Global sign and graphics print franchise Fastsigns is pursuing a new growth strategy and celebrating the launch of its first ‘co-brand’ business in the UK.
The US-headquartered franchise organisation launched its co-brand initiative in 2012, with 41 agreements now sold in the US and around 30 in operation, but until April this year there was no uptake in the UK.
Now Fastsigns UK managing director John Davies, who took the helm at the firm’s Staffordshire head office last year, wants to double the number of franchisees by 2018 to around 40, with half of new signings to be co-brand models.
He said: “We currently have 20 franchisees in the UK and I’d like to reach 24 by the end of the year, ideally co-brands. Then we’re looking at reaching 30-32 by 2017 and double our current number by 2018.
“I think the business model has stagnated here a bit because UK franchisees decided to hunker down and weather the recession and since then they have been in a cycle of maintenance rather than going for growth. Looking at it with a fresh pair of eyes I can see that there is great opportunity here for co-brand and also conversion from an independent business,” Davies added.
Unlike the standard franchise model, where the franchisee sets up a business from scratch under the Fastsigns brand selling only Fastsigns branded goods, the co-brand model allows a new franchisee to effectively bolt on a Fastsigns business to their own existing business with the parent company taking royalties only from what is sold as Fastsign products.
The UK’s first Fastsigns co-brand shop launched in Oxford in April, as part of £3.5m-turnover photography and creative design firm Ward-Hendry.
“It’s an opportunity to bolt on a new revenue stream,” Davies said. “Who we are looking for is someone who is established as a print or photographic business that is doing well but who has hit a ceiling. Margins in conventional print are always under pressure and this is a chance to diversify.”
Businesses suitable as a fit for the co-brand model need at least three staff including the franchisee, a salesperson and a production or graphic design person, Davies explained. The year one sales target is £125,000-£140,000 rising to £250,000-£290,000 in year two with the commitment to employ another production person and an outside sales person.
Currently the average turnover for Fastsigns franchisees in the UK is just under £500,000 although some achieve more than £1m, Davies said.
“With the co-brand agreements there is sufficient control to ensure we will have a successful business. They have the benefit of keeping their own established names as well as using our branding and of course they have access to all of our expertise and training.”
One of the reasons for the co-brand push is to improve speed to market, according to Davies. “Finding rental properties at a decent price in the locations we want to be is the major obstacle that we face,” he said. “With co-brand the businesses generally have space already so it frees up a major time-drain on what we do.”
Davies said that where traditionally Fastsigns UK used to target high-street locations, they are looking more for premises with high visibility to passing traffic, such as on major arterial roads. “We aren’t really about retail any more,” he said.
Fastsigns started as a traditional signage firm but has evolved to incorporate a huge array of visual communications including digital signage, banner displays, internal and external signage on a wide range of media.
Sectors serviced by the UK franchisees predominantly include education, healthcare, manufacturing, distribution and retail range with clients including Merlin, Euro Car Parts and Amazon.
The business turned over £8m in the UK last year.
The global business, which has around 630 franchisees worldwide, has an annual turnover of around $440m (£310m).