FDD Talk: The FASTSIGNS 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 FASTSIGNS franchise opportunity, including relevant news updates

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

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

• 2015 average gross sales for the 505 FASTSIGNS Centers that were open and in continuous operation in the United States during the entire calendar year ending December 31, 2015; the 126 FASTSIGNS Centers in the top quartile; and the top 25 FASTSIGNS Centers in the United States

• 2015 average gross sales for the 27 FASTSIGNS Centers that opened in calendar year 2014, the 28 FASTSIGNS Centers that opened in calendar year 2013, and the 18 FASTSIGNS Centers that opened in calendar year 2012

• 2015 average gross sales for FASTSIGNS franchise owners who (i) were in business for at least two years prior to January 1, 2015; (2) reported gross sales for each of the 12 months in 2015; and (3) advised FASTSIGNS that they employed a full-time outside sales representative during this period who was not one of the franchise principals of the Center

• average total sales generated by the 61 outside sales professionals hired by FASTSIGNS franchisees in 2013, and 34 outside sales professionals hired by FASTSIGNS franchisees in 2014, that completed 12 consecutive months in the outside sales professional position, during their first 12 months in that position

• 2015 average sales, cost of goods sold, labor expenses (including franchisee principal), advertising expenses, auto expenses, facility expenses, equipment expenses, general and administrative expenses, and EBITDA for the 290 FASTSIGNS Centers included in the 2015 Financial Benchmarking Survey

Section I – Background Information

From a Single Location to the Largest Sign Franchise in the World

The first FASTSIGNS location was opened in 1985 in Dallas, Texas by Gary Saloman and Robert Schanbaum. The year before, Saloman had visited a computer shop in Austin and was impressed by how quickly the store could produce signs. Saloman and Schanbaum convinced the owner of the Austin computer store to teach them how to use the new technology to make signs on the condition that they not open a competing store in Austin.

FASTSIGNS quickly took off and franchising began a year later in 1986. The company’s first international location opened a few years later in 1991. By 2000, FASTSIGNS had 400 locations throughout the world.

In 2003, FASTSIGNS was sold to Roark Capital Group, an Atlanta-based private equity firm. Over a decade later, in 2014, FASTSIGNS was sold again, this time to Levine Leichtman Capital Partners, a Los Angeles-based investment firm.

The company’s growth has remained strong and today, FASTSIGNS has more than 650 locations in the United States, Puerto Rico, Canada, the United Kingdom, the Caribbean, Mexico, the UAE, and Saudi Arabia. FASTSIGNS also has locations in Australia under the name Signwave.

Unprecedented Growth in 2016

In early January 2017, FASTSIGNS announced that the company had experienced unprecedented growth in 2016. FASTSIGNS had signed 63 franchise agreements with new and existing franchisees in the U.S., the U.K., and Canada last year. In addition to the franchise agreements, FASTSIGNS opened 35 new locations.

FASTSIGNS also expanded its international presence last year by signing Master Franchise Agreements in the Dominican Republic and U.S. Virgin Islands.

According to Catherine Monson, President and CEO of FASTSIGNS, the company generated over $446,000,000 in sales for 2016, with strong sales growth in all regions and countries.

FASTSIGNS has plans for more growth and the company’s projected goal for 2017 is to open 45 new locations.

Award-Winning CEO

In November 2016, President and CEO Catherine Monson received the Leadership Award at the Women That Soar Awards. The mission of Women That Soar is to empower all women to feel confident in their talents and abilities, and to bring women together to recognize each other for all the work that they do.

Monson is a 30-year veteran of the print and visual communications industry and has been with FASTSIGNS since 2009. Also in 2009, Monson received the Bonny Levine award from the International Franchise Association (IFA). The award is given to women in franchising for their exceptional accomplishments and mentorship.

As CEO of FASTSIGNS, Monson has appeared on the reality TV series Undercover Boss to learn how to further grow the FASTSIGNS brand.

Top Franchise for Veterans

FASTSIGNS was named “The Best of the Best” franchise for veterans by Franchise Business Review in late 2016. The franchise placed 11th overall on Franchise Business Review’s list.

The company reports that 10 percent of its franchisees are military veterans and FASTSIGNS is dedicated to assisting veterans through its participation in the International Franchise Association’s VetFran program (Veterans Transition Franchise Initiative). The program helps military veterans in accessing franchise opportunities through training, financial assistance, and industry support.

Through FASTSIGNS’ VetFran program, veterans have a reduced franchise fee of $22,250, a savings of 50 percent, in addition to reduced royalties and advertising fees for the first year.

Also in recognition of its services to veterans, FASTSIGNS was awarded the 2016 Secretary of Defense Employer Support Freedom Award. It is the highest recognition presented by the Department of Defense and given to employers for their exemplary support of National Guard and Reserve members.

FASTSIGNS was nominated by Air Force Reservist Stephen MacKenzie, who is a FASTSIGNS International, Inc. Business Consultant. MacKenzie nominated FASTSIGNS for the award because of the personal and financial support the company provided him during his most recent deployment overseas.

Number One in Its Category on Entrepreneur’s Franchise 500

FASTSIGNS has always done well on Entrepreneur’s annual Franchise 500 list. The company tends to rank somewhere in the top 100. Additionally, FASTSIGNS consistently ranks No. 1 in the Signs Franchise category.

For 2017, FASTSIGNS earned spot No. 95 overall and No. 1 in its category. Over the past decade, FASTSIGNS’ lowest rank was No. 138 in 2008; the company’s highest rank was No. 79 in 2013.

Section II – Estimated Costs

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

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