Rise of The Titans

Chains and franchises are aggressively pursuing print volume, intensifying competition in the small commercial sector. These mammoth players' offerings of fast turnaround, small-format print products is quietly shaking up the quick print market, consuming market share and posing a significant threat to smaller, independent operations.

Quick print chains, such as FedEx Kinko's, OfficeMax and Staples, account for more than 4,500 print facilities not counted as print operations by the federal government because they are ancillary services to these firm's core business. These parent-owned organizations are advising shareholders in SEC filings of their intent to gain print market share. Plus, many chains have reported big expansion plans.

FedEx Kinko's plans to add 300 print and ship centers in 2008; 226 were opened in the most recent fiscal year. In total, it operates 1,500 print facilities and 40 centralized print centers serving the commercial print market. Earlier this year, FedEx Kinko's added direct mail services and print online to its document solutions for small and mid-size businesses. The print unit of FedEx posted annual sales of $2.04 billion, down 2% over the prior year. www.fedexkinkos.com

Similarly, franchise outlets (Allegra Network, Sir Speedy, Kwik Kopy, AlphaGraphics) number over 2,000 and are multiplying. According to the International Franchise Assn., print franchises grew 27% from 2003 to 2005. Print franchises, where the shop's owner licenses the business models and trademarks from the franchise for a fee, have been merging under parent organizations, maintaining a franchise's individual brand but gaining strength in support services from a larger organization. For example, Franchise Services, with nearly $600 million in network revenues, owns franchises Sir Speedy, PIP Printing & Document Services and MultiCopy, and counts 1,000 locations in 26 countries.

Chains have been busy re-branding services, adding locations and upgrading operations. Staples, which operates 1,884 superstores that offer some type of pay-for-print service, plans to expand its Copy & Print centers launched last year—a re-branding of its print services. The centers offer digital color copying and printing of customized letterheads, envelopes and business cards, along with lamination, various binding capabilities and shipping services. Additional offerings include wide-format printing of photos, posters, signs and banners. Print can be ordered online at www.staples.com for output at any store location.

The company recently launched design services and is targeting corporate accounts. Three facilities are dedicated to serving the print needs of the corporate market, and plans call for several more of these sites to open this year.

“The multi-billion dollar copy and print market is highly fragmented, and we believe we have a significant opportunity to gain share,” says Staples in its most recent annual report. “Over the past three years, we have upgraded the technology, signage, labor, training and quality processes in our copy and print centers across the chain. More recently we invested in marketing and pricing offers to drive customer awareness of our capabilities. These efforts have resulted in increased sales and average order size as well as improved gross margins as our copy and print business has much higher than average margins.”

Earlier this year, OfficeMax unveiled ImPress, its new identity for print and document services operations inside its retail stores. The company signed a three-year deal with Xerox to rollout nearly 3,000 printers and multifunction systems to 900 retail stores nationwide. www.officemax.com/impress

Franchises, too, are focused on building a larger footprint. Efforts focus mainly on incorporating independent print shops.

Franchise Services is aggressively converting independent shops to Sir Speedy and PIP franchises and reports its efforts are succeeding. A program is also in place to support owners' growth through acquisition. The franchise assists its owners in targeting businesses in their local market either to purchase or buy sales volume. Additional support services include a print research and development facility and an advertising and marketing company.

Franchise Services also operates franchise TeamLogic IT and, in January, launched franchise inkTone, Inc. www.franserv.com

Allegra Network, Northville, MI—whose brands include Allegra Print & Imaging, American Speedy Printing, Insty-Prints, Instant Copy, Zippy Print and Signs Now—launched a Matchmaker Program to convert existing independent businesses to franchises. The company reports it has 30 signed franchise deals with individuals looking to purchase an existing business. Next year, the franchise plans to convert 60 independent firms. The company also assists its owners in making acquisitions. Twenty percent of Allegra franchises offer offset printing.

The company reports 600 locations across North America and system-wide sales of about $400 million. In the next three years, plans call for sales to reach $600 million through conversion and organic growth.

The firm has grown steadily through acquisition. It acquired 24 Quick Print and Instant Copy centers from XYAN, the Insty-Prints franchise and the Signs Now franchise. The sign market is a big growth area for the company, says Allegra Network CEO Carl Gerhardt. According to him, it is growing 10% annually, and sales at Signs Now franchises are up 14%. www.allegranetwork.com

ICED (The International Center for Entrepreneurial Development), Cypress, TX, owns franchises American Wholesale Thermographers, Franklin's Printing, The Ink Well, Kwik Kopy Printing and Kwik Copy Business Centers (a combination of Kwik Kopy and ICED's pack-and-ship franchise Parcel Plus). The company has 584 locations and system-wide sales of $335 million. www.iced.net

AlphaGraphics, Salt Lake City, reports network sales in 2006 reached record highs, with average center sales of $1.081 million. The company (owned by British print giant Pindar, which also owns premedia provider Pindar Graphics, Chicago) reports a 100% success rate in renewing franchise agreements expiring in 2006. Other highlights of the year: online sales grew by 77%; 11 digital business centers opened; and five independent printers converted to or are in the process of converting to AlphaGraphics franchises.

Going forward, the franchise will offer its owners personalized cross-media, data-driven campaign services. Recruiting also joins the company's list of support services. www.alphagraphics.com

Denver-based print franchise PostNet, with system-wide revenue of $200 million and 500 domestic and 400 international franchise locations, plans to bring its franchise total to 1,500, adding 50 facilities by year's end. www.postnet.com

CPrint (Certified Printers International), recently launched by well-known consultant Tom Crouser, targets printing firms with four to 20 workers and less than $2 million in sales. More than 100 North American companies belong to the franchise. www.cprint.org