FDD Talk: The AlphaGraphics Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the AlphaGraphics franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an AlphaGraphics franchise, based on Item 7 of the company’s 2015 FDD

• Section III – Presentation and analysis of AlphaGraphics’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:

• total gross sales for all AlphaGraphics business centers during the company’s last 6 fiscal years (2010 to 2015)

• 2015 fiscal year average and median gross sales for the top 25%, top 50%, and all 162 single-unit AlphaGraphics business centers in the U.S. that have been in operation for 1 year or more as of June 30, 2015

• 2015 fiscal year average and median gross sales for the top 25%, top 50%, and all 35 multi-unit AlphaGraphics business centers in the U.S. that have been in operation for 1 year or more as of June 30, 2015

• 2014 calendar year median gross sales, operating expenses (payroll, accounting and legal fees, advertising and marketing, auto operating expenses, building rent, franchise fees, lease and rental expenses – copier, office supplies, property and liability insurance, travel and entertainment, utilities, and all other overhead expenses), EBITDA, and other miscellaneous stats (depreciation, interest, gross margin percentage for different profit centers, sales mix percentages) for 146 franchisees operating a U.S. AlphaGraphics business center at a single location for the full calendar year ended December 31, 2014

Section I – Background Information

When Rodger Ford started AlphaGraphics in Tucson, Arizona, back in 1970, his goal was to offer customers the latest in visual communications technologies. Nine years later, after honing the business model, franchising began in 1979.

AlphaGraphics became the nation’s first desktop publisher in 1984, and by the latter part of that decade became the first printing chain to expand across the globe. The chain reached 278 locations back in 2011 and has hovered right around that number ever since, with units across the United States, Brazil, China, Hong Kong, Saudi Arabia, and the United Kingdom.

In 2001, the chain was purchased by the Pindar Group, and its headquarters were subsequently moved to Salt Lake City, UT. When the Pindar Group went bankrupt, the chain was then sold to Blackstreet Capital Management, a private equity firm. AlphaGraphics was most recently acquired by Western Capital Resources, a publicly traded holding company.

Here’s how AlphaGraphics keeps the presses running hot and heavy in the competitive printing and marketing communications segment:

More Than Just Printing

The business centers of AlphaGraphics offer customers a whole lot more than just printing business cards, letterhead, brochures, and posters. Whether it’s graphic design, marketing communications, book publishing, signage, branding, or document creation and management, businesses of all sizes can take advantage of whichever services they need.

Certified for Success

AlphaGraphics created its very own Quality Management Program in order to maintain a high standard for quality products and efficient production. The chain’s program is based on ISO 9001:2008 standards along with aspects of Lean Manufacturing philosophies.

Each AlphaGraphics business center goes through a rigorous screening process to ensure it follows the strict requirements of the program, thereby providing high-quality products and services to its customers.

Focus on the Future

For its charitable giving, the chain is focused on Junior Achievement (JA), a non-profit group that educates 8 million young people each year on how to succeed in entrepreneurship, work readiness, and financial literacy.

JA programming relies on volunteers to convey their real-life business acumen to young people, and AlphaGraphics owners all across the country are stepping up to the challenge, working with JA to share their professional successes, challenges, and know-how with kids in their communities.

Franchisee Autonomy

AlphaGraphics franchisees have room to spread their wings and be unique. In fact, the AlphaGraphics location in the Cultural District of Pittsburgh, PA was recently highlighted as one of that city’s coolest offices. This is not your typical cookie-cutter approach to franchising.

Leadership Transition

Art Coley, Jr., resigned from AlphaGraphics in August 2014 after seven years with the company, although he only served as president since 2012. For six months the chain’s board executive chair, Gay Burke, served as interim president until Aaron Grohs was hired to fill that slot in February 2015.

Before coming to AlphaGraphics, Grohs was Executive VP of Sales and Marketing at Consolidated Graphics, one of the print industry’s leading sheet-fed digital print and technology companies.

Section II – Estimated Costs

• Please click here for detailed estimates of AlphaGraphics franchise costs, based on Item 7 of the company’s 2015 FDD.

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis