Poised For Takeoff!

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Kevin Cushing (left) is the CEO of AlphaGraphics and Keith Gerson is the vice president of marketing and development. Together, the dynamic duo is leading AlphaGraphics' franchisees to record sales growth. AlphaGraphics is the only visual communications franchise organization to have attained ISO 9000 certification for adhering to strict operational and quality standards. A gold rush of sorts is taking place these days. But it’s not gold that’s the object of everyone’s pursuit. Instead, it’s visual communications. Businesses both large and small are scrambling for the best ways to plan, produce and manage their visual communications needs effectively and confidently.

Visual communications franchisor AlphaGraphics—a longtime innovator in the quick-print industry—is leading the charge in providing solutions. Having celebrated its 35th anniversary in 2005, one of AlphaGraphics’ key growth strategies is increasing its focus on providing consultative solutions for the visual communications needs of its customers rather than just convenience and commodity printing.

With 265 business centers in the United States and nine countries, AlphaGraphics provides a wide range of solutions for design, digital copying, printing, one-to-one marketing, digital archiving and mailing services for small- to medium-sized businesses. Research by the Print Institute of America indicates that in the next five years, value-added services will grow to 50 percent of industry revenues vs. 20 percent in 2005.
“Our customers need to communicate more efficiently and effectively than ever before but many of them don’t know how to go about it,” said AlphaGraphics CEO Kevin K. Cushing. “It runs the gamut from small one- and two-person companies all the way to Fortune 500 firms.”

AlphaGraphics is accustomed to staying a step ahead of the rest of the quick-print industry. In 1984 it became the first desktop publishing retailer and later became the first U.S. printing franchise to expand internationally.
Now AlphaGraphics is seeking to nearly double its number of locations to 500 in the next five years, growing its network through new openings at a rate of 10 percent annually.




The franchise development plan entails five key elements:

1. The introduction in 2005 of digital business centers, which have highly-enabled digital printing capabilities but no traditional offset press, requiring less space and a lower cost of entry than a traditional business center.
2. The Prospective Partners Program, which provides a means for qualified AlphaGraphics employees to move into franchise ownership and allows them to earn up to 80 percent of new business center franchise, marketing and training fees, which are currently $49,900.
3. A multi-unit development incentive program for existing franchisees.
4. A legacy program that allows retiring franchisees to pass their business centers to family members and affords reduced rates on licensing fees and royalties.
5. A conversion/independent acquisition-to-conversion program that offers financial incentives for independent printers to join the AlphaGraphics network.

AlphaGraphics digital business centers, which offer customers the same level of consultative service and visual communications solutions as other AlphaGraphics business centers, are the most intriguing aspect of the five-year plan.

The initial investment for a digital business center ranges between $226,000 and $367,000 compared with an initial investment of $395,000 to $551,000 for a traditional business center. Digital business centers also require only 1,200 square feet of retail space compared to 3,000 square feet for a traditional business center.

The economies of scale in both cost and size offered by the digital business centers not only attract new franchisees to the AlphaGraphics network but also enable existing franchisees to expand by opening digital print centers in their local markets that complement the offset printing capabilities of traditional business centers and accommodate excessive production capacity.

AlphaGraphics’ first digital business center opened in Brazil in January, with the first digital business center in the United States scheduled to open in Corvallis, Oregon, in March. Approx-imately eight to ten more are expected to be open by the end of 2006.

Digital business centers are expected to account for 30 to 40 percent of new openings within the next five years. Cushing said about 50 percent of AlphaGraphics’ anticipated growth would come through expansion by existing franchisees.

“Digital business centers provide us with another economic model to appeal to franchise candidates who are younger and might not have all the financial resources necessary to open a traditional business center,” Cushing said. “With so much of our work migrating toward digital output devices today, it opens a vast pool of franchise candidates who also can grow their businesses into traditional business centers with offset printing services.”

Consistent with its reputation, AlphaGraphics business centers boast the highest average sales per location in the industry—$948,366. For centers open one or more years, this is early twice the quick-print industry average.

Franchisees are attracted to a brand that not only takes advantage of today’s technology to provide relevant, desired services to its customers, but also offers an attractive business-to-business model and strong lifestyle component. AlphaGraphics business centers—typically located in highly visible retail locations such as strip shopping centers—are usually open Monday through Friday from 7 a.m. to 6 p.m.




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According to a survey undertaken by Franchise Business Review, a franchise research market firm, 59 percent of AlphaGraphics franchisees said their reason for buying an AlphaGraphics franchise was to gain more control of their future.

“These people are looking for more balance and flexibility in their lives while still having the opportunity to work on building their wealth,” said Keith Gerson, AlphaGraphics vice president of marketing and development.

More than 20 percent of current AlphaGraphics franchisees were in senior executive positions or owned companies before joining the network. Husband-and-wife teams comprise about one-half of AlphaGraphics’ 212 franchisees, 22 of whom own more than one location. More than 85 percent had no direct print or industry-related experience before joining AlphaGraphics.

“I think that speaks very highly of the strength of our training, our systems and our network that we’re able to take individuals who had been successful in other careers and help them master a totally different industry,” Cushing said.
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