Case Study: Franchise Strategic Planning

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As one of the world's largest graphic communications franchises, Allegra Network LLC enjoys an enviable vantage point for spotting trends and opportunities in the print industry. "Our job at headquarters is to provide our franchise members with tools, processes, and outsourced services that increase their profits," says Tim Wood, vice president of technology for Allegra Network.

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Founded in 1976 in Michigan, Allegra Network LLC has grown to support more than 600 locations in the United States, Canada, and Japan, and its sales rank in the top 200 among all franchises of any industry worldwide. The franchise includes six leading brands in its printing division—Allegra Print & Imaging, American Speedy Printing, Instant Copy, Insty-Prints, Speedy Printing, and Zippy Print—as well as the Signs Now brand in its signs division. Locations offer full-color printing, graphic design services and electronic publishing, digital color copying, high-speed copying, and online file transfer.

What sets Allegra Network apart is the company's extraordinary commitment to franchise training, technology implementation, and store profitability. Franchisees are attracted by the company's Profit Mastery Program, which includes advanced training; an annual benchmarking study for profitability called the Operating Ratio Study; and Performance Groups of about six franchise owners who act like a board of directors, advising each other on business directions and technology adoption.

But these important programs and commitments didn’t just happen. To counteract slowing growth in the print industry, Allegra headquarters aggressively began developing new services and more efficient processes to give its print franchises a competitive edge. One strategy was helping franchises offer more diverse services, both to differentiate themselves and to gain new sources of revenue. "We want to transform print craftsmen into effective marketers as well," says Wood.

To this end, Allegra headquarters began providing outsourced services that its franchises can offer to their customers. One is a web-based service that customers can use to order variable pieces such as business cards, letterhead, forms, brochures, and pocket folders. Headquarters uses software from Printable Technologies to create web-based design templates that can be customized online. Once customers have entered their data, the server instantly generates an Adobe Portable Document Format (PDF) file that they can proof and then submit online for printing. Allegra Network centers perform imposition in-house, and then deliver or ship the finished product to the customer.

"The advantage of online job submission is that the customer actually assists in the production process," says Wood. This workflow has at least three advantages: Allegra saves many hours by not having to type in the variable information, customers receive immediate proofs instead of having to wait based on the workload at the print center, and the print centers have nearly eliminated errors for these repetitive pieces. "Our previous error rate was 2 per 100 jobs," Wood says. "Use of Adobe PDF has reduced that by 98%, to 4 per 1,000 jobs." Practically eliminating reruns has enabled Allegra headquarters to offer the web-based job submission service to its stores for about 10% of the setup costs and 20% of the monthly fee of another leading e-commerce print provider.

QUESTIONS:

1. What inputs did Allegra management use to formulate their strategic plan?

The strategic plan Allegra Network was to deliver the best trained managers and franchise owners as well as providing the most efficient printing services to their customers. They achieved their stratecgic goal by implementing a world class franchise training program and through groundbreaking improvements in technology. Franchisees are attracted by the company's Profit Mastery Program, which includes advanced training and the introduction of Performance Group, consisting of six franchise owners who act like a board of directors, advising each other on business directions, technology adoption, and local marketing techniques. The introduction of the Adobe Portable Format file revolutionized the printing industry, greatly reducing inefficiencies (reprints) while also reducing input costs by having the client assist in many aspects of the production process.

2. What led Allegra to focus more closely on its franchisee support model?

What led Allegra to focus closely on franchisee support, was the fact that the printing industry was experiencing a period of extremely slow growth. Allegra realized that for their franchisees to be successful, they needed to differentiate themselves from competitors by expanding their service offerings to gain new sources of revenue. In addition to enhanced product offerings, the company’s emphasis on training and technology allowed them to provide a better product, a more enhanced and hands on experience for the customer, while yielding higher profits to Allegra due to lower inefficiencies.

3. What elements did Allegra create in franchise support that became a key component of the franchise sales model?

The main pillars that were created by Allegra for their franchise sales model were the creation of the Profit Mastery Program, the implementation of the Operation Ratio Study, and the Performance Group that acted like a Board of Directors. The technological element that was implemented by Allegra was the introduction of the Adobe PDF format used by its customers.

4. What other benefits do the franchisees receive from the Allegra focus on support?

They have access to enhanced services through third party relationships created by Allegra. Access to industry leading technology at all times. Allegra’s focus on training ensures that franchisees are well managed and provide the same high quality products and services consistently throughout the company.