing against anybody who has the guts to go out on their own whether franchised or not.
So I guess the bottom line is you have to take your time do your homework and do what's right for you and your personal situation.

Dave
I knew the workings of franchise operations from running a furniture/appliance rental franchise for 15 years..I was unexpectedly downsized in 95

Posted by Mike Pipes (Member # 1573) on :

Mark,

If you "buy yourself a job" where are you gonna find the time to work on your truck?

I don't have anything against franchise operations, I just have a problem with paying fees so I can be associated with a group of businesses and "get support" when I can purchase the equipment, stock the shelves, train myself and have money left over for cashflow.

If you know how to operate a business, you'll be OK whether you go out on your own or go with a franchise.

If you want to make it with a business, you need to hustle. That doesn't mean working 80 hours a week - hell I havent done that since I worked at Mc Donald's when I was a teenager - it just means placing ads, using target marketing and getting out to meet people so they know who you are and what your business is about.

People won't flock to your doors just because you open a shop with a recognizeable name.

You'll still have to market it somehow, which means you may as well rent some space in town in a busy area and purchase your own equipment and materials.

If that shop is only 1 1/2 years old and they're giving in, something is wrong there.

Posted by VICTORGEORGIOU (Member # 474) on :

We should thank Stephen Brolin for weighing on on behalf of franchise shops. I broadens our perspective to hear from him.

When Bob and I started Bob Loves Signs in 1989, we made a conscious decision not to buy a franchise. In retrospect, the support of a strong franchise would have been helpful in those tough, early years. In the longer term, we put our own systems together, and non-franchise worked for us.

There are some very successful franchise stores out there, and also some not so successful. I won't mention brands, because that is not the topic, but there are two franchise stores that I can name that started when we did, that made money almost from the git-go, and are still going strong with the original owners. I can also name others that are on their second or third owners or are for sale.

Personally I don't think the answer is franchise/non-franchise. Part of it is location location location. Part of it is the owner. This is not an absentee manager business, at least in the beginning. Part of it is the franchisor. They are not all the same.

Gerber's E-Myth is good reading for anyone starting a business. Most small business owners work in their business, not on their business - ie they buy themselves a job. That is ok, as long as that is the plan.

Back to this particular shop. 300 clients after 2 years sounds awful low to me. Work the numbers backwards. Calculate your "Nut", your total sales required to pay all your bills and feed your family. Now calculate how many signs a day you have to sell, make, and get paid for to crack the nut. Now you have the facts to make an informed buy/don't buy decision.

Good luck to you either way. Vic G

Posted by Laura Butler (Member # 1830) on :

When I opened this post I thought that Mark was asking one thing but everyone was responding in a way that now I am confused. I thought Mark was talking about selling the rights to someone else to open a sign shop the same name as his. Like McDonald's franchises, Burger King etc. So now I am confused what the term franchise means here. Can someone set me straight?

One year ago I bought an existing sign shop (doors open M-F 9-5)cold turkey. I had never made a sign in my life and I didn't work with the previous owner before the sale. Before I bought, I got involved with what we call in our county, the Economic Development Corp. This is a group of business people in our area that have been highly successful and are now volunteering their time to others who need their experience. This group of people actually belong to a National group of business people that do the same thing. They are called "sponsors" and they are there to help answer questions about financing, business, guidance, etc. I might be able to find a national phone number later, but not right now.

Posted by Glenn Taylor (Member # 162) on :

Stephen,
First let me say that anyone who wants to improve his/her abilities and craft by learning from others; and is willing to share his/her knowledge belongs here. Whether you are part of a franchise or if you are an independent is irrelevant.

I'm glad you are here.

My feelings about franchise shops have changed over the last few years. Three or 4 years ago I hated them. Today, I'm glad they are here for the most part.

Posted by Monte Jumper (Member # 1106) on :

Wow, Stephin Bolin.... I didn't mean to raise your ire...
Since you asked the difference made by "Who preps the material" it's this ...I pay far less for my materials because I do my own prep.

The quality is far superior because I make sure that it is ...I don't have to accept what is delivered to me.

From your divulgence of your annual income I can tell you we are much the same...I too have Gerber equipment.

I occupy 3000 square feet on Main Street and have the best price per square foot you could imagine.
($450.oo per month...you do the math)

I haven't carreid the yellow pages for 8 years now and have more work than I can handle.

I pay no one for anything other than supplies and utilities and do that on a daily cash basis so I pay no credit card charges or late fees.

We are a cash and carry business so there are not additional Credit card fees nor do I wait for the money.

Now all this having been said... if A franchise is good for you I'm glad for you and we can still be friends...It is not however for me and nothing I said was meant to be derogatory nor was it directed at you or anyone else.

I simply stated the facts as I see them...and the facts still remain I have far less overhead than "any" franchise. Not that I have to spell it out but that means more profit and the more profit the less anger.

And I like that...now I think I will go back ad read the rest of the posts I avoided til I answered yours. Catch you at a meet and we'll discuss this more over a nice cold beer.

[ October 07, 2001: Message edited by: Monte Jumper ]

Posted by Garrickc (Member # 2352) on :

I got an SBA Loan once to buy a building. I would never, ever, never consider doing it again. I would only wish the process on Osama Bin Laden. Don't waste your time, energy and money. If you can't do it without the government. Don't do it. Get a job instead. If you want specific reasons...call me.

As for the franchise. I think they are good for certain types of businesses...like food...where you identify with the company name, but name a sign franchise that Joe BizOwner says "Give me a Sign-a-Rama" sign over all others.

thats my take

Posted by Bruce Bowers (Member # 892) on :

Hey Garrick...

I applied for an S.B.A. loan back in 1982 when the money was still being loaned the S.B.A. and not just backed by them.

The amount of paperwork was enormous. The degradation that I felt after that ordeal swore me off of any kind of government assistance what-so-ever for the rest of my life.

It makes you wonder sometimes...

As far as the franchise goes... I don't own a franchise. I might have looked at one had the circumstances been different.

Fortunately, I had been working on the side for several years (with my employer's blessing, in case you want to know) before I opened up my own shop. I had a space and a phone for over a year before I went out on my own full-time.

If I was to move to a different geographical area, i might consider one. Then again, I might just go work for someone else. I honestly can't say for sure.

I have nothing against sign franchises. Some are obviously better managed than others. Some of the ones around here have switched hands 2-3 times already. Maybe the expectations are too high.

Monte, you and I are on the same page on a lot of things.

It all comes down to what ends up in your pocket, not what goes through the shop's coffers.

Have a great one!

Posted by Mikes Mischeif (Member # 1744) on :

Ok Here are the deep dark secret confessions of a franchise support rep.

I serviced 22 stores for 6 months.(the average burn-out period form handling cry-baby shop owners who want profits to exceed expenses after 1 month.

First I show up after you fork over $80 - 110 grand and set you up in a $2500 a month store front. Keep in mind no study is done to see if theres a market for the store.

Then,I teach you how to sell. Franchise manual says Market every day. I grab a handfull of your new flyers and start at ground zero making a spiral out of your area into every new busuness. We do this 6 hours a day, for 5 days. The law of averages guarantees us a few sales. Two weeks later you hire the $5.50 an hour worker to do this for you.

Next we set up your estimating software. It costs $300 bucks (you pay $3.000) We plug it in and turn it on - Done. Then we crank call 5 sign shops in your area and get price quotes on 4 x 8's magnetics etc. We throw out the highest and lowest, average the middle 3 and presto! your prices are set - total time - 3 hours.

Day 2: I call a special list of suppliers who are suppost to give you the special franchise price. Most find out that the local supplier is more reliable and end up using the same supplier as every one else anyway.

Day 3: I train you to apply vinyl and decorate your truck and windows. I also hire a $6.00 an hour production employee who has no experience in design or production to meet overhead costs.

I spend the rest of the week telling you how great it is to an independant business owner who can call me anytime you hit a snag. When you do call I show up to trouble shoot your software problems...Problem is I'm not a computer tech, so I plug you into a program called PC ANYWHERE and dial up the franchise headquarters who after some time takes control over the unit and fixes everthing from there. I stay and watch.

Finally I call the phone book ad and order the required $800 a month 1/4 page ad.

Congratulations! Your on your way to becoming wealthy, Don't forget the royalty checks, we'll be watching.

(now send me your 80 grand)

Um, This story is completly fictional er ok?
Please send hush money to the address below.

Posted by Colleen Henderson (Member # 906) on :

Mark, I converted my sign shop to a franchise 5 years ago, and I feel that it was the best thing I could have done with my business - I'm very happy with the decision. My biggest reason for doing was to gain more equity in my business. Is someone going to want to buy a 1 or 2 person signshop in the outskirts of the city or a signshop that is in a high traffic location with a very large customer base? If I had not gone the franchise route I would never have moved to my high traffic location (rent is very reasonable - I lucked out), or had the clean, professional looking show room for customers to browse. Customers are very impressed when they walk into our shop and often comment about our competitors shops. We offer great service, guaranteed work, and charge accordingly for our work - we are probably close to the most expensive sign shop in town! We paint, airbrush, carve but the money is in the knock out work which we try to design to set ourselves apart from our competitors. Our customer base has increased substantially every year in the past 5 years and just about all our customers are repeat customers so you can see where this can grow exponiently. It takes a little more work to keep things in control but I still find the time to do the work I like to do.
Hope this has enlightened you a little - I know it's not for every one but I love the challenge!

Posted by old paint (Member # 549) on :

all i can say is what P.T. BARNUM said..."their is a sucker born every minute"......and the other old adage.." a fool and his money are soon parted".......

Posted by Rick Sacks (Member # 379) on :

Rich Stebbing, please speak up now.....we need to hear your perspective

Posted by George Perkins (Member # 156) on :

I remember a post along these lines on the old board five or six years ago. Most of that post was like this one, folks down on franchises. After awhile a few well respected letterheads posted on having gone franchise and how well it worked out for them. Too bad the search feature can't dig that one up as I remember it made for some very interesting , while somewhat heated reading.

Posted by Chuck Churchill (Member # 68) on :

Mark, I urge you to look at your opportunity from another perspective...timing. Like it or not we have steped into a recession. No one knows if it will be short and shallow or long and deep. I would suggest you take the next six months to fully evaluate if you want to buy this shop or build your own. Don't worry the franchise shop opportunity will still be there in 6 months (or you will be given the opportunity to buy the assests at fire sale prices!)

In late 89 we decided to start a sign business and explored the possibility of opening a franchise shop. Decided to go it alone but the decision was very close. Basically I decided it would cost me less to learn the business from "free" sources (suppliers, equipment sellers, sign magazines and local sign guys) than what I would spend on the franchise fee and royalities for the next ten years. I will admit the financial advantage was not overwhelming.

By the time we opened in April 90 the world had moved from good times to a recession. Here in Central Canada it was long (over three years) and fairly deep. Large companies were laying off lots of staff and small and medium sized businesses were having bankrupcty sales. We struggled those first few years. We were on a steep learning curve, made some bad decisions about equipment and phone book advertising and most importantly had trouble establishing solid long term clients. We would do a few jobs with them and then they would decide to cut back or in some cases go out of business.

Eventually the recession turned around and our business picked up.

I would take the next 6 months to evaluate the opportunity in front of you, look at alternative ways to get a sign business started and watch the economic activity in your area closely. Businesses opening and expanding are a good sign! Businesses laying off people or closing are a bad sign. You may end up deciding this year is not the right time to start up a business, you may start one from scratch at a lower cost than the franchise shop, or you may end up owning the franchise shop. Just make sure you do "due diligance (sp)" and investigate that shop fully.

I would find out how many of those three hundred customers have been back for signs at least three times. 30 would be terrible, 50 would be ok, 90 would be excellent. Most sign businesses (independent or franchised) make money off of the repeat customers. You are luckly if you break even on the onetime customer.

Good luck and let us know how it's going.

[ October 08, 2001: Message edited by: Chuck Churchill ]

Posted by Kissymatina (Member # 2028) on :

The main question to you and the others who have posted this question in the past is this:

Do you WANT to do sign work, do you ENJOY doing sign work or do you just want to own your own business?

If all you're looking for is to buy a business so you can ruffle your chest feathers and say you own your own business and to make money without the love of that type of business, then you are in the wrong place.

When I think of franchise sign shops, all I can think is "I'd like a number 4 in primrose red and can you add a standard logo to that?" I'm not saying ALL franchise shops are like that, but the majority are. Just puts me in the mind of a McDonalds or MailBoxes, Etc. Colleen said she did the franchise route and it's working great for her. I'm happy for her. I also must point out she was in the business before she went franchise and I would say she's the exception to the franchise scenario. (glad to hear things are working out for you Colleen )

I also think the franchise fee is very expensive. For that $80k you get equipment, software and marketing/support services. Spend a day online and check out prices for equipment. Take a marketing class and a couple other business classes (if you haven't) or at least get the text books and read them. This board and the people here are a wealth of information that cannot begin to be compared to the 'support' from the franchise people. The people here do this stuff every day. They know what it's like and can help you a lot. The reps from the franchise who are suppost to help you... do they spend more time creating signs to eat and live or do they just put in 8 hours a day getting people to fork over $80k to pay their salary?

Start doing jobs in your basement, on the side to make sure you like it. Start telling everyone you know/meet that you do signs. In a month or two, evaluate where you are. I just have a real problem spending $80k for a ready-made cookie-cutter business. I think that $80k would go a lot farther and end up to better use other ways than giving it to the franchise people. I know the support and assistance they say you'll get is tempting, but wouldn't you rather spend that $80k your way and take the business the direction you want to take it, rather than have some corporate office approve your location and dictate new franchise policies?

[ October 08, 2001: Message edited by: Kissymatina ]

Posted by Rich Stebbing (Member # 368) on :

Having gone "franchise" at one-time, and now working from home (full- circle) I do have my opinions and stories to tell, although being a fast talker, but slow typist I will keep it short.
Franchising is right for some, and not for others !
It really depends on goals, business and/or personal. For me it was the desire to plant some seeds foe retirement. I thought if I invested some time grooming a "sign-store" or two,...or three, that someday I could sell them, maybe keep one and stay in it part-time just to keep my hand in it(pun intended).
"It was the first real business decision I ever really made" when I signed that contract to be a Franchisee. Yeah it was kinda scary after having an industrial location with come and go as you please hours. It meant I was going to have to turn it up a notch! It was alot of work getting it to look and act like a retail store. We had to get a highly visible location, employees,build a showroom, prepare marketing strategies,commit to the big-ad in the yellow pages, etc. The payoff was there! I kidded about putting in a revolving door. Unfortunately it all came to an end in just over a year in business due to the "P" word,.....partnership problems.
I have seen many succesful Franchisees, and have seen many go belly-up. Some people have a "magic-pill" mentality when signing up. They think they are guarenteed success. The Franchisor does offer tools,manuals,resource guides,trade-shows,regional managers, and a variety of other avenues one can take advantage of as well, but some people still mismanage or make poor business choices and go down the tubes.
Many of these Franchisees are very business savvy and many DO have artistic talents they have developed, or have hired them.
Letterheads have Bullboard here and are networked and can rely on each other at times for help etc. They too have a camraderie with other stores,have their own kind of Meets, a magazine, a bulletin board, and do draw support from their corporate people as well.
I know many who have simulated a Franchise store and we could have done that but felt we needed to have their name to add value for resale. Before signing anything, we did research the Franchisor, talk to Business/Franchise Attorneys. It was a careful move. Would I do it again????? No. It was a good adventure for me, to step over "on the other side". It really opened my eyes alot regarding this industry. Although I had a lot of positive experiences it does represent alot of work and at this time in my life I am into enjoying life outside of work.

Posted by Rick Sacks (Member # 379) on :

A few years ago when this discussion occured, Ricky Jackson had a lot to say about joining a franchise. If he still reads this BB, now might be a great time to respond.

The talk then was that eventually the franchise folks would know marketing and hire hungry letterheads to work in their shops creating outstanding signs that get sold for a price that is profitable.

Posted by Neil D. Butler (Member # 661) on :

I am from the old school... hand lettered for years and years.... also about 8 yrs ago became a partner with a franchise... the biggest Franchise.
To the hand letterer open your eyes... these sign shops are here to stay.. I've been to many franchise conventions in texas and let me tel you some of these stores are doing hundreds of thousands a year and some are not doing so good.
I opened my own Franchise looking shop almost 4 yrs ago.. I have 6 people with us including my wife and I. Business is great... am I making money? Some, but I'm paying bills and when I get my start up bills paid off things should get easier.. and the shop should also be worth something if I get to that situation. Is it easy? No Way! Rewarding? Yes!
Don't be so hard on the Franchise shops.. it sounds like you are all scared to death of them... These guys run a slick operation and are not stupid.. after all How can a shoe salesmen open a sign shop and make a go of it?
Overall a Franchise is not for everyone but others... well
Neil

Posted by Stephen Bolin (Member # 2234) on :

Thanks, Neil, for another fresh and insightful perspective on franchise shops.

The post that asks how many cumulative years of experience everyone has--really opened my eyes to why franchises are "hated." With a lot of members of this board having 25, 30, 35 or more years in the sign business (i.e. painting), franchises are the "new" kid on the block with only about 18 to 20 years experience. Franchise operations, whether pizza, haircuts, auto repair, or burgers--have always produced an unsettled feeling in the competition.

Franchises have a "system" that the competition, out of frustration, ignorance and fear, brands "cookie cutter," or "not genuine." After all, how can someone having "no experience" do what I'm doing with 25 years of experience?

Franchise sign shops wouldn't exist, IMHO, without Gerber and then Bill Gates, IBM, and Steve Jobs. So if you want to blame someone for the franchise sign shop encroachment (around 1000 shops, I think) why not shift the blame to Gerber and Bill Gates?

Stephen Bolin

Posted by Doug Allan (Member # 2247) on :

Stephen,

There you go again projecting fear onto the independent shops. No one posted anything about fear of Franchises. Many people have offered advice against purchasing one based, among other things, on the start-up costs. The fact that many people have seen inferior work sold for inflated prices by franchises does not mean that you all do that, but it is certainly no source of fear to shops like mine.

quote:
Why the antagonism against shops like mine? Am I a threat to your livelihood? Do you think all franchise shops only produce crap? Or is it a manifestation of the 'scarcity' mentality that sees only a limited "pie" to divide?

I really don't think there is antagonism in this thread, just a lot of sign folk who don't want & don't recommend a franchise, & a few who do.

You get what you pay for, and some people are happy to pay for a sterile main street shop appearance, & a structured shopping experience. Sometimes (not always) part of that price is having a entry level production person making your sign (with 18 - 20 years experience being alive). This can be true for either franchise or independent shops.

[ October 12, 2001: Message edited by: Doug Allan ]

Posted by Monte Jumper (Member # 1106) on :

Hey... bottom line to this "us and them" crap that seems to prevail here...is those that can "do it" are doing "it"...If a Franchise is where "it" is for you ...so be it. If not, thats kewl too.

There 's more than one way to make a livin, hope you decide on the one for you. More importantly I hope it works out for you.

Posted by Mark Fair Signs (Member # 289) on :

ain't "no us and them" crap here monte.

we all have to make our way in the sign biz.
any business, one has to love what they sell.
we here happen to love the sign business.

there are no quick formulas for success.
i do not knock the franchise shops, they have their niche in the marketplace.

anyone opening a new sign shop, educate yourself in sign design before you buy any signmaking equipment, because when it is all said and done, design is everything.

thoughtful design will make your business stand above the rest.

just my opinion,

mark

[ October 12, 2001: Message edited by: Mark Fair Signs ]

Posted by Neil D. Butler (Member # 661) on :

Good Advice there Mark. You Know when you "Sign" on.. with a franchise at least the one I was with, you get an amazing 2 or 3 week traing period in how to run a sign shop, there was hardly any traing on how to actually Make the signs, there were some but not much. Now that makes you think does'nt it.
I remember one meeting we had at Dallas, about 6 yrs ago, we had all the Canadian franchise shop owners in the room, there were only about 6 or 7 at the time.. but the first question anybody asked was. "How come such and such in Newfoundland can get the sales like he does, with a population of 200 thousand and here I am with a pop of 800 thousand and we can't come close.
Our rep from Texas said "Well our shop is very lucky to have Neil as a junior Partner.. he brings "Experience and Talent". Now I'm not saying this to bragg at all, cause I don't hold a candle to some of you guys and gals, but experience is the best teacher. If you combine that with a Franchise or even a franchise looking shop, I tell you it just "Might" work out.
Like I said before in my other post This shop I have is very modern looking right on the busiest street in the City, I share an A&W parking lot that will tell you how busy this street is, BUT it is still a struggle, with 6 employees that's a lot of mouths to feed. Have we been busy? You Betcha! I just pray that it continues to be busy..
Good Luck!
Neil

[ October 12, 2001: Message edited by: Neil D. Butler ]

Posted by Mike Pipes (Member # 1573) on :

After you read all these posts, put all the information into a big pot and let it boil for a few hours.

What you'll end up with is this: If you want it bad enough, YOU have to make it work.

It does not matter if you go independant or franchise at all. If you want a successful business, you have to offer the customers what they want (or create your own cool niche' market!) and market your business.

You have to hustle, and you'll have to do that whether you own a franchise or an independant shop. It just so happens you can hustle just the same whether it's for your own business or for the franchise name, but you'll have less financial committment if you start up on your own.

Anyone that thinks local franchise shops are the cause of their problems (or any other shops for that matter) has an even bigger problem - themselves.
If your shop fails, it's not because of that franchise shop or new independant shop moving in. It's because you're trying to do things the same way you've always done them - ie: the old "Do good work and offer great service and the customers will come to you." just DOES NOT work like it used to!

Your customers see a new shop opening up they're going to check it out just to see what it's like, regardless of their "loyalty" to your shop. It's something new and they've driven by it everday for the past month while the building was under construction/remodeling, wondering "Hey, what kinda store is going in there?"

You need to get YOUR name back into THEIR heads so they think about YOU and not THEM!

Posted by Neil D. Butler (Member # 661) on :

Right On Mike!
Neil

Posted by roger bailey (Member # 556) on :

Hey old paint, you do pay the "honest amount" of taxes on all that money "going right straight in yer pocket" don't you ??

I would expect a "yes" answer from someone so
politicaly educated as yourself.

Now if the answer is no, I'm calling Geo.W !!
Ha ha ha ha ha ha ha ha

Actually, my opinion is;
Anyone with some "common sence" motivation, time to research, ability to comunicate(without runnin customers off),collect debt firmly(but respectfully), figure out what customer wants and have the ability to supply it (timely and with good quality), and knows a good C.P.A., will do just fine in 4 to 8 months in any buiss. franchise or otherwise.

Roger (on my 5th buiss. now)

Posted by Danny Palmer (Member # 95) on :

I am a seller of franchise stores, so I feel like I must chip in here. The original thought of whether or not to franchise, is missing volumes of information.

First and foremost, to evaluate the situation, we would need to know exactly what is in your franchise package as far as real property, training, and support. And then the two largest issues, buying power, and area of protection.

When you purchase that franchise, how far away can the home company legally place another franchisee?

What can you buy as a franchisee, that independents cannot buy. And if independents can buy the same things, how much cheaper can you buy it, being a franchisee.

Our franchises bear a major difference to the sign business. I think I can offer a fair comparison, because we have done both for quite sometime. I sell franchises because I can provide goods to a franchisee, that they most oftentimes cannot obtain themselves. I'm talking
about Rawlings, Russell, DeLong, Louisville Slugger, Wilson and on an on and on. Major sporting goods and garment companies simply will not open smaller dealers. Many of these companies required an initial order of $25,000.00 or more, and require a given dollar amount 3 times per year for us to remain qualified with them.

Secondly we will do all embroidery, tackle twill, pro-print, lasering an so on for the franchisee, so he/she does not have to invest in all of the equipment and labor to do so. We sell those services to the franchisee at a wholesale rate, so that they remain competitive at the retail level.

We have a complete webstore. We scan our daily sales. Any purchase that was made from the postal code of a franchisee, goes to that franchisee. We pack and ship the item, and pay the franchisee accordingly.

Lastly, we sell our franchises by population within a postal code area. A franchisee can protect as little or great an area as he or she decides. If later the franchisee wants to expand the area, they can do so at any time. If you are an existing franchise of ours, and we get a prospect in a postal code contiguous to yours, you have the right of first refusal to that area, before we would sell it. We charge .50 per capita
to buy a franchise. In other words, if there are
20,000 people in the area you wish to purchase, your one and only fee with us is $10,000.00. You will never be charged or assessed again. You can buy as many of our goods and services as you like, no minimums, no maximums.

Sorry for the long explanation, but I need to offer that information to compare it to sign franchise. If you are only purchasing equipment, and their basic "know how", you are buying something you can do yourself, probably cheaper and better.

Ask yourself what can I obtain through this franchise, that I cannot obtain without them?
And if not that, how much money will I save buying
vinyl, blades, substrates...whatever through the franchise as opposed to picking up a supplier book and buying it myself. If you can't answer one or both of these convincingly, you are not buying anything of value.

And lastly, I must tell you respectfully, that a customer database of 300 is laughable. Now if 100 of those is under a volume based, dated contract, that has time remaining on it, and it is legally transferable to you, it's worth something.

Take heed to the advise about the economy. I currently will not sell a franchise. Our weekly sales prior to the attack were around $60,000.00. It dipped to about $17,500.00 per week for two weeks after the attack. Sales are again up. If they stay up through the end of the month, I will let a couple of pending franchise deals go through. I have not had a franchisee that didn't do well. I want to keep it that way.

Good Luck!

Dan

UBB.classic™ 6.7.2