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Melbourne, Australia

SIGNARAMA franchisees share their advice on starting up

An Australian Franchisee Case Study


The comparative success rates of franchised outlets vs. independent businesses are vastly different. Statistics suggest that after 10 yrs of operation, over 90% of franchised businesses are still in operation, compared with around 18% of independents.
So when faced with the opportunity to jump on board the franchise train, you would think that the decision would be a lay-down misere. But what of the perceived loss of independence and the feeling of compliance to a franchisor?
Is there ever a right time for an independent operator to make the leap to the world of franchising? What are the circumstances that would encourage such a move? And what things does the independent operator need to be wary of?
Two such operators who have made the leap of faith are EC Stumpf, owner of SIGNARAMA Albany, New York and Adam Cullen, franchisee of Speedy Signs in Dunedin, New Zealand. Stumpf converted from Infamous Graphics to SIGNARAMA in July 2008, while Cullen did likewise in NZ in 2001.
What were some of the key considerations that they had to weigh up as they went through their due diligence process?
Buying Power
For many, one of the most obvious advantages is the immediate savings to be had from better group buying deals. “Our buying power has definitely increased since joining SIGNARAMA,” said Stumpf. “Our major supplier stepped up to the plate and gave us great deals.”
Field support, mentorship and business advice as a wide-angled lens on the business can be a major attraction. When provided professionally and in a timely fashion, franchise support fulfils the adage that you’re ‘in business for yourself, but not by yourself.’
Stumpf said that his experiences regarding support were very positive. “SIGNARAMA had a lot to offer regarding support. I had a ton of attention and support in the beginning.”
Cullen felt a marked difference in his business with the additional support resources he had at his disposal. “The major difference for us was in the marketing,” said Cullen of his decision to join Speedy Signs. “We already knew how to make signs, but we hardly did any marketing on our business. In our last year as an independent we turned over $150,000. Three years later we were turning over more than $1 million.”
Cullen has been a member of the Speedy Signs Marketing Fund Committee and Franchise Advisory Council for the past few years.
The Exit Strategy
One issue that swayed Stumpf towards making the move was to think of the long-term, and what he would do when the time came to sell the business and move on. “The overall business world is changing and moving to a franchise made sense,” he said. “It gives me an exit strategy – it is easier to sell a franchise than to sell an independent sign shop.”
Cullen concurs. “At the beginning our exit strategy wasn’t really a consideration, since we were planning to be in the business for a long time. However we now realise that our business will be worth a lot more now than if we were just ‘Cullen Signs,’” he suggested. “Having said that, we’re still not intending on going anywhere for a while yet!”
But Be Wary Of……..
For many independents that decide to take the plunge, the feeling of buyer’s remorse is often immediate, and often long-lasting. The mental challenge of accepting losing that independence can often be the hardest part. And it’s not just for the owner of the business.
Says Stumpf, “my employees were a little reluctant regarding the switch. They liked the fact that we were Infamous Graphics. It was a unique name that had some recognition in Albany. But having the SIGNARAMA name has definitely helped us become a legit sign company and now we offer a full-service across the industry. Electrical signs have really helped our bottom line.”
All franchise systems have a royalty structure and these must be taken into account. Any small business owner will be monitoring their dollars and cents on a regular basis, and must be sure to factor in the ongoing franchise royalty fee (anywhere from 1% to 10% in Australia) as part of the budgeting process. These need to be weighed up against the cost savings as a result of the buying power that is generated from being part of a franchise. Those thinking about making the switch need to plan for these expenses.
The Key Question
With the benefit of hindsight, would either Stumpf or Cullen make the decision to become a franchisee if they had their time all over again? “I am glad that I made the switch,” said Stumpf. “The idea of being in a franchise is a great one. Ours is the best sign franchise in the world, period. There have been some difficulties lately but overall it has been a good move and one that I am glad I made.”
“We’d absolutely make the decision again,” said Cullen. “Like any business owner, there are some things that we would do differently, but not to do with the franchise itself.”
So – to franchise or not to franchise? Weigh up the available options and consider the pros and cons. Create lists of the things that you like about your independent business.
Jot down some things that you think a franchise can bring to increase your performance – and your profitability; and importantly, think about where you want to be in 1/3/5 years time. By starting with the end in mind, you can help yourself be on the positive side of the statistics, whichever way you decide to go.
SIGNARAMA is the world’s largest sign and graphics franchise, with more than 850 stores in 50 countries around the world. SIGNARAMA is part of United Frnachise Group, incorporating other B2B industry-leading franchises EmbroidMe, Plan Ahead Events and Billboard Connection.

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