How to Achieve Success Through Franchising

January 4, 2014 | By | Reply More

(Editor’s Note: This article is based on an interview with Michael Reagan, former President of FastSigns on Central in Phoenix, Arizona after he won the 2000 Arizona Small Business Person of the Year Award from the Small Business Administration).

Fast Signs Franchising

There is no bottled formula for success, but there are several steps that you can take to ensure your business will thrive and flourish. One of them is the application of logic in your entrepreneurial venture. Michael Reagan, President of FastSigns on Central in Phoenix, pursued his entrepreneurial dreams only after a careful and thorough analysis of his business prospects. Like any other business, every step of the way was a calculated risk, but Reagan made sure that he had the knowledge, expertise and skills needed to manage and run his chosen business.

In 1991, Michael Reagan left an impressive career in sales and marketing behind in Chicago to start a new life as an entrepreneur in the sign business. “It was going to be a clear change,” he said. The big change included the move to Phoenix and starting a sign business. Never mind that he had never been in the sign business or that Phoenix was in an economic slump and it already had the largest number of sign companies per capita of any other major metropolitan area. “Because from my research, Phoenix is going to experience rapid growth,” he said.

>> RELATED: Directory of Home-Based Franchises

Michael joined the FASTSIGNS franchise network, which is the largest single source of quality signs and graphics today. His franchise, called FastSigns on Central, offers mostly promotional graphics signs for companies of all sizes, including lighted arena advertising signs right down to banners and point-of-purchase displays. He has since taken his company past the million-dollar mark.

Why Franchising?

Franchising is a business concept that has worked since the dawn of the nineteenth century. It is a simple way of becoming an entrepreneur with a built-in market and proven product. Thus, purchasing a franchise is a perfect opportunity for small business ownership for those with little or no business experience. “With a franchise, you are cloning an already successful business model,” Michael explains. “If you operate your location the way the other successful ones are operated, then there is every reason to expect the same success.” FASTSIGNS is a proven franchise with hundreds of successful stores worldwide.

An advantage of a franchise is the presence of a support system, which already exists from the very beginning. “A lot of the work has already been done for you. A lot of the things that you don’t have the skills to do yourself are done. For example, advertising programs, marketing programs, brochures, catalogs, the setting up of relationship with vendors and suppliers — all are done for you. All of the considerations for lay-outing of the facility — what is the most attractive for consumers and all of that research has been done for you.”

FASTSIGNS even provide store opening support, where the field support representative will be present to ensure a smooth opening. In addition, it provides a Grand Opening Marketing Program, which makes available to its franchisees ad slicks, direct mail, point-of-purchase, and public relations materials to give your grand opening campaign maximum impact.

“So your risk of failure is much, much lower than someone who tries to start something on his own as an independent. You have much more credibility, much more name recognition; there are so many benefits that they greatly reduce the start-up risks of trying to do everything on your own,” he added. Another benefit of franchising is the relative ease in securing financing relative to a non-franchise business.

Each individual FASTSIGNS store is unique, but it will include concepts and features which have been tested and proven throughout the FASTSIGNS network. As Michael explains, the difference with FASTSIGNS is that “it is not like the franchise that we have to buy everything. We’re totally independent. We do our own decisions. We do our own buying from whoever we want to. We market our own prices. We can market it anywhere we want to. We decide what to sell and manufacture and what not to sell and manufacture.”

Unlike independent business owners, however, franchisees need to pay royalty fees to the franchiser. Reagan contends that a good franchiser nonetheless allows you to save money in other areas that offset the royalty. “For example, we buy raw materials from national manufacturers, with prices that have already been negotiated for us and it’s below what my independent competitors pay.”

Franchising His Way to Success

After completing a month of intensive sign making training, Michael’s business – FastSigns on Central – opened on July 1, 1991, in a strip shopping center in Phoenix. He financed his business from his own savings and equity of the house that he sold back in Chicago. FASTSIGNS presently require minimum cash or liquid capital of $75,000 or $200,000 minimum net worth.

In 1992 – a year after opening FastSigns on Central – company revenues were $296,000. Three years later, they more than doubled to $687,000. In 1998, Michael’s firm recorded more than $1.3 million in revenue, an unbelievable feat considering the national average for a FastSigns franchise is $32,000 a month. FastSigns on Central was 2nd for western region sales among FASTSIGNS network and 5th nationally. In the previous year, the company ranked No. 1 in the region and No. 2 internationally.

Keys to success have been the willingness to accept risks. Michael purchased new computer graphic technology and was one of the first printers in Phoenix to install a large format color printer. He’s also made a significant investment in staff training to stay at the cutting.

Today, FastSigns on Central is housed in a two-story building that was completely remodeled in 1995 as part of its third expansion. The 6,500 square-foot facility was expressly designed to maximize the productivity of the employees as well as provide room for future expansion. It’s become the model for the rest of the FASTSIGNS system and is regularly visited by owners of sign companies worldwide.

His greatest accomplishment? “I believe that when you are recognized by your peers as being one of the best companies in its category, then that’s the highest accomplishment that you can achieve.”

Challenges in Growing a Business

Michael identified three biggest challenges that entrepreneurs face when starting and operating their own businesses.

His biggest challenge was keeping separate his personal goals in life from the business. He contends that the first mistake entrepreneurs make is not separating their business from personal ambitions in life, and “it’s very dangerous.”

He reasons that:

“When people go into business for themselves, they mix their business goals with personal goals. It is important to remember that your business has only one goal: to develop and retain customers. If you don’t attract and retain customers, you go out of business. You can’t grow; you can’t do anything.”

His personal goals, on the other hand, include “early retirement, job satisfaction, career security, independence, and to be my own boss. Those are my personal goals; but not the goals of my business.”

The second challenge for entrepreneurs is to learn to work ON your business but not IN your business. “I do not work in my business making signs; I hire people to make signs,” he explained. “I work on my business by being on the outside spending as much time as possible with customers and potential customers. Just being with people who just have an opportunity to buy.”

He contends that most entrepreneurs make the mistake in operating a business from a technical or operation standpoint “when they really should be hiring people to do that.” For Michael, the role of the entrepreneur should be working with the customers, doing marketing, advertising, public relations, meeting with venture capitalists and banks to raise money ¡V whatever needs to be done to keep the business going forward.

The third challenge for business owners is to understand employees are vital. For Michael, it is essential that you “treat employees as your customers; because if you treat them as your best customers, then they will treat your customers extremely well. If you treat your employees very poorly, then they will treat the customers of the company just as poorly.”

Michael’s staffs are treated as business partners and company resources are focused to create a highly motivating environment with compensation well above the local pay scale. One time when the group exceeded $200,000 in monthly sales for the first time, the payoff was an all-expense paid trip to Las Vegas for everyone in the firm.

When Michael started his business with two employees, the franchiser thought Michael made a mistake paying premium salaries to his new staff at a time when the business was just getting off the ground. But with satisfied customers as a goal, Michael believed he was right. Within three months, FastSigns on Central had five employees. Today, FastSigns on Central has 13 employees – excluding his wife and daughter who both works for him.

Advice to Entrepreneurs

His advice to would-be entrepreneurs? “You have to be a leader. You have to have natural leadership skills. Otherwise, you cannot lead the employees that you will need to be dependent upon to run your business.” According to him, while some business owners know something about their product or service area, they lack all the other business skills needed to run a successful business. Some are not good leaders or managers; yet they don’t want to pay to get the right people.

He also stressed the importance of discipline – lots of it! He cites lack of discipline as a main factor in why businesses fail. People fail because they are not committed to the level that they really need to be.

“When you’re a business owner, especially if it is a new business, you work extremely hard. You work 7 days a week. Your lifestyle goes out the window; your lifestyle gets worse, not better.”

He also stressed the importance of a business plan, even if you are buying a franchise. Business owners need to have a plan to start with, and “you follow that plan instead of ‘flying by the seat of your pants as they say.”

What is his advice in looking for a franchise opportunity? He points out four things that every start-up entrepreneur must look for in a franchiser:

  • It must be rock solid with a well-documented track record of growth and success;
  • One that is a going to be expanding for many years in the future;
  • Offers a product or service that is unique and is not a fad, such as yogurt shops, which were a rage back in the 70s and has since saw a decline in demand.
  • Avoid products that can be bought anywhere and be sold by everybody else, such as cellular phones.


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Isabel Isidro

Isabel Isidro is the co-founder of A mom of three boys, avid vintage postcard collector, frustrated scrapbooker, she also manages Women Home Business, Starting Up Tips and Learning from Big Boys. Connect with her in Google +.

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