Signsnow

[Kevin nixin]

Needless to say how lucky I am to find this forum!!! I've been reading every post of this forum...

Has anybody heard about the franchise Signsnow company?

I've been thinking buying a laser and doing some engraving/cutting jobs for some bigger sign shops who don't have a laser engraver...

I'm still doing my homework, taking all the advice/suggestions from everybody in this forum, MARKETING is key.

[Joe Pelonio]

If you mean Signs Now yes, they are one of the many sign franchise places, and there used to be one in a nearby town but it went out of business a few years ago, as did two other franchise shops there.

Most of these do their vinyl signs and large format printing in house, but sub out the engraving and electrical signs. Some will have rotary engravers and a CNC though, so their need for laser may be limited.

It could be a good source of wholesale work for the laser shop but remember they will expect to make a profit, so you will have to charge less than you would to a retail customer. I personally do very little work for franchises, and prefer to deal with independent shops like mine.

[Kevin nixin]

Thanks Joe for your swift reply.

Why did some of them have to close their shops?

By the way, I am from Richmond area in BC Canada.

I am also thinking about taking over one of the shops which is up for sale for now... they are asking for 69k Canadian dolloars. I've not talked to the agent yet, but I will and find out more details about it.

[Joe Pelonio]

I am aware of some of the details from talking to suppliers.

Often the franchisors will tell prospects that with their training anyone can run it, and that they can hire people off the street at minimum wage to help do the work. Unfortunately in the sign business that is not true. One must have have some graphics artistic ability, and a lot of manual dexterity (more so with vinyl than laser). Also, the cost of franchise fees and royalties is a major factor, which independents don't have, and some even
require you to by materials and supplies through them so you cannot shop for the best prices.

Their training is on the use for the software and equipment, and business operation, but if the signs are bad people don't come back. During the 13 years my shop was in Bellevue, WA, I saw 7 sign shops, all franchises come and go. They shall remain nameless but three were the same franchise name.

I think the biggest thing for you in considering such an investment is the real reason they are selling, which may be hard to find out. You might even ask for contacts at some of their biggest customers. Make sure they would stick with you, and that they plan to continue buying signs at the current pace. Showing you a long list of invoices from company ABC does no good if company ABC is planning to move or will soon go out of business. Often a shop will have one really good customer, which when lost, puts them out of business.

[Kevin nixin]

Joe,

Appreciated very much your input!

You are absoutely right, the toughest thing is find out why thye are selling it...

I'll find out more about it.

Thanks again.
Kevin

[Kevin nixin]

Here is what I've got out of the agent, the shop has been there for 16 years! And the same owner been there for those 16 years! Reaon why they are selling it is becuase the current owner wants to move on to a bigger operation and focus on automile signage etc, which is absolutely my concern, becuase they could be my competitor. It's a very small shop, about 800 sq feet. But a good location though. Two man operation. I'll go visit next week and find out more about it. The franchise will do the training. And I don't think they have a laser, which is a good thing, meaning that I can get a laser as an add on to provided more value added servcie if allowed by the franchise.

[Tim Bateson]

I would ask specifically about using a laser. Some franchises not only make you use their material, but you may be limited to ONLY their business options. That may be why the current owner is selling. I would ask the owner, the agent and the franchise company, even ask to look at their contract.
People don't sell a thriving business just because they have another business idea. My 2 cents (Canadian or othewise) that seems like a low asking price for an established business of 16 years.

[Kevin nixin]

Thanks Tim. Their gross and net are pretty small. I don't think it's approriate to post the nubmers here, but it is a small number. It's totally relevant to the selling price.

I'll keep that in mind for sure, about using a laser in their operation.

[Joe Pelonio]

Generally I see a business of this type sold for 2.5 times the annual sales, plus inventory. I don't know what happens when you add in a franchise fee. It does sound like he wants to do more than the franchisor allows, because otherwise he could merely rent a larger space.

Don't buy it without a no-compete clause from the seller, generally a period of time and geographic area are included, and that he and his employee cannot do business with any of the previous customers. It's then your problem to enforce it, though, by filing a law suit if you find evidence that the contract was broken. Make sure you have a lawyer write up the contract or review it if he or the franchisor provide it, to make sure it's legal and enforceable and protects your interest.