Fit To Print

In the struggle for survival in the printing industry, ProForma stays alive by diversifying.
3 min read
Opinions expressed by Entrepreneur contributors are their own.

It's hard to get excited about business forms. I'm sure there are people who feel a rush of adrenaline when deciding that salmon will be the color of choice for the third page of a multipart form or exactly how small the fine print should be, but my personal opinion is most of us could live without this type of challenge. It's also hard to get excited about where the preprinted-forms industry is headed in light of the publishing capabilities lurking inside everyone's desktop computers. E-commerce is ready to cut into this multibillion-dollar industry by providing service that eliminates the need for paper trails. So why in the world is a company like ProForma growing like wildfire, adding 150 franchisees in 1999?

Mass consolidation in the industry tells part of the story, as the days of small-time, independent printers are surely numbered. In addition, the large commercial printing jobs that success demands "are very scary, because so many things can go wrong," says Teresa Perkins, a ProForma franchisee in Dallas. And independents rarely have the creditworthiness to advance the cost of such large jobs.

But ProForma has stumbled across a new market: business owners who love to see their companies' names emblazoned on cups, pens, T-shirts, etc. Pro- Forma franchisees are gravitating toward this specialty-advertising segment as the margins and demand for promotional products are allegedly better than those for, say, printing a batch of business cards.

Founded in 1978, ProForma began expanding through franchising in 1986. Franchise support services include customer billing and collections, accounts payable, direct marketing and telemarketing programs, information systems (e-commerce, sales management software, Internet/intranet strategy, etc.), sales and product training, and joint marketing programs with preferred vendors. ProForma franchise owners also enjoy a plethora of business management, product sourcing/group buying, marketing and sales services provided by ProForma. Apparently these synergies are attractive to those familiar with the industry, as more than 125 ProForma franchisees are former independent printing business owners who joined the ProForma network to maximize sales and earning potential, and develop business succession plans.

ProForma brings clout and credibility to its franchisees, who typically work from home. For example, the company aids existing franchisees in acquiring other independent printers through a mergers and acquisition program that complements a $25 million working-capital package to fund ongoing franchise expansion. That program recently replaced a $6 million package under which ProForma grew from 246 franchises to nearly 500, and from $60 million in 1997 sales to projected systemwide sales of $175 million in 2000. ProForma also negotiates volume deals with preferred vendors so franchisees have the advantage of favorable pricing based on the aforementioned sales volume.

According to John Campbell, ProForma's chief franchise officer, the ideally suited franchise candidate is a sales and marketing professional with a minimum net worth of $100,000. The initial franchise fee depends on whether you're brand new to the business ($9,500), have worked in the industry ($4,500) or are converting your existing printing business ($0, but only if you're getting $300,000 in annual sales). Accordingly, the total initial investment, as disclosed in Item 7 of the UFOC, ranges from $5,415 to $27,020, but be forewarned: That estimate doesn't include any income for you during the business start-up phase, which can last for 12 months or more if you're new to the industry.

Todd D. Maddocks is a franchise attorney and small-business consultant who is presently the CEO of The Worldlink Group LLC.

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