FDD Talk: FASTSIGNS Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk 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 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a FASTSIGNS franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned FASTSIGNS outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of FASTSIGNS’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average, median, high, and low gross sales for the 608 FASTSIGNS Centers; the 561 Full-Service FASTSIGNS Centers; the 152 Full-Service FASTSIGNS Centers in the top quartile; the 152 Full-Service FASTSIGNS Centers in the lowest quartile; and the 29 Co-Brand FASTSIGNS Centers that were open and in continuous operation in the United States during the entire calendar year ending December 31, 2019

• 2019 average gross sales for FASTSIGNS franchise owners who (i) were in business for at least one year prior to January 1, 2019; (2) reported gross sales for each of the 12 months in 2019; 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 20 outside sales professionals hired by FASTSIGNS franchisees in 2017 and the 59 outside sales professionals hired by FASTSIGNS franchisees in 2018, that completed 12 consecutive months in the outside sales professional position, during their first 12 months in that position

• 2019 average gross 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 248 FASTSIGNS Centers included in the 2019 Financial Benchmarking Survey, the 62 reporting FASTSIGNS Centers in the top 25% based on profitability, and the 62 reporting FASTSIGNS Centers in the lowest 25% based on profitability

Section I – Background Information

27 Things You Need to Know About the FASTSIGNS Franchise

Marked 35th Anniversary with Celebratory Franchise Fee of $35,000

1.  In mid-February 2020, FASTSIGNS marked its 35th anniversary by offering qualified franchisees in the U.S. a celebratory franchise fee of $35,000 – a savings of $14,750. The limited opportunity was available through April 30, 2020, and applied to franchise agreements for new, co-branded, and conversion centers. For 2020, FASTSIGNS was aiming to sign over 45 franchise agreements in markets like Michigan, Southern California, Florida, New York City, Boston, and throughout the Northeast Corridor.

2.  The brand’s aggressive growth comes on the heels of a strong 2019 where FASTSIGNS reported exceptional results, including the signing of over 40 franchise agreements in the U.S and Canada to develop new, co-branded, and conversion centers and the opening of more than 30 locations. FASTSIGNS also acquired Long Island-based Sign Me Up Signs & Advertising, adding seven locations to its network.

3.  Mark Jameson, executive vice president of franchise support and development, FASTSIGNS International, Inc., said, “As a brand and franchise opportunity, FASTSIGNS has never been stronger. To capitalize on our strong performance in 2019 and mark our 35th anniversary, we’re excited to offer this special franchise fee to enable prospective franchisees to join the leading sign, graphics, and visual communications franchise.”

4.  “We liked the sign industry and where it is heading technologically, and FASTSIGNS is the top dog in the category. It was important to me that I have an experienced team of professionals behind me that were dedicated to achieving my success,” said Clint Ehlers, a FASTSIGNS franchisee in Willow Grove, Pennsylvania, and Cherry Hill, New Jersey. “There’s no better system than FASTSIGNS if you’re looking to get into the business.”

5.  For any existing business looking to expand into this fast-paced market, FASTSIGNS offers co-brand and conversion programs to help owners diversify their product lines and services to meet the growing demand for comprehensive signage and visual communications solutions. FASTSIGNS has helped countless owners of print shops, photography studios, camera stores, embroidery shops and more, add a FASTSIGNS to their existing business or fully convert their store to a FASTSIGNS franchise.

6.  FASTSIGNS franchisees receive ongoing training and support to stay ahead of the competition and exceed the needs of their local business community. Both the co-brand franchise opportunity and conversion can be started with only $15,000 down on the initial franchise fee.

7.  FASTSIGNS also offers a special incentive for first responders, including paramedics, emergency medical technicians, police officers, sheriffs and firefighters, which includes a 50% reduction on the franchise fee – a savings of $24,875.

Continues Nationwide Growth as an Essential Business Amid Ongoing COVID-19 Crisis

8.  In late August 2020, FASTSIGNS announced strong growth year-to-date in 2020 including the signing of 16 new franchise agreements, 12 of which the brand signed since March 1, to develop locations in new markets like Aurora, Illinois; Panama City, Florida and the Toronto area. FASTSIGNS also celebrated the opening of 20 new centers in the first half of 2020 with 16 new centers opened since March 1.

9.  Much of FASTSIGNS’ growth in 2020 was due to its centers nationwide being deemed essential as COVID-19 forced thousands of businesses across the country to temporarily close earlier that year, allowing franchisees to pivot their services to best serve their customers and local communities.

10.  According to Mark Jameson, EVP of franchise support and development, FASTSIGNS International, Inc., “At FASTSIGNS, our franchisees’ success comes first. When the pandemic began to impact our industry, we fought to ensure FASTSIGNS centers across the U.S. could continue to operate, and we’ve continued to be by their side to help them every step of the way. We’re incredibly proud of how our franchisees adapted to the changing climate by tapping into the diverse product range we offer so they could fulfill the unique needs of their customers.”

11.  Jameson added, “Throughout the pandemic, our franchisees have continued to manufacture critical signage, plexiglass shields, and more to help hospitals, local governments, and businesses communicate important health and safety information and to protect communities. Their role of being the go-to resource for visual communications in their communities continues to grow stronger every day. The growth and momentum we’ve experienced is a true testament to the strong FASTSIGNS network, our brand’s ability to adapt systemwide, and the rising demand for signage.”

12.  Kevin Leamon signed a franchise agreement with FASTSIGNS in March 2020, and in July celebrated the grand opening of his center in Springfield, Illinois. “Looking back, I feel incredibly lucky to have had my new business up and running in just four months during such a challenging period,” said Leamon.

13.  “As a first-time franchisee, the support and guidance that FASTSIGNS offered as I navigated this new endeavor helped the entire process run smoothly. Along the way, I had the opportunity to tap into the impressive network of existing franchisees to discuss how they were adapting throughout the pandemic, and learned so many invaluable tools that I could incorporate into my center. It was motivating to hear how FASTSIGNS centers could quickly pivot to meet the needs of current events and further position themselves as the expert in the sign industry. I’m thrilled to be part of this dynamic brand,” said Leamon.

14.  FASTSIGNS is known in the industry for equipping its franchisees with tools vital to securing the ongoing success of each individual location. In addition to the brand’s online FASTSIGNS University, FASTSIGNS partners with 1HUDDLE, a workforce-training platform that converts unique training content into science-backed, quick-burst training games that are proven to accelerate workforce productivity.

15.  Steve Brown, FASTSIGNS franchisee of Newport Beach, California, who opened his center in April 2020 in the midst of the pandemic, added, “As a first-time franchisee, it was important for me to invest in a brand that provided guidance to help me succeed, while allowing me to be in business for myself – and FASTSIGNS provided just that. I was just weeks away from opening my first location when the pandemic hit, and FASTSIGNS proved to be an invaluable partner during that time. I moved forward with opening my center amid the pandemic, having faith in one of the largest sign franchises. The support shown during these unprecedented times helped me get my FASTSIGNS center up and running.”

Recruits Existing Business Owners Looking to Grow Through Co-Brand and Conversion Program

16.  Near the end of September 2020, FASTSIGNS announced that it was recruiting existing business owners looking to grow through its co-brand and conversion program. The franchise offering allows entrepreneurs to add a FASTSIGNS to their business or fully convert their store to a FASTSIGNS center to take advantage of FASTSIGNS’ established brand recognition, state-of-the-art products, unmatched training and support, and status as the No. 1 franchise opportunity in the sign and graphics industry.

17.  Earlier in 2020, FASTSIGNS centers nationwide were deemed essential as COVID-19 forced thousands of businesses across the country to temporarily close, allowing FASTSIGNS franchisees to pivot their services to best serve their customers and local communities.

18.  Mark Jameson, EVP of franchise support and development, FASTSIGNS International, Inc., said, “Small business owners have been navigating through the unknown during the pandemic, with many businesses struggling and others shutting their doors forever. But FASTSIGNS franchisees have fared extremely well with the backing of our strong support center, allowing them to be in business for themselves, but not by themselves during these unprecedented times.”

19.  Jameson added, “At FASTSIGNS, we stay on the cutting edge of technology and trends, so our franchisees don’t have to, and, throughout the COVID-19 outbreak, our constant stream of knowledge and resources amplified their ability to focus on what matters most — their customers. With a recognized brand name, advanced technology, a global supply chain network and an international system of franchisees, we’re proud to assist existing businesses as they look to diversify their product offerings and services to weather this storm.”

20.  FASTSIGNS has helped countless owners of print shops, photography studios, camera stores, embroidery shops, and more add a FASTSIGNS to their existing business or fully convert their center to a FASTSIGNS franchise. In 2019 alone, co-brand and conversion centers opened in markets including Brooklyn, New York; Windsor, California and Findlay, Ohio, among others.

21.  FASTSIGNS franchisees receive ongoing training and support to stay ahead of the competition and exceed the needs of their local business community. Both the co-brand franchise opportunity and conversion can be started with only $15,000 down on the initial franchise fee and lower royalties during the first 12 months.

22.  “After establishing a thriving business within my local community over the past two decades, I was looking for a new way to expand and take my signage and awnings shop to the next level,” said Nikki Taheri, who converted her existing business to a FASTSIGNS center in Bayonne, New Jersey, with her husband, Brendan Duane. “FASTSIGNS has proven to be an invaluable partner as they’ve provided us with a deeper connection to the signage industry. Beyond the national brand name recognition, FASTSIGNS gives us access to new resources, immeasurable support and vendor relationships, which allow our business to provide additional services to our customers.”

Company History

23.  FASTSIGNS was founded in 1985 by Gary Salomon and Bob Schanbaum in Dallas, Texas. Salomon, who was a print broker and catalog developer, came up with the idea for FASTSIGNS after he visited a computer shop in Austin and saw how quickly they were able to produce vinyl signs. Interested in the technique, Salomon convinced the computer shop owner, after agreeing not to open a competing store in Austin, to teach him how to utilize the new sign technique.

24.  Armed with the knowledge of vinyl signage, Salomon partnered with Schanbaum to launch FASTSIGNS and the business was a quick success. The next year, Salomon and Schanbaum decided to start franchising the FASTSIGNS concept to meet growing demand and the first franchise was sold in December 1986.

25.  Over the next few years, FASTSIGNS grew around the United States and the first international store opened in Canada in 1991. By the beginning of the next decade, there were over 400 FASTSIGNS stores around the world and in 2003, the company was sold to Roark Capital Group, an Atlanta-based private equity firm.

26.  Over a decade later, in 2014, FASTSIGNS was acquired by Levine Leichtman Capital Partners, a Beverly Hills-based investment firm. In 2019, FASTSIGNS was sold to LightBay Capital and Freeman Spogli & Co. Today, there are FASTSIGNS locations in the United States, Canada, the U.K., the Cayman Islands, Mexico, Saudi Arabia, the UAE, Chile, and Australia (where centers operate under the name Signwave).

Entrepreneur’s Franchise 500

27.  FASTSIGNS ranked No. 44 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of FASTSIGNS franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on FASTSIGNS’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  572
• Outlets at the End of the Year:  603
• Net Change:  +31

2018

• Outlets at the Start of the Year:  603
• Outlets at the End of the Year:  620
• Net Change:  +17

2019

• Outlets at the Start of the Year:  620
• Outlets at the End of the Year:  641
• Net Change:  +21

Company-Owned

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

• On December 31, 2019, there were 726 FASTSIGNS Centers open and in operation, of which 85 were international. 641 FASTSIGNS Centers were open and 608 were in continuous operation in the United States during the entire calendar year ending December 31, 2019. The analysis set forth below is based on the average yearly gross sales and median sales for those 608 FASTSIGNS Centers for 2019.

• Of the 608 FASTSIGNS Centers open and in continuous operation in the United Slates during the entire calendar year ending December 31, 2019, 561 FASTSIGNS Centers were “Full-Service” Centers, 18 FASTSIGNS Centers were “Satellite” Centers, and 29 FASTSIGNS Centers were “Co-Brand” Centers.

• A “Full-Service” Center is the FASTSIGNS Center that the franchisor typically offers under the Franchise Disclosure Document. It includes production equipment and is a stand-alone business.

• A “Satellite” Center is a FASTSIGNS Center without any production equipment and is owned by a franchisee who also owns a Full-Service FASTSIGNS Center. The franchisor no longer offers Satellite Centers for sale.

• A “Co-Brand” Center is an existing operating complementary business that establishes and operates a FASTSIGNS Center within that business.

• The following Tables refer to “Gross Sales.” “Gross Sales” includes cash and credit sales as well as any goods or services received by the franchisee in exchange for goods and services sold at the FASTSIGNS Center. “Gross Sales” does not include sales or use taxes.

Part 1 – System-Wide Gross Sales – Centers Operating for the Entire 2019 Calendar Year

• The following Table provides system-wide Gross Sales for all operational FASTSIGNS Centers reporting sales for the full twelve months and the Gross Sales for Full-Service Centers.

All Centers