2019 Annual Sign Franchise Review

How and what the franchises are doing can be a useful barometer for understanding how the industry at large is doing—whether it be print franchises (see Cary Sherburne’s complementary feature on page 8) or the sign and display franchises. Are they growing and expanding their centers? Is revenue increasing? How are they growing? What products and services are they expanding into? What challenges are they facing and how are they confronting them?

The sign and display franchises included in this year’s review are:

• Alliance Franchise Brands (Signs By Tomorrow and Signs Now)
• FASTSIGNS International
• Signarama (part of United Franchise Group)
• SpeedPro Imaging

Industry Background

The U.S. Census Bureau has two different classifications for signs and display graphics: 

• NAICS 339950 Sign Manufacturing: This industry comprises establishments primarily engaged in manufacturing signs and related displays of all materials (except printing paper and paperboard signs, notices, displays).
• NAICS 541850 Display/Outdoor Advertising: This industry comprises establishments primarily engaged in creating and designing public display advertising campaign materials, such as printed, painted or electronic displays; and/or placing such displays on indoor or outdoor billboards and panels, or on or within transit vehicles or facilities, shopping malls, retail (in-store) displays and other display structures or sites.

According to the latest County Business Patterns, in 2017 (the most recent year for which the Census Bureau has data), there were 5,727 Sign Manufacturing establishments, an increase of +1.4% from 2016, and 2,640 Display/Outdoor Advertising Establishments, an increase of +3.3% from 2016. 

How do the sign franchises compare?

The State of the Sign Franchise

If we look at sign franchise demographics, we find that the growth in new centers lags the growth in overall establishments. Indeed, if we compare this year’s survey results to last year’s, the number of total centers declined -1.6% from 2018 to 2019, and system-wide sales declined -11%. 

There are several reasons for this. The first is that some franchises recorded a net decline in centers; as we’ll see later in this article, employment is a big challenge for these businesses, and that doesn’t exclude personnel at the top. Owner retirement has led to attrition in some centers, which the franchises are combating by seeking to recruit new owners from outside the printing or conventional sign industry. 

SpeedPro Imaging in particular draws its owners from outside the graphic arts industry

“Our system has really been built over time by attracting former executives in management, whether they be senior or middle management, and they just kind of get tired of the rat race, tired of travel and tired of the politics, and these are individuals that don’t have prior printing experience of any kind,” said Larry Oberly, president and CEO of SpeedPro. “I would say our network is made up of over 90% of owners in that category.”

Another reason is increased competition in the marketplace. For the past half decade or more, an increasing number of commercial print businesses have been expanding into wide-format printing, encroaching on the sign franchises’ territory. There are a lot more players in the market than there used to be, which drives down prices, among other effects. 

Alliance Franchise Brands is unique as a franchise in that they have both sign and print franchises, and thus there is the opportunity for dual-branded franchises. In last year’s review, they had been looking to have 80 dual-branded Allegra and Image 360 centers in the next five years.

“We believe we’re going be on track for that,” said Ray Palmer, president of the Sign & Graphics Division of Alliance Franchise Brands. “Our members are finding great success with dual branding. We’re able to provide support on both sides of the business. With their existing client bases, they’re able to cross-sell and therefore generate more revenue per client because they have more things to offer them. Our members are adopting that a little faster than we thought.”

There is also some degree of overlap in demographic data, as non-franchise sign businesses convert to a franchise. FASTSIGNS, for example, has a successful conversion program through which an established sign business rebrands itself as a FASTSIGNS center. Signarama—a member of the United Franchise Group—also has a robust conversion program, and also co-brands with other franchises in the United Franchise Group, such as Fully Promoted, which offers promotional products. SpeedPro has just launched its own conversion program last year. 

Sign Franchise Summary Data—2019

Some of the specific issues that arose in this year’s review included finding employees, expanding franchises and finding owners, adding new services and products, and assisting centers with sales and marketing. (See the specific responses to our survey in the Sign Franchise Fast Facts section of this article.)

Finding Employees

Finding employees in all parts of the business—sales and production—was cited as challenge by all the sign franchises. 

“The staffing issues we’re facing are what the entire workforce is facing,” Palmer said. “With unemployment so low, there’s really a challenge finding qualified people. For a long time, we were a stepping stone for people wanting to get into the job market, specifically for graphic designers coming out of school and people who are working their first job out of vocational school, especially on the production side. But there’s not that many of them.”

FASTSIGNS also cites a labor shortage as a significant challenge.

“I think that the labor shortage is not a FASTSIGNS problem, it’s a U.S. business problem,” said Catherine Monson, president and CEO of FASTSIGNS International. “We're teaching our franchisees to create a positive work environment so their people are more likely to stay, and we’re just working on providing the tools and training for our franchisees to help them solve it as best as they can.”

Workflow automation and online ordering can help take up some of this slack as well, and will be key to a successful print business—let alone a franchise—in the future. 

Franchisee Recruitment

The employee search challenge even extends to recruiting new franchise owners. All the franchises use a variety of recruitment channels, including franchise brokers as well as their own internal channels. Allied Franchise Brands reported a net contraction in the number of centers due to owner retirement, and a challenge in finding prospective new owners to fill the pipeline. “We still put a number of new centers in, and what we’re seeing now makes us pretty optimistic about future growth,” said Palmer.

How is FASTSIGNS recruiting new franchisees? “I’ll say quite successfully,” said Monson. “We just had another record year and continue to add new countries. Part of that is our brand is preeminent.” This is FASTSIGNS’ 35th anniversary, so for a limited time (until April 30th), they are offering a $35,000 franchise fee rather than the typical $49,750. 

New Services

Textile printing in all its myriad forms are on the franchises’ collective radar, and many centers are already doing a substantial amount of soft signage. In the FASTSIGNS system in particular, 80–90% of FASTSIGNS centers are selling fabric-based signage, specially backlit signage and silicone-edge graphics.

“Our franchisees sell a lot of that,” Monson said. “There’s a percentage of our franchisees that have the dye-sublimation equipment in-house and then we have many great outsource vendors.”

One application area that has been seeing a lot of interest is environmental graphics, best defined as where signage and décor intersect.

“We're doing a lot of environmental space signage,” Palmer said. “It’s not so much signage, per se. Even wayfinding and those kinds of things are certainly part of the overall solution, but we’re seeing a lot of opportunity in these areas.”

“We also do a lot of what we might call interior decor,” Monson said. “As an example, dry-erase boards that have printed graphics underneath the dry-erase surface.”

Sales and Marketing

One of the major challenges with sign and display graphics is in the area of pricing. SpeedPro studios (as their centers are called) in particular have wrestled with pricing issues, and corporate has sought to help the studios in that regard.

“We give our owners the freedom to price either by cost-plus or market-based pricing, but we are putting together for them a set of price ranges,” said SpeedPro’s Oberly.

These ranges are gleaned by taking advantage of the hive mind of the entire system.

“They’re giving us an idea of the type of pricing that they’re using to win certain projects. We’re trying to give them some education on how to best profitably price.”

SpeedPro has also been heavily active in launching new initiatives to help its studios better market their services by understanding how to approach certain vertical markets.

“We are starting a new set of initiatives that is related to tackling a particular industry and all of the sales strategies and marketing strategies behind that,” Oberly said. “We’re building out sales and marketing kits that we have case studies, we have an industry expert that might be in that space, and that will give us the guidance on how we talk to and how we engage individuals in that space. We need to be much more specific and target the types of industries and products that our owners really want to serve.”

“We provide sales management training for our franchisees, and we provide very robust sales training on a consultative selling,” Monson said. “How do you sell comprehensive solutions? We provide that to the employees of our franchisees who are outside sales professionals. When we launched our outside sales initiative in January of 2010, we had less than a dozen outside sales people in the network. We’re approaching 600 outside salespeople in the FASTSIGNS network today.”

Looking Forward

As of this writing (mid-March), an unforeseen bug in the system (as it were) could potentially roil the economy, but regardless of what long-term damage COVID-19 has on the U.S. and/or world economy, the sign franchises are bullish on 2020 and beyond.

Sign Franchise Fast Facts

Alliance Franchise Brands (Signs By Tomorrow, Signs Now, Image 360)

For each of the following capabilities, what is the extent to which you have looked at it or considered adding it?

• soft signage—actively considering and researching it
• dynamic digital/electronic signage—actively considering and researching it
• digital textile printing for applications other than soft signage—interested in adding it, but we have no timetable for it
• hard signage/ sign construction—centers are producing this now
• vehicle/fleet graphics/wraps—centers are producing this now
• building wraps—centers are producing this now
• digital ceramic printing—never considered this
• digital art printing—actively considering and researching It
• commercial printing—actively considering and researching it

What do you see as the top challenges for your network in 2020? 

• managing workflow automation
• competition from other print providers
• capabilities of sales personnel
• capabilities of production personnel
• consumables and supplies prices
• national economic conditions
• finding qualified sales personnel
• finding qualified production personnel
• increasing employee benefit costs
• migrating business functions to the cloud
• migrating customer service and sales to the cloud
• keeping up with technological changes
• owner/management retirement

What do you see as the biggest opportunity(ies) for your network in 2020?

• New market areas for signage and graphics are huge opportunities for our members to diversify. 
• Environmental and interior graphics and art are one such growing area.

FASTSIGNS International

For each of the following capabilities, what is the extent to which you have looked at it or considered adding it?

• soft signage
• dynamic digital/electronic signage
• digital textile printing for applications other than soft signage
• hard signage/ sign construction
• vehicle/fleet graphics/wraps
• building wraps
• digital ceramic printing
• digital art printing
• commercial printing

• We have been doing all of these for much longer than 18-24 months.

What do you see as the top challenges for your network in 2020? 

• capabilities of sales personnel
• capabilities of production personnel
• consumables and supplies prices
• finding qualified sales personnel
• finding qualified production personnel
• pricing
• keeping up with technological changes

What do you see as the biggest opportunity(ies) for your network in 2020?

• Continued expansion in more advanced products and solutions as the sophistication of customers and prospects continues to rise. Beyond that, we will have continued growth both domestically and internationally; we will be adding 40+ domestic locations this year, which are franchises already sold and in the pipeline to open. As part of our growth, we continue to seek great partners for our conversion program and our co-brand initiatives in 2020. If you are in the signage and visual graphics business or a related business, joining the FASTSIGNS brand will be a significant advantage for your business.

Signarama

For each of the following capabilities, what is the extent to which you have looked at it or considered adding it?

• soft signage–have specific budget plans to add it in next 12–18 months
• dynamic digital/electronic signage—actively considering and researching it
• digital textile printing for applications other than soft signage—interested in adding it, but we have no timetable for it
• hard signage/ sign construction—have specific budget plans to add it in next 12–18 months
• vehicle/fleet graphics/wraps—have specific budget plans to add it in next 12–18 months
• building wraps—have specific budget plans to add it in next 12–18 months
• digital ceramic printing—we considered it, is not appropriate for our business
• digital art printing—have specific budget plans to add it in next 12–18 months
• commercial printing—have specific budget plans to add it in next 12–18 months
• promotional products not included above—have specific budget plans to add it in next 12–18 months

What do you see as the top challenges for your network in 2020? 

• finding qualified sales personnel
• finding qualified production personnel
• increasing employee benefit costs

What do you see as the biggest opportunity(ies) for your network in 2020?

• In 2020, the biggest opportunities for our network will be in data integration and new equipment. 

SpeedPro Imaging

For each of the following capabilities, what is the extent to which you have looked at it or considered adding it?

• soft signage—plan to add in 12–18 months
• dynamic digital/electronic signage—we considered
• digital textile printing for applications other than soft signage—centers are producing this now hard signage/ sign construction—plan to  outsource
• vehicle/fleet graphics/wraps—already a big part of our business
• building wraps—will outsource
• digital ceramic printing—Never considered
• digital art printing—will outsource
• commercial printing—will outsource
• promotional products not included above—will outsource

What do you see as the top challenges for your network in 2020? 

• finding qualified sales personnel
• increasing employee benefit costs

What do you see as the biggest opportunity(ies) for your network in 2020?

• Adding textile/fabric printing capabilities, automating production, partnering with other print providers, adding digital printing equipment, acquiring another company, hiring new sales people, customized, personalized or variable-data printing jobs and adding wide-format printing capabilities.