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

In this FDD Talk 2016 post, you’ll learn the following:

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

• Section II – Estimated initial investment for a Proforma franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Proforma’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• number of Proforma franchise owners in operation for the entire 2015 calendar year that had 2015 sales greater than $400,000, greater than $1 million, greater than $2 million, greater than $5 million, and greater than $10 million, respectively

• number of Proforma franchise owners in operation for the entire 2015 calendar year that had 2015 gross profit greater than $100,000, greater than $250,000, greater than $500,000, greater than $750,000, and greater than $1 million, respectively

• number of Proforma franchise owners in operation for the entire 2015 calendar year that had 2015 gross profit greater than 35%, greater than 40%, greater than 45%, greater than 50%, and greater than 55%, respectively

• 2015 average, high, and low order size by Proforma franchise owners during calendar year 2015

• number of Proforma franchise owners with 2015 sales over $1,000,000 through $1,999,999 (Million Dollar Club Franchisees), and their average, high, and low gross sales

• number of Proforma franchise owners with 2015 sales of $2,000,000 or greater (Multi-Million Dollar Club Franchisees), and their average, high, and low gross sales

• 2015 average gross sales, gross profit, and gross profit percentage for start-up franchises (i.e. franchise owners entering the system without relevant industry experience)

• 2015 average gross sales, gross profit, and gross profit percentage for RIE franchises (i.e. franchise owners entering the system with relevant industry experience)

Section I – Background Information

Proforma got its start back in 1978 when founder Greg Muzzillo saw an opportunity to serve medium and larger businesses with superior printing services for promotional products and business documents. He and a friend started the company with just $200 and grew it into the $500 million business it is today.

They started franchising the concept in 1985 with a model where franchisees act as sales agents who work with a carefully selected network of suppliers to deliver what’s needed.

From its recent high of 753 locations in 2011, there are currently 677 locations, one of which is company-owned and 48 of which are located outside the U.S.

Headquartered in Independence, Ohio, here’s how Proforma keeps the ideas popping in the competitive business branding and marketing industry:

Changing With the Times

Proforma started out essentially as a printing company, but has had to change over the years with the advent of the Internet and World Wide Web. Now its services span a wide range of offerings, including branded merchandise, custom packaging, uniforms and apparel, local and global fulfillment (warehousing and distribution), ecommerce solutions, digital media (video marketing, social media amplification, marketing automation, etc.), awards and recognition, smart communications, and creative solutions (marketing campaigns, project development, design, copywriting, etc.).

The chain will even help any owner of a print or promotional business develop an exit strategy to sell their business through its Mergers and Acquisitions Team.

Successful Franchisees Rewarded

Back in 1990 the company formed its Million Dollar Club to recognize franchisees who have achieved $1 million in annual sales. Just twelve years later the company had to form a Multi-Million Dollar Club as more and more franchisees exceeded those targets. Members are rewarded with special trips to fabulous destinations around the world.

A Powerful Customer Base

Even though there are only 677 locations, the chain serves more than 50,000 clients. Although that averages out to only 73 clients per location, these tend to be larger companies and corporations, which is clearly a lucrative niche to be servicing.

Among its customers are such powerhouse companies as AT&T, Coca-Cola, Nationwide, Little Caesars, Sealy, Sherwin Williams, Skechers, Sony, and UPS, just to name a few.

A Husband-and-Wife Team

Although Gregory Muzzillo founded Proforma and was CEO for many years, his wife Vera came on board in 2001 as co-CEO, then became sole CEO in 2009, with Greg remaining as Founder. The two were named “People of the Year” by Counselor magazine in 2010.

Proforma became a certified woman-owned business by the National Women Business Owners Corporation (NWBOC) in 2013, and in 2014 Vera Muzzillo was named one of the Top 24 Women in Franchising by Franchise Update magazine.

Section II – Estimated Costs

• Please click here for detailed estimates of Proforma franchise costs, based on Item 7 of the company’s 2016 FDD.

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis