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A friend's/customer's experience with buying a sign franchise.

I just thought I should share this. Maybe I can save someone from having a similar experience

In a nutshell, a year and half ago I picked up a wholesale customer that had purchased into a sign franchise.

She wanted to open a business, the franchise sales people convinced there that even though she didn't really have any experience with design, vinyl, installs or really anything in the sign industry that they would be there for her to make her business a success. She would be partnered with another franchisee until she had made enough money to purchase her own equipment and open a store front. Not saying she was smart but I'm sure they where very compelling with their argument.

She forked out about $45,000. She was given illustrator and photoshop, a bucket full of install tools, a cookie cutter website and about a weeks worth of training.

First problem she encountered, the other franchisee she was partnered with didn't know anything about it and was only willing to give her a price slightly below retail. Honestly she really was paying to be an independent sales person for someone else at this point

Somewhere along the way, I picked her up as a wholesale customer and have helped/trained/guided her to the best of my abilities. She's made a few descent sales but not really enough to make a living off of, so she's already struggling. She tried to sale her franchise to someone else a few months ago and corporate would not allow the sale.

She gets a letter from the franchise corporate last week, she hasn't met their minimum sales for the last few months. They want her to pay an additional amount or lose the franchise. There is absolutely no way she can pay what they are asking. So she's booted out. That's bad enough but now they are demanding her cell number, the software, tools, contact info for all of her clients, etc...

First off, she really should have been smarter about spending her money and she really should have read the fine print in her contract before agreeing to anything. But seriously they took her money, provided almost no training, really didn't offer much in the way of help and when she failed booted her out and now want anything associated with business in anyway back.

It's almost criminal.
 
I'm not sure if I get myself in trouble giving the exact name...there always seems to be some hesitation about doing that on message boards, so I'll follow suit and say it's "Sign by sometime in the next few days".

Forgot to mention they also want any remnant rolls of material she might have left over. Too be fair, I'm getting all of this through her but i don't think she's exaggerating.
 

rjssigns

Active Member
She learned an expensive lesson. Those are the best. The bitter taste lasts years...




I know. I've done it.
 

SignManiac

New Member
Anyone with brains should first have an attorney read through the FDD (Franchise Disclosure Document). Everything that the Franchisor requires from the Franchisee has to be disclosed by law and the Franchisor must give them two weeks so they have plenty of time to make a sound decision before the franchisor can take any money from them.

She can only blame herself in this situation. Careful research and she would probably have decided against going into a sign franchise. Probably the hardest business to learn in my opinion. I know a lot about franchising and have witness this same scenario over and over many time. I feel bad for her but as said before, she just learned an expensive lesson in life.
 

Rick

Certified Enneadecagon Designer
Most, if not all franchise sign business models use the idea that you will hire
an experienced sign person to run, or at the very least sell, design,
fabricate and install for your business while you learn it.

I'm pretty sure the franchise you allude to has that business model.
I have a feeling she missed that, or thought she could do it. Kinda hard
blame the other franchise when they may not know what they are doing
either.

There was another franchisee here recently looking for someone. I occasionally
see their work on Facebook... horrible work. Don't know if it's the guy they hired
or them thinking they can design.

Kinda hard to learn all that in a weeks course.
 
I agree with everyone she should have hired an attorney and definitely scrutinized the fine print before ever writing that check.

Mainly it's just wrong on so many levels...not saying it's not legal but I would have trouble sleeping at night.

Chris
 

jtinker

Owner
Thats depressing.

With that type of startup she could have just done it all herself without and hired someone with experience.
 

Billct2

Active Member
There's a franchise location near here that bankrupted several owners till someone came along to make it work. Problem is that I don't think that inforamtion is known, the location is still considered a success as long as it doesn't close. I don't get the concept of investing that much in a business that you have no idea how to run, with the idea that you can hire someone that actually knows the business to run it, at least not a small sign shop.
 

Christian @ 2CT Media

Active Member
I don't get how people can invest over $100k plus 6+% in residuals for a name. Most of those Franchise Parent companies provide little more then a book or Web page for support and training seems to be little more then an overview of how to run the equipment. Then they force you to choose building locations that are way over priced.

Seems like the world needs to be more skeptical of too good to be true situations.
 

CanuckSigns

Active Member
Thats depressing.

With that type of startup she could have just done it all herself without and hired someone with experience.

$45,000 wont get you much of a start up to be honest, we had a fire 2 years ago, and when the bill was all said and done, we had over $250,000 in materials and equipment lost, and we are not a big operation by any means.
 

Doc Zoom

Doc Zoom
So far I'm really impressed with being a FASTSIGNS owner.

I was really skeptical about getting into this business and talked with tons of sign owners as well as FASTSIGNS Center owners and all had nothing to say but good about FASTSIGNS.
It's been almost a year and things are really starting to ramp up for our new center! FASTSIGNS has had great training, sent reps up to see us and guide us and has even sent their tech guy up to make sure we're all dialed in!
We get a known name on our front sign, we get referrals, webinars, our own website and a ton of national franchises who automatically buy from FASTSIGNS exclusively. We have a question, need a profile, have printer problems, need advise, they're just a call or email away!
One other thing we get is way better pricing from vendors because we belong to a really large buying group! We save almost $100 a roll on IJ180, just cause we're a FASTSIGNS Center! Equipment is way cheaper too!
We can see what other centers are doing for business and compare their numbers to ours. It's amazing to see how many million dollar centers that are out there!
Yes, we do have to pay royalties, but it's totally worth it with all that FASTSIGNS does for us!
If you have any questions please feel to give me a call and I would be happy to discuss them with you.
Here are some videos and pics of our journey!
http://graphiclabstv.com/fastsigns/
And no I am not a paid spokesperson!
And I love Signs 101...so much to learn!
Greg 406-459-5531
greg.painter@fastsigns.com
 

synergy_jim

New Member
Total bummer about your friend. I've seen Franchise agreements sink people more than once. We used to have 3 well know oven toasted sub shops in the area and all three made it less than 3 years. They made it impossible for the franchisee's to make money with all their fees and stipulations.

The funniest thing I have seen to date is trade magazine ads encouraging established sign shops to convert to a franchise.... That might be the most ridiculous thing I have ever seen.

" Give us your customer list and pay us a fee for this pretty new sign on your building".
 
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