FDD Talk: Proforma 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 Proforma franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Proforma 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 Proforma franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned Proforma 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 Proforma’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• number of Proforma franchise owners in operation for the entire 2019 calendar year that had 2019 gross sales between $0 and $99,000, greater than $100,000, 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 2019 calendar year that had 2019 gross profit between $0 and $99,000, 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 2019 calendar year that had 2019 gross profit percentage between 0% and 34%, greater than 35%, greater than 40%, greater than 45%, greater than 50%, and greater than 55%, respectively

• 2019 average, high, and low order size for Proforma franchise owners during calendar year 2019

• number of Proforma franchise owners with 2019 gross 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 2019 gross sales of $2,000,000 or greater (Multi-Million Dollar Club Franchisees), and their average, high, and low gross sales

• 2019 average gross sales, gross profit, and gross profit percentage for start-up franchises (i.e. franchise owners entering the system without relevant industry experience)

• 2019 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

16 Things You Need to Know About the Proforma Franchise

Celebrates Technology Innovation with Steve Wozniak

1.  In mid-January 2020, Steve Wozniak, co-founder of Apple, joined Proforma at The PPAI Expo in a celebration of technology innovation. A record-breaking number of Proforma owners, supplier partners, and special guests in the industry attended this private event. Wozniak was the 2020 featured speaker to launch Proforma’s Annual Kick-Off Meeting.

2.  Proforma celebrated the success that its $15 million business management technology platform, ProVision, is creating for its affiliate members. Affiliate members on ProVision have seen an average 20% increase in sales and a 17% increase in gross profits since switching to the proprietary system.

3.  Steve Wozniak said, “After hearing the success of Proforma’s members on ProVision, it’s clear that Proforma is unlocking doors to the future of their industry. I have always said that ‘wherever smart people work, doors are unlocked’ and clearly Proforma has an abundance of smart people behind their technology. It was a thrill to be a part of this special celebration.”

4.  “The WOZ” captivated the audience as he shared personal anecdotes, practical jokes, and technological insight with Brian Carothers, chief technology officer of Proforma. Wozniak’s passion for promotional products was recognized by the presentation of an honorary Master of Advertising Specialist (MAS) by Paul Bellantone, president and CEO of PPAI.

5.  Carothers added, “Having the opportunity to interview one of the world’s most influential minds is a testament to Proforma’s pursuit of technology innovation in the print and promotional products industry.”

Launches Business Success Webinar Series

6.  In mid-August 2020, Proforma launched a new series of webinars, “New Days, New Ways,” as a sequel to its original Rise & Thrive webinar series. The Rise & Thrive series, introduced in March 2020, included over 100 webinars focused on helping members pivot and innovate during the first several months of COVID-19. This original webinar series was very successful, measured by the fact that Proforma’s YTD sales were ahead of its 2019 YTD sales. The New Days, New Ways webinar series is designed to help Proforma owner affiliates strategically plan and adjust their businesses to the new reality of the global business environment.

7.  Vera Muzzillo, CEO of Proforma, said, “To date, the results of our webinar series have been amazing. We are proud of our Owners and very appreciative of the participation of our many great suppliers and the hard work of our Support Center Team Members to keep innovating and leading the way forward.”

8.  Deborah Lanigan, owner of Proforma Mega Marketing Solutions, said, “The tools and resources created as a part of the Proforma strategy for pivoting in the midst of this pandemic have been extraordinary. The education, success sharing and supplier strategies shared in the ongoing webinar series has helped keep me and my team motivated and challenged to keep pushing forward and looking for new opportunities to form new relationships.”

Sets Record of New Million Dollar Club Members

9.  In early February 2021, Proforma announced that it set a a record for adding new members to its exclusive Million and Multi-Million Dollar Clubs. Despite the challenges from this past year, 38 Proforma owners achieved First Time Club Status or First Time Next Level Club Status in 2020. The strength of the Proforma network is illustrated in these numbers supported by the company’s quick pivot to provide essential and time critical tools and resources to help its owner network persevere amidst the challenges of the COVID-19 pandemic.

10.  According to Vera Muzzillo, CEO of Proforma, “This record number of new members driving Proforma’s overall increased sales in 2020 proves that Proforma is truly the industry’s technology and business success leader. The investment in our $15 million business management technology platform, ProVision, supported by our ongoing business success services, has positioned our Proforma Affiliate Members to not only grow in the best of times, but to persevere and succeed in challenging times. We are extremely proud of all of our Proforma Members and their ongoing drive to achieve their next levels of success.”

11.  This year’s newest members include 13 first-time Million Dollar Club Members, 14 first-time Multi-Million Dollar Club Members, 8 first-time 5 Million Dollar Club Members, and 3 first-time 10 Million Dollar Club Members. Proforma’s Million Dollar Club sales range from $1 million to $40 million with members earning additional recognition for $5 million, $10 million, $25 million, and $50 million in sales for the previous year.

12.  Mike Durkee, owner of Proforma Durkee and a new member of the $10 Million Dollar Club, said, “I am very proud of my team and our sales achievements, as well as the achievements of our Proforma peers. The Proforma network of Owner Members, Supplier Partners and Support Team Members provides us with unparalleled technology, service and support to help us achieve success in every business climate.”

Company History

13.  Proforma was founded in 1978 by Greg Muzillo with a college friend. Muzillo and his business partner wanted to offer printing services, promotional materials, documents, forms, and other essential services to medium-sized businesses and large corporations. Within one year, the business that was started with $200 grew to $250,000 and its client base to more than 300. Within a few years, Proforma reached $1 million in sales and national franchising was launched in 1986.

14.  Over the next few years, Proforma expanded around the United States and its first international location was opened in Canada in 1991. Throughout the 1990s and early 2000s, Proforma updated its services to meet its clients’ growing needs. These updates included launching a Proforma website as well as portal websites and eCommerce services.

15.  In 2001, Vera Muzillo, Greg Muzillo’s wife, joined the company. Less than a decade later, Vera Muzillo was appointed as the CEO of Proforma, while Greg Muzillo stepped down from day-to-day activities. Today, there are Proforma offices all across the United States and several in Canada.

Entrepreneur’s Franchise 500

16.  Proforma did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Proforma 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 Proforma’s 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:  666
• Outlets at the End of the Year:  641
• Net Change:  -25

2018

• Outlets at the Start of the Year:  641
• Outlets at the End of the Year:  638
• Net Change:  -3

2019

• Outlets at the Start of the Year:  638
• Outlets at the End of the Year:  627
• Net Change:  -11

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

• To help you evaluate this franchise opportunity, Proforma has compiled certain actual historic Gross Sales, Gross Profit, and Average Order Size information for the calendar year ending December 31, 2019.

• Proforma has compiled the information for each franchise classification based upon information Franchise Owners have reported through its system for the calendar year ending December 31, 2019.

• Some Franchise Owners have earned this amount. Your individual results may differ. There is no assurance that you will earn as much.

• Proforma has computed the average Gross Sales, Gross Profit, Gross Profit Percentage, and Average Order Size for each type of franchise based upon information it has collected in the ordinary course of business.

• Proforma compiled this information only from Franchise Owners whose franchised businesses were in operation for the entire year. During 2019, the time period of the financial performance representations made herein, there existed no company- or affiliate-owned outlets, and 627 total franchised outlets.

• Results from Franchise Owners who either began (20) or terminated (31) their franchise relationship with Proforma during 2019 are not included in the financial performance representations provided herein.

• The Gross Profit information was derived by subtracting the reported Cost of Goods Sold from the reported Gross Sales. From their Gross Profits, Franchise Owners pay Proforma’s fees and pay all the business, wage, and debt service expenses associated with running their businesses, including any taxes.

• Franchise Owners are classified as Start-Up or RIE. A Start-Up Franchise Owner is a Franchise Owner entering Proforma’s franchise system without Relevant Industry Experience. A RIE Franchise Owner is a Franchise Owner entering Proforma’s franchise system with Relevant Industry Experience. RIE includes both Relevant Industry Experience and Conversion franchises.

Part 1 – Franchises with Gross Sales Greater Than $400,000 (247 Owners Representing 42% of the Franchised Businesses Reported in Item 19)

• In calendar year 2019, 247 Franchise Owners in the survey had sales greater than $400,000. These 247 Franchise Owners include 220 RIE Franchise Owners and 27 Start-Up Franchise Owners. This group represents 42% of the total number of Franchise Owners that were in operation for the entire calendar year of 2019 and reported in Item 19.

• The reported information does not include the results of 31 Franchise Owners whose affiliation with Proforma terminated during 2019, including 3 Start-Up Franchise Owners and 28 RIE Franchise Owners.

• The reported information does not include the results of 20 Franchise Owners whose affiliation with Proforma began during 2019, including 0 Start-Up Franchise Owners and 20 RIE Franchise Owners.

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