Members of Allegra Network LLC’s leadership team, the leading franchise network of nearly 500 marketing, print and sign companies, have reached an agreement to invest in an entity that will purchase the assets of Signs By Tomorrow, Inc., a 162-unit network of firms providing indoor and outdoor signage, exhibit displays, vehicle wraps and other large-scale graphics. The transaction is expected to close by the end of February. The new entity will continue to do business as Signs By Tomorrow.
Investors from Allegra Network include Mike Marcantonio, majority investor, President and CEO, along with other members of the company’s leadership team. Signs By Tomorrow Chairman Joe McGuinness, President Ray Palmer and Vice President of Operations Andrew Akers also will be investors in the new company. Non-management stockholders George and Judith Coolidge and Gina McGuinness have elected to redeem their stock and will not have an interest in the new company. During the course of the next three years, Joe McGuinness will sell his interest as he moves into retirement.
Allegra Network LLC, founded in 1976, has nearly 500 locations in the United States, Canada and the United Kingdom. Its existing network of 180+ sign and large-scale graphics companies operate under the Signs Now brand. Its network of 300+ franchisees providing marketing and printing services operate primarily under the Allegra, Insty-Prints and American Speedy Printing Centers brands. The company is headquartered in Plymouth, Mich., and reports nearly $300 million in system-wide sales, ranking among the Top 200 global franchises.
Signs By Tomorrow, Inc., located in Columbia, Md., was founded in 1986 by Joe McGuinness, a marketing executive for a major retailer. Today, the company includes 162 franchisees operating in 36 states with system-wide sales approaching $70 million.
According to Marcantonio, “Our investment will provide Joe McGuinness a well-deserved exit strategy over the next three years and represents a sound investment in a business with which we are very familiar. While Signs By Tomorrow and Signs Now will remain separate companies, we expect that over time both of our organizations and all franchise members will benefit from this alliance.”
Joe McGuinness comments, “This is a watershed moment for our company in terms of securing a strong succession strategy and added value for our franchise members. As the founder of this organization, I took great care in handpicking a successor in Ray Palmer and financial partners in the members of Allegra Network that would take care of our franchise members with the same care that we have. I plan to remain invested and active for the next three years to ensure a smooth transition. Allegra Network brings financial strength, leadership, and resources to help our organization continue to grow and keep pace with the rapid changes occurring in the graphic communications world. We are extremely pleased to call this group of investors our partners for the future. We share a deep commitment to providing our franchise members with the instrumental tools to enhance and grow their businesses.”
The management team of Signs By Tomorrow, Inc. will remain intact and all operational support for franchise members will continue from its headquarters in Columbia, Md. Some administrative functions will be moved to Allegra Network offices in Plymouth, Mich.
Commentary by Cary Sherburne
Cary Sherburne, WhatTheyThink’s Senior Editor, had a few questions for Allegra’s Carl Gerhardt and Mike Marcantonio about this acquisition. Here’s what they had to say.
As the press release indicates, Signs By Tomorrow will be held as a separate company within the Allegra corporate structure. According to Marcantonio, this “builds a wall” that keeps sensitive information, such as marketing, field support, customer information, etc., confidential so that this information is not being accessed by both sign companies Allegra now owns. However, certain functions will be shared at the corporate level that do not violate the competitive situation.
Gerhardt pointed out that this will streamline costs, and also allow more leverage with vendors, adding, “This type of arrangement is not without precedent in our industry. Way back, when Sir Speedy (Franchise Services) acquired PIP, it was a similar situation. They had overlapping territories, but it worked out for them.”
Both Gerhardt and Marcantonio asserted that if the integrity and intent of the organization is proper, this type of arrangement does not betray the trust of existing franchisees. Gerhardt added, “Our intent is to make us into a stronger company that will be able to provide better support for all of its components.”
It is possible, according to Allegra, that these business might be integrated down the road, depending on overall market conditions and those in certain markets.
Marcantonio reports that reaction from Signs Now franchisees has been “pretty positive,” adding, “We have always operated under the philosophy that we put our franchisees first, and Joe McGuinness operates under that same philosophy. What he didn’t do when he approached retirement was auction the business off to the highest bidder. He wanted someone who could carry on serving members in the way in which they were accustomed, and he hand-picked us for that purpose. We are very pleased with the executive team he has put in place, including President Ray Palmer and VP of Operations Andrew Akers.”
Both franchises have similar equipment configurations and offerings. Average store sales for Signs Now are just shy of $400,000, while average store sales for Signs By Tomorrow are just over $400,000. Gerhardt adds, “Each claims to have its secret sauce, but there are a lot of similarities in the profiles.”
One of those similarities is the deployment of HP Latex inkjet products in both operations.
Allegra plans to augment Signs By Tomorrow capabilities with its marketing expertise that it also brings to the other members of its franchise network. The company has also recently made a six-figure investment in FranConnect, a CRM solution that is available to all of its members. In addition, in exchange for the royalties that franchisees pay, Allegra invests in programs and resources to give back to franchise members, giving them a competitive edge over independent printers who do not have access to that type of support.
Gerhardt concluded, “Our network understands that there are big competitive forces out there that are common enemies, including Internet-based print providers and the Big Box superstores. We want to fight together rather than fight each other. One thing this company has always prided itself on is having integrity in what we do to enhance the businesses we serve—all of them and not one against the other. Over time, we believe this acquisition will prove to be a benefit to both Signs Now and Signs By Tomorrow, as well as the rest of the Allegra network.”