The Opening of this Show
Make The Old New
I'm Hattie Bryant and this is Small Business School. If you want to understand
how business works from the inside out, stay with us for the next 30
Need a sign
and need it fast? Here's a business owner who spotted a trend, and jumped on
it. And this is a company that's helping others to open their own
In 1985, Gary
Salomon, founder of FASTSIGNS, saw something similar to what you're seeing now:
a computerized system for producing high-quality signs in hours instead of
(FASTSIGNS): There's probably about $5 1/2 billion worth of revenue on an
annual basis in the sign industry--at least that's what the trade associations
tell us. The niche that we go after are the more temporary signs, and--you
know, everything from banners to vehicle graphics.
We do a lot of the stuff that the big sign companies would consider, many years
ago, a bother.
Man #1: OK. Much easier to work in small pieces like that.
(Voiceover) After the sign is designed on the computer, a high-speed plotter
cuts the graphic from adhesive-backed vinyl. The excess vinyl is removed,
leaving behind a message, which is then transferred to a sign
Man #2: We take this lift tape, and we tape everything together, and this is
how we ensure that we get a nice, straight tape line. OK, then once we pull it
off, all the letters are nice and straight, and they're flat. None of them
moved anywhere, and that's why we use the tape, to keep them all straight. And
(Voiceover) Anything from acrylic to aluminum to window to vehicles, all in a
matter of minutes.
only did we create a niche that really wasn't being serviced properly, but no
one cared about it, either.
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Put Systems In Place
(Voiceover) Today there are nearly 500 franchise locations worldwide. The
typical FASTSIGNS is located in a strip shopping center much like this one in
Arlington, Texas, owned by Myra and Dan Phillips.
surprised you about owning a business?
(Owner, FASTSIGNS Franchise): How much work there is. How dedicated you have to
be and how much fun it is, actually. You get to know a lot of people, you get
to be creative, you just get to do a lot of things.
you have a lot of repeat customers?
MYRA: Yes, we
do. We do have a good mix of a lot of repeat, and at the same time we always
have the percentage that we should have of new customers all the time, which is
understandable. This area has a lot of growth. So I think we're going to have a
lot of new customers.
me how you find people.
MYRA: Well, I
had a banner up there, and he walked in. And I think I hired him the same day,
didn't I, Will?
it a good idea? You glad?
WILL: I think
it was a good idea, because I enjoy working here.
you put the banner up--`Now Hiring'--that you have up now.
MYRA: Yes. It
that's how you got Will.
MYRA: It has
worked pretty good, better sometimes than spending a lot of money in newspaper
ads, which I have done before. And it has not worked out well, as the banner.
what you're saying is, you sell signs and you use signs to build your
build my business. Exactly. And that's what I tell my customers,
(Consultant): They're a part of the community. They establish relationships
with their customers and thank them, and they keep coming back.
(Voiceover) Mike Mackey works for FASTSIGNS as a consultant to a small group of
it: To some degree, signs can be something of a commodity, but the people here
in Arlington, Texas, enjoy doing business with Myra Phillips.
you ran for school board, huh?
(Owner, FASTSIGNS Franchise): Mm-hmm.
you had a meeting yet?
yeah. That was last May. I've been on it almost a year now.
OK. All right. How important were these signs to your election?
were important because a lot of people knew my name, but a lot of people didn't
know who I was. In other words, a lot of people already knew me by seeing me
and a lot of people probably knew my name, but they didn't put the two
together. By putting this up, people knew who I was, and put my name in with my
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Create A New Breed Of
tell me about the first time you put the FASTSIGNs plan in writing.
it was over breakfast on a napkin, and Steve Mailman and Bob Schanbaum and I
sat down and talked about exactly what we were going to do and how we were
going to do it, and that if it worked out, we'd franchise. So, you know, that
napkin was filled up.
really sold a franchise to someone that had been in the sign business before.
We were selling franchises to people that had been professional managers and
marketers and salespeople, and said, `Now this technology will help you compete
in an industry that you probably didn't know anything about before.' We
operated a very lean, mean, effective franchise machine. We didn't have the
money to lose, so we made darn sure that we didn't, and there was quite a
number of years where I didn't take any money out of the business, which was
fine, because I had a previous business that I sold off that I was able to live
the two of you--the two partners, just scrape together some cash to lease your
first retail space and buy equipment? I mean, how did you get the cash
GARY: We used
our personal funds and also got a loan from a bank, not a big loan, but got a
loan from a bank in order to set up the first store, and that's pretty much how
we did it. It wasn't a lot of money. I mean, we put together, I think, about
you got the first store up and running for that, but did you also keep your
other job going? Is that what you said, in that first 10 months?
GARY: Yes, I
right. So again, when people start businesses, it's not magic. I mean, it's not
like, instant. It's not like...
there's no silver bullet, there's no question about that. I mean, you're a jack
of all trades, you're juggling. It's like herding cats. I mean, you are--when
you don't have systems, when you don't have a franchise program to get into
where all the job descriptions and all the definitions of what you're supposed
to be doing are nailed down, you're learning on the go, and it's very
inefficient, and it's very frustrating, but it also gives you the opportunity
to truly learn hands-on.
One of the best experiences I can tell you about is we had a
store that I was a partner in. This was after we started franchising. The store
was not getting off the properly and I went up to allow the owner to get out of
the store and I did all the telemarketing appointments. An individual walked in
at the time and wanted to know where to get some gold medallions for the back
of an envelope. He obviously wasn't interested in a sign. Anyway in the process
he said, "I own an ad agency and last year we lost a large account because the
sign company couldn't deliver on time and that was a tennis tournament."
Obviously I was sorry he lost the account and I showed him
which direction he needed to go to get those gold medallions. And I went back
to the telephone and started calling every single country club and tennis club
in town to find out when is its tennis tournament that this guy obviously lost
last year. I came to find out it was the Virginia Slims Legends and we nailed
New franchisees attend
extensive training programs. I asked some of them, `Why FASTSIGNS?'
Woman #1: We chose FASTSIGNS because it was business to business, so it suited
our lifestyle, and it was one of the best performing sign companies in the
world. And we came over to America to observe the sign industry as you do it in
America, and decided that that was a good sort of business for us to go
Man #3: Well, I decided it was time to take control of my own destiny, and I
have a friend that's had a FASTSIGNS business for about seven years. He's done
extremely well. And he's been working on me for a long time, so here I
were you doing just before you decided to buy the business?
Man #4: Before getting into this business, I was a commercial banker for about
you saw a lot of good business numbers and bad business numbers.
That's exactly right. We saw the companies that succeeded, the ones that
failed. We looked at the reasons why they succeeded and failed, and when I
compared that background, when I developed into the FASTSIGNS operation and the
people, I clearly saw a winner.
GARY: Sometimes we have had situations where franchisees who
were interested in buying the business had more enthusiasm for it than they had
probably the background or the capability to do it and we've had to turn them
We had an individual who came to us a number of years ago that
was an engineer and engineers are typically not great sales and marketers.
They're usually very wonderful at detail work and they're very good at follow
through and they're good at following a system. But our business also requires
someone who is good at sales and marketing. But this was an engineer that was
frustrated with being an engineer and he had a wonderful personality. You could
tell he was stuck in this engineer box and he was screaming to get out. He
turned out to have a very successful business. We've also had some CPAs come on
board that also fit the same characteristics. They didn't like being a CPA and
they wanted to go out and have a business of their own and they had the
willingness to go out and do some stuff that quite frankly they hadn't done
before. But they had the energy and they had the commitment.
HATTIE: You even have a new franchisee in your training right
now who was a banker.
GARY: I know. I don't know how we managed that. He must have
slipped through the cracks.
HATTIE: A banker!
GARY: I hope he had a real easy time getting his
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(Voiceover) Franchising is responsible for 50 percent of
retail sales--almost $1 trillion.
GARY: On this
entire end of the facility, you've got everything from operations...
(Voiceover) Don DeBolt is the president of the International Franchise
Association. He came in from Washington to see FASTSIGN in action.
(President, International Franchise Association): The International Franchise
Association is the world's oldest association representing the franchising
community, and what's unique about it, we represent the franchisors, the
franchisees and the suppliers. And we all come together with a unified voice to
speak on behalf of franchising whenever there's a regulatory or a legislative
issue, or any other issue that affects the franchising community. We're there
all the the FASTSIGNS people, are members of IFA. What is their greatest
benefit? Why do people join the IFA?
DON DeBOLT: I
think Gary would say networking is one of the major things that he gains from
IFA; the networking with other franchisors to learn how to operate our business
better. This was a very young company. Just 13 years ago it started to
franchise. So, I mean, it's been pretty exciting for them, and where did they
go? They went to other people in franchising they hooked up with through the
International Franchising Association to learn how to do it better.
are franchisees so successful?
First of all, they're in business for themselves, but not by themselves. They
have their franchisors, their peer group of franchisees to help them along the
path. All of the obstacles that any small business faces are still going to be
faced by the franchisee, but they're going to have a lot of support and help.
When you acquire a franchise, you acquire a recognized trademark or brand name,
a proved operating system that's perfected year after year. And, of course, the
marketing and advertising support that makes that brand more recognized in the
marketplace. But most important, continued training and support by the
franchisor and the other franchisees in the system.
right. So the odds are greater that a franchisee will succeed over a
DON DeBOLT: I
think just look at the record. There are over 500,000 franchisees in this
country today who figured out it was better to open up under a brand name that
was recognized in the marketplace than Joe's Hamburger Stand.
right. How many franchise concepts do we have to choose from?
Well, there's a varying number, from 2,000 to 3,000 franchise concepts out
there that you can select from. We know there are at least 2,000 very serious
concepts that are major players in the franchise field today. So you have a lot
of choice, and most importantly, 70--70 different industries.
have you learned about the ones that do it right?
The ones that do it right are in partnership with their franchisees. FASTSIGNS
is a terrific example of that. They have over 400 franchise--and this is after
10 years of franchising--they have 400 franchisees out there. My suspicion is,
if you went to the annual convention of the FASTSIGNS operation, you'd see a
bunch of happy people that are really bonding and very proud of the affiliation
they have with this company, and I think if you'd go to many other franchise
conventions, you'd experience the same uplifting, rewarding--and see a lot of
GARY: I had
been operating as a franchisee of another system, of a direct mail dealership.
So I had some idea as to when a franchise is run properly, what you get and
when it's not, what the frustrations are of a franchisee. So I brought that to
the biggest `ah-hah,' for lack of a better term, was when I went to meet other
franchisors at some seminars, one of them that was put on by the IFA and
another one that was just a separate--I guess an offshoot for doing
franchising. And I sat down and bought a couple of beers for some fairly
well-established franchisors--one of whom was Tony Martino of AAMCO, and
then--now MAACO; another one was Fred DeLuca, of Subway Sandwiches--and just
asked them a whole bunch of questions. And you can't just take whatever these
individuals say as that's the way you have to go. You have to assimilate it,
and you have to extrapolate what works for your particular concept, and also
how you want to create the culture of your own business. And I picked up some
pearls that have definitely helped form the way this business is run
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Buy An Unexploited Idea
in the Studio
don't have to invent a product to own it. Gary saw the technology. By striking
a deal with the inventor, he learned how to use it, and, with vision and sweat
equity, he became a leader in his market. You don't have to be the inventor to
be the owner.
Business School.org there are plenty of resources about franchising. Follow
links from the Overview and read the entire transcript and study guide for this
episode. Learn about five other franchise stories and even go to the Wall
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Stop Doing And Start
(Voiceover) The FASTSIGNS leadership meets every Monday morning.
STEVE: Just a
couple issues. This week we're working with Alternative Living. It's a company
that's been turned in by Chris Rose. They have 400 locations that they're doing
a name change with. They want them done rapidly.
has an idea, or a theory about why this particular group of people sitting
around this table gets--why do you get things done, why does this group work
Man #5: This team works well as a group because, like I said, a number of
people have had their own businesses here, and we enjoy also working in
the--getting entrepreneurs started in their own business.
Man #6: It's probably the fairest organization I've ever worked for.
do you mean by fair?
Man #6: Gary,
Don, everybody sitting at this table really takes the time to listen to all
sides of every story to make a decision.
Woman #2: I guess I'm here because--right now I'm here because Gary cares about
everyone who works here, as well as cares about the franchisees.
have to work through people a lot more than when you're running a smaller
operation. The typcial store in our system has anywhere from four to eight
people. The larger stores maybe have ten or twelve. You can keep your hands on
all that is going on, to a certain extent, in an environment like that. When
you have a staff of 75-80 you've got to work through people and you've got to
make the shift from being an entrepreneur to being more of an organized
business.That's a threshold that I had a great deal of difficulty coming
through many years ago.
did you get through it?
finally decided to stop meddling with what they were doing. In the beginning I
had to keep everything in my head and after awhile it became evident that while
that fed my ego it didn't allow the people that I had hired, put in place and
paid a decent wage to be able to be fulfilled by what they were doing. Because
you put people in place you have to let them do their job properly.
people we attracted over time the more I was looking for the areas that I was
not really the best at. I'm great at ideas, I'm great at marketing, I'm great
at sales. But when it comes to the day in and day out activities of management,
that's not my bailiwick.
GARY: I try
to keep things as simple as possible. Basically, I try to have people get the
feedback they need in order to be as productive as possible and I try to reward
accordingly. I think the bottom line is I don't have much of an ego. I'm not
really interested in as much being right as I am interested in having the best
result or the best solution, and if it's not my idea, I really don't care. I'd
rather it just be, you know, the best idea.
When you have
that attitude, people aren't afraid of giving you an opinion, because they know
they're not going to be shot down. And as a matter of fact, you know, while I
sometimes have some excellent ideas, I'm sometimes showed the door, in a manner
of speaking, as to how unreasonable that idea might be. But what it does is, is
it fosters the ongoing embracing of ideas coming from other people, because
they know that it's going to be considered, and that we mean it.
So, you know,
does that necessarily mean that you always get the right solution to a problem?
No. But at least people aren't afraid of offering it. And I think that, you
know, compensation is a part of keeping good, quality folks, but it's not
really the top item. It's creating an environment where people feel like they
can make a difference, and that they're being listened to.
I think one
of the most rewarding things in the world, if you're running a business, is to
know that you underpromised and overdelivered beyond their wildest
expectations. And that's pretty much the postulate by which we run the
FASTSIGNS franchise system. We want to surprise people. We want to make sure
that they understand that we could have done this, but we did that. And that
franchise agreements, or any agreement, whether it's by written agreement or by
handshake, are the basis by which you move forward, but what you do above and
beyond that is really how you build the relationship.
that transcendent to anything, any business, and that is promise this and give
GARY: I think
it's in any relationship, whether it's business where money changes hands, or
whether it's personal. I mean, if you exceed the expectations of the individual
that has some expectation, you're usually going to create a pretty darn good
relationship, and I think that with--in franchising, that's always the case.
(Voiceover) Gary's smilling because he's helping so many make their dreams come
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Look For Neglected
(Voiceover) Gary's just one of thousands involved in franchising. Blair Taylor,
who owns an Athlete's Foot store in Los Angeles, is committed both to
franchising and to urban development.
(Owner, Athlete's Foot Store, not far from Watts in LA): I came from a
background of sales and marketing. And when I wanted to make the transition
into entrepreneurship, there was no better vehicle than to utilize a franchise
concept, particularly one that was well-established and had a track record of
success, because that helped us to get off the ground very quickly, especially
when you're going into a new market like an urban market. The urban marketplace
has typically been a little underdeveloped. We saw that as an opportunity, and
we wanted to marry ourselves to a leading-edge franchise concept so that we
could get into that market with a name brand concept and have all the success
that's associated with that.
do you think so many folks are afraid to do business, or to come into--bring
their businesses into urban areas?
you know, I think there's a lot of misconceptions about the urban marketplace
on the part of major retailers and on the part of small-business people as
well. Sometimes I think there's a misconception that folks believe there's not
enough business to be had in the urban marketplace, which if you look at, for
example, the consumer of athletic footwear, a large percentage of athletic
footwear consumers and a large percentage of the dollars spent are coming from
individuals who live in communities like Compton.
what's happened, though, is that those individuals are going out of their
community to buy those goods and services, and so our concept was really to
bring those goods and services right back to the home location. And when you
get into the question of why do major corporations have some issues with urban
development, I think there's still a lot of stigmas attached, there's still a
lot of misunderstandings about what the urban marketplace is, and what it can
be. And I think one of the things that we have positioned ourselves to be is a
vehicle to help some of those companies really understand, `Hey, there is a
viable business opportunity here.' It is a wonderful growing community and with
the right model and approach to store development, there's some great things
that can happen in those partnerships.
Does this store make money for you guys?
Absolutely. This is probably going to turn out to be our most profitable store,
and it already is well en route, even after six months, to being just
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Tap Into Experts
Dr. John Hayes
writes and speaks about franchising.
advice can you give someone when they're trying to figure out, `Should I buy a
JOHN HAYES: I
think the first thing they've got to think of is franchising is sort of a wheel
with a lot of spokes in it. You invest in that wheel from the very first day,
and you continue to reinvest in the wheel, in the spokes of the wheel, because
the more spokes there are and the sturdier the spokes, the faster the wheel
will spin and the faster the wheel spins, the more money you're going to make.
So you've got to, number one, be willing to invest in it from the outset.
There's going to be a franchise fee, there's going to be royalties, there's
going to be advertising fees. Accept that.
follow the system. You've got to be willing to follow somebody else's
prescribed operating system. They've already gone out and tested it, they've
done it, they've proven it, it works, just follow it.
make a commitment to being trained and retrained and retrained, not only for
yourself but for the people who work in the franchise with you, because there
are always new products, there are always new technologies, there are new
problems with customers and with employees, and you've got to be trained on
those concepts, and the franchisor will do that for you.
(Voiceover) Learn more from John at hayesworldwide.com.
the Studio) For more information on franchising, visit the International
Franchising Association's Web site, franchise.org.
can all business owners learn from Gary even if you don't want to franchise
your business? We can learn that by putting teachable systems in place we will
no longer be a slave to our business. FASTSIGNS has also embraced technology
and they have moved their best business practices to the Web. They're making
sign and graphic solutions simple to create and order from your desktop. And
remember, you don't have to invent a product to own it. We'll see you next
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The Closing of the Show
We invite your
comments, suggestions and
the other pages of this episode of the show:
Overview / Profile,