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Crouser & Associates Performance Group program helps printers prosper through
on-site assistance and twice yearly group meetings. For more information by Email or call (304) 342-5100. Crouser Report OnLine is the Copyright Thomas P. Crouser. Material may not be reproduced in whole or in part without written consent. Current reports are on the WWW at http://www.printusa.com.

Independent To Franchise? Opinions Part 2

Copyright February 7, 1996

Pamela and I will be attending the National Association of Quick Printers Executive Conference in New Orleans this week. Hope to see you there.

Transmitted from Dallas, Texas

We continue our discussion on the Chicagoland printer considering going from independent to franchise. First, let s hear from the sunburned suffering JoePrint. Of all our writers, Joe has had the most time to consider his response since he s in Miami and has not had to shovel snow. Tell us what s hot, Joe.

Why Join A Franchise?
I may have a few problems in my shop, but a franchise would not have stopped them. I looked at many, before I decided to go it alone. I feel five years later, that it was the right choice.

Franchises may help with an ad, but don t expect too much more. Tom can do better than that. The answer to keeping, training, interviewing, etc. Is in the mirror. I have found that these are resolved from the top down. You must lead by example. You set the environment of the work place. Tom can tell you about my shop and my people. You must set standards to evaluate your employee s by. No franchisee, book, or consultant can do this for you. Give you ideas, yes. Do it for you, no. NAPL, NAQP, Tom Crouser, etc. have all kinds of information. But, you must decide what is right for your shop.

What happened to service and quality? The name on the door is not a guarantee of quality. I have one of the most modern shops in south Florida. It is my employees who make it work.

A franchise will recommend an accounting package, not because it is the right one for you, but because they can track their royalties. I ran one company s ideas by Arthur Anderson, who was my tax prepare at the time, They laughed, and said they wanted no part of it. Not all system are bad, talk to your accountant.

I have negotiated many deals. I use The NAQP deals, and I read a lot. Larry Hunt is the best source when it comes to copier s. Cost a lot less than a Franchisee. Talk with Tom, talk to other printers. I have yet to pay list or close to it for any machine. On my last press, for example I was able to get $40,000 off, plus installation by factory people along with local service people. The factory people would have cost about $3m+ for the week. NAQP does the same thing.

Six or seven percent off the top is too steep for me. The shop I bought was almost a franchise. The former owners installed all the recommend equipment. Problem was that the shop s customer s need work done the equipment could not do. Each piece of equipment must serve a purpose for your base. I feel that my equipment in your shop could be wrong. Too much, not enough, Wrong sizes, etc. You know your market, They know a pattern. Not bad information, but not right for everybody.

I was dealing with a company that wanted to expand to Florida. I was able to get their site search requirements without signing up. I thought that they would have some secret way they decide where to put a shop. It was very poor. I found I had better ideas, and I am no expert. They did this for the simple reason, they wanted me to market their franchise in the state. I was the VP of Marketing for Arvey Paper. I did new store site searches, and opened 16+ stores.

When you look at a offer from any franchise, look first at the section marked legal. How many franchisees are suing. Why? Check this out, it is very important. Also notice that your deal gives you the right (to sue), but not in the state you are in. Rather (suits must be brought) in the one that is home base. Think what that can in costs?

You are in Chicago. NAQP is there use them. Tom was in your shop, step one. Step two join a performance group. I have found this to be the best. Should have done it back in 1989. Hind sight is 20/20. People like Tom, can help as little or as much as needed. The costs are controlled, and when your are done, it s your choice, not 20 years. I could go on, but I feel you get the point. I would be happy to discuss this more if you like. Tom can give you my phone number. Good Luck.

Thanks, Joe. Sorry it got down to 60 degrees this weekend. Oh, well. Here s advice from Pittsburghland: DON T! From: F1senn
To: TomCrouser

Tom, The gentleman who wants to join a franchise, shouldn t. The franchise is not going to do all the work for him. Once he realizes he is in control of his own destiny, it will all make sense! (especially not paying a 5-10% royalty on his gross sales!!) I think he should worry more about sales and marketing, but only after he compiles a solid business plan for 6 - 12 - 18 - 24 months. Direct mail and brokers may also be a large help. I have found, no matter how large you are, (or how small you are), people do not do business with corporations or computers.

PEOPLE DO BUSINESS WITH PEOPLE

I think he should be encouraged to build relationships with his current customers, and start to contact other business he lost with letters, articles pertaining to his ex-customer s business, attend Chamber of Commerce meetings, network with people in industries he wants to print for, etc. (Actually, I would happy to consult with him for his marketing needs!)

You could have the greatest business plan in the world, however, if you can t market and sell your company, yourself and your services in your marketplace, its all academic. Keep me abreast of what he decides, I would be interested to know what he does. Thanks! Paul, Fotorecord Print Center, Greensburg, PA 15601 800-464-6622 f1senn@aol.com

And thank you, Paul. And, since we are in Dallas, the folks here wanted me to let you know that they can understand your feelings regarding the Cowboy-Steelers thing. Only, I don t think they really would consider changing the outcome. Oh, well. George Hahn of Atlantaland recommends rugged individualism to the Chicago question. (And, he too understands your feelings about the Braves-Pirates thing.) From: George APC
To: TomCrouser

Most Independents have had printing experience (I ve been in printing since I was 15) or bought a successful going business! This printer you consulted should have bought a franchise to start with, he seems totally lost. Independents are just that, Independent people who want to be on there own and take the glory or the blame for the way their businesses run. Every problem you listed is what we enjoy solving, he should join the franchise before he goes under. Everyone is not cut out to be an entrepreneur, some people do well if directed! George Hahn

Thanks, George. Dennis Dater of San Diego (now here s someone whose team Pittsburgh Paul can gloat over!), is a happy franchisee. He tells us why. From: ASPC OF SD
To: TomCrouser

Dear Tom, I joined American Speedy in 1986 and now have two locations. I can get help on hiring and training outside sales reps, and have guidelines for various other positions. The franchisor does offer assistance with various accounting, billing, credit etc. policies and procedures. There is some leverage with major vendors - I was able to get out of a lease with Kodak, after my franchisor spoke to one of their VP s. Some pricing is better with the franchisor, and sometimes the NAQP price is the base line. From my standpoint on why I remain or would convert: in today s rapidly changing world with a mature marketplace, the franchisor provides me with product research, test bed activities, marketing directions and materials, instant communications via phone/aol, and on-site assistance when ever I need it. The owners provide honest feedback on a variety of problems and opportunities - and you feel you are not alone. Hopefully the name will build value which is worth more when I decide to exit. Regards, Dennis Dater

Thanks, Dennis. Now, we hear from Walt in Chatham, New Jersey. He and his wife and, now, his children, have been operating a Minuteman franchise for 17+ years. They re the third owner of the shop and. . . .well, let s let Walt tell it. From: Walt NJ
To: TomCrouser

Tom, just a little background. We are the third owner of a Minuteman Franchise. The first one locked the doors after 3 months. The second one survived 11 months and broke even. After we bought from the 2nd owner, he wrote a letter to the franchise with a copy to us which stated, This location will never support a printer. You are doing a disservice to anyone who buys this location.

Obviously we were not impressed with his opinion after the fact. We have now been operating the place for over 17 years and talk with many other printers. I have seen franchise and independent shops fail. Success depends more on the owner than the name on the front of the place.

In response to each of your questions:

1. To help me find good workers. It is true I have to find the employees, but once I find them, they can help me screen, evaluate, train and keep those employees. The franchise may help you train. All printers have the same problem.
2. Measure the output and performance of these employees. I have not seen that the franchise is capable of truly measuring the performance. I also wonder if this would be a continuing service?
3. Provide name recognition. I have lost customers to Alphagraphics and Insty-Prints and do not know how to go back and retrieve these customers. When we took over the place we had to live down the bad reputation of the previous owners. Now we live on our reputation. They neither come nor stay because of the name. Customers come back again and again because of service. Our goal is to give them what they want, when they want it every time.
4. Provide assistance with established systems: accounting, billing, job filing, credit and collection policies. When we took over the business we received a set of systems. They were of little help and were basically manual. We scrapped most of them in short order.
5. Equipment purchases. Our purchase of a Xerox 5065 was a disaster. I am still fighting with Xerox. They may occasionally get you a good price on something. I am not sure they can help with resolving conflicts. I had trouble with my 5090 and it was resolved through my efforts and my promise to tell everyone I know how Xerox treated me. The NAQP usually has the same deal.
6. With a major franchise, maybe Xerox will pay more attention. Besides they can make a more attractive pricing deal with the major companies. See #7 below.
7. Help in buying equipment. Besides getting a better deal they know what makes money and what does not.My experience is that they are not that close to what you need specifically for your location and client mix. They do have some general information. I also believe when they have struck a deal with a vendor, you will have a difficult time getting an objective reading on a competing vendor, even if it may be the best route for you.

Although we are a franchise, we are members of NAQP, the New Jersey Assoc. of Quick Printers, NAPL, National Association of Desktop Publishers, and participate in Crouser s Performance Group. These seem to duplicate what you would expect from a franchise, however there is little if any duplication.

My advice would be to join the NAQP and a local group, and participate to meet and share experiences with other printers. Let your vendors know that you will be asking other printers about how they treat them, and let them know that you will share your experiences, both good and bad, with all your friends in the business. We need to band together to protect us from vendors who are short on ethics. If we get enough people sharing honestly, they will listen.

I rarely have a problem with Xerox. They know that I will tell all, good and bad, to everyone who will listen, then I tell Xerox to treat me any way they want. I apologize for getting on the soap box. I did finally get off although there was more I wanted to say. Walt Francis, Chatham Minuteman

Imagine, Walt on a soap box. Could it be? Nah. Seriously, thanks for sharing your experience on this subject. Wait! What s that I hear? Hey, it s Enthusiastic Earl! (ER-RAL, ER-RAL, ER-RAL, ER-RAL, ER-RAL) Get back people, or we will never finish. Alright. Earl is an enthusiastic franchisee, but he question s Chicagoland s primary motive for joining a franchise. From: earl@cdsnet.net (Earl Eyre)
To: TomCrouser@aol.com

As an enthusiastic franchisee this is an interesting situation. Being I had never seen a printing press when I signed on to open a print shop I believe I would still be struggling along without all the excellent help I received from my franchise. However, I m not so sure about this one because behind his list seems to be the feeling that a franchise would do all his work for him.

1 & 2: Sure a franchise can help in teaching the printer how to screen, train, evaluate, etc., but I doubt that any franchisor is going to actually do the work. Besides, this is one area where a trip to any bookstore will yield all sorts of books giving the same answers. Or Inc. Magazine (one of my favorite magazines) is filled, almost monthly, with success stories on how to treat and work with employees. Also, your column (thank you vury much), John Stewart s and many others deal often with this subject. I have a feeling if Chicago is having big troubles in this area, the root of the problem will not be fixed by a franchise.
3: Our town is filled with franchises: food, printing, clothing, etc. Some of the biggest named facilities are empty (no customers) while others are packed. I don t think the name makes a big difference. We all have to build our customer base. A name may help, initially, but in the long run, it s customer service, quality, price.... that determines success. If Chicago is losing customers to Insty Prints I have a feeling that it has to do with more than the name. I know we have been very successful in our community and our franchise name is virtually unknown outside of Portland or Seattle.
4: I would answer this essentially like Nos. 1 & 2. Sure a franchise can give you accounting information, filling tips, etc. but you can find this info on your own quite easily. It certainly doesn t warrant a franchise fee.
5: A definite YES. Two days before we opened our store the Xerox technician walked in the door with a letter from our Xerox franchise sales rep and says I don t care what _____ says, you won t get 4 hour service in Klamath Falls. It may work in Portland but not here! Panic time. One call to our franchise, who called Xerox and our local technician suddenly got another tech to back him up so we would get what we were promised. It also happened with a major paper company. Our local rep walked in and says No way...you can t get those prices because you are 70 miles from our nearest warehouse. Another call to our franchise and the rep came back saying I can t believe it. Those prices are lower that ANY printer in town gets but you are going to get them.
6 & 7: I believe 5, 6 & 7 has been one of the biggest helps in being a franchise. NAQP pricing may be great, but it is seldom as good as our franchise gets. And they are great in backing us up in disputes with vendors and believe me when the franchise yells, the vendors listen.

While you don t ask the question, I think the greatest help from our franchise comes in the following areas: Providing a balanced approach to what we are doing so we don t go overboard in one area without even knowing it; insistence on a modern, well kept shop with high standards of cleanliness, neatness, etc.; keeping up on technology so we don t have to spend so much time doing our own research; providing marketing and advertising support; and finally, the above--items 5-7.

Biggest disadvantage: Sifting out what s best for the franchisor because it increases their revenues and what s best for us because of our own situation.

Thanks, Earl. Kevin says franchises are for those who want a fast start. From: USPRESS1
To: TomCrouser

Regarding the printshop owner who wants to join a franchise. Sounds like he doesn t know much about marketing or the business end of running a shop. If so, why pay them to teach you their way of doing things. The only advantage to a franchise, in my opinion, is if one doesn t know the business and wants a fast start. Thanks, Kevin Boerup, USPress1

Chuck Murphy had been a 20 year franchise owner in Cedar Rapids, Iowa before he became an independent. He writes (maybe because there is nothing else to do in minus kizillion degree weather): From: CMURF
To: TomCrouser

Tom, as a 20 year franchise owner I can give some opinions on the seven questions.

1. A franchise really will not be able to help find good workers. Many tools are available to help a business evaluate, screen, train and keep employees. A consulting service will cost less in the long run than a franchise fee.
2. Buy Larry Hunts book, or even better have him in as a consultant.
3. No franchise has even 5% of the market. Name recognition is not a factor unless it s Kinko s.
4. Systems. I ve had two point of sale systems. Printsmith is the best for accounting, billing, job filing and general business management. Most franchises use it anyway.
5. Equipment purchases. A contract may save a few dollars, but I ve found that NAQP membership generates contracts that are about equal to the franchise. NAQP has 5000 members, and most franchises have 500.
6. Clout & pricing deals. Again, not much more if any than NAQP.
7. A franchise s value is in the start up portion of a business. They can tell you what to do and what not to do. Most owners tend to ignore most of the franchisors directives after a few years anyway. Most franchisors by necessity tend to pay more attention to the problem owners and really do not focus on the future as much as they should. There are successes and failures in the franchise and non-franchise system. The real question you need to ask is can you justify someone taking X% of your gross sales in return for a small amount of assistance? Look for consultants in the industry first. Chuck Murphy, PrintSource, Cedar Rapids Iowa.

Thanks, Chuck. Keep warm. Jim s a happy franchisee who thinks Chicagoland may be looking for an easy way out. From: Jimkaspc
To: TomCrouser

Chicago shop owner: I have a franchise, and wouldn t trade for anything. I think your friend is looking for the easy way out. It takes hard work to run a successful business, and a franchise organization is there to help, guide and train YOU to do a good job. His other reasons are valid. Lots of good from a GOOD franchise organization. Luck, Jim.

And here is a Sir Speedy owner giving you his view. From: SPEEDY4043
To: TomCrouser

1 Sir Speedy probably won t provide hands-on screening, evaluation & training of your employees but they can provide good advice on how to do it.
2. Same as No. 1
3. Name recognition is particularly helpful in obtaining new customers; from unsolicited walk-in or phone-in and also when making personal or phone sales calls.
4. Sir Speedy can provide good advice on administrative procedures.
5. You can get more attention by going through a major Franchisor. I m fighting with Xerox on my 5365 also but haven t yet resorted to going through Sir Speedy.
6. We do get excellent prices through Sir Speedy. Particularly at the annual convention equipment show.
7. Sir Speedy gives good advice on purchasing equipment. I wish I had followed their advice more often.

One of the largest benefits of a major franchise is the franchisee networking. We have a local Sir Speedy Owners Association which is regularly attended by 11-12 store owners. We exchange advice on all of the subjects mentioned above, combine supply purchases, loan each other supplies in emergencies and run jobs for each other when someone s equipment is down or operators don t show up. We can also call on several hundred other franchisees when we have questions about how they do things or how they like particular equipment they have purchased. The business rep assigned to our area also provides a wealth of information since he calls on about 80 other franchisees. Sir Speedy is probably the leader in providing help and encouragement in going digital. If you are looking at franchisors I d sure recommend Sir Speedy. Their corporate staff is genuinely interested in the success of each individual franchisee. However, if you don t ask for advice, or don t follow advice, don t go to Owners Assn. meeting or conventions, and don t network with other franchisees you ll be wasting your franchise fees.

And, finally, here is some information from the horse s mouth, so to speak. Carl Gerhardt of American Speedy Printing gives us his response. From: CGERHARDT
To: TomCrouser

Tom: I have some input for the independent in Chicago that is interested in joining a franchise. First, let me admit to a strong bias. I work for American Speedy in franchise support (including Chicago) and I purchased the franchise which I still operate as an absentee owner . First, I would agree that the 7 points listed are all potential reasons for franchise affiliation. I would add the following points:

1. Which Franchise: Franchise companies are not created equal especially in the area of support of operating centers. Some will do a good job of starting you up but not so good at on going support. Talk to their franchisees in your area to find out how good they are.
2. Will You Listen and Act: We find that many independents are so set in their ways they are not willing to adapt to the needed changes. If this person is open minded and willing to follow advice then he may be able to benefit from a franchise.
3. Franchise vs. Independent Profitability: The last two NAQP Ratio Studies show franchise profitability at least as good as independents and possibly gaining in profitability. What they pay in fees they are getting back somewhere.
4. Price Systems and Price Discipline: I personally feel that most franchise price systems and the efforts made to help centers sell in an intelligent way in and of itself will more than offset royalties.
5. Transition to The Digital Future: If one joins a franchise be sure they are positioned to help you completely re-invent your business over the next five years. This could make some franchise chains the big winners in the future.

Tom, I m sure there are others that will find as many reasons why not to join a franchise as I can to join. I would agree It s not for everyone. But, for the individual that is open and receptive a good franchise could help turn the business in the right direction. Just be sure you investigate carefully and make an informed decision. Carl Gerhardt, American Speedy Printing, Colorado Springs, Co. P.S. HAVE I GOT A DEAL FOR HIM!!!!!!!

Thanks, Carl. In a few days, we ll be sending another message on the independent to franchise question. In the meantime, stay warm. Spring training is only a few weeks away.
Happy Trails... Tom Crouser

Crouser & Associates - Helping Printers Prosper Since 1985

Crouser & Associates Performance Group program includes two on-site evaluations by Tom Crouser each year along with two group meetings. Management training is held during the group meetings along with participation in a meeting with non-competing printers. Join others who have decided to run their business instead of the business running them. Reply to by Email to Tom Crouser for more detailed information or call Clark Workman at (304) 342-5100. Or fax (304) 342-5187 or contact crouser@ibm.net.

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Date inserted: Wednesday, February 07, 1996 11:01:52 AM

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