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Signarama just hit a new milestone in July 2021: They broke the GUINNESS WORLD RECORDS™ record for most signatures on a banner in one hour. “This is a great accomplishment for Signarama, and we are honored to have so many customers and franchisees who support us,” said A.J. Titus, President of Signarama and United Franchise Group. “We appreciate the Guinness World Records™’ recognition and hope that our sign business continues to grow.
Well, are you also expecting the Signage Franchise industry to grow exponentially? Well, it is time to rethink it. There are specific facts that seem you are unaware of.
The Industry Is Already Oversaturated.
One of the most prominent reasons you should rethink getting into the Signage Franchises industry is that it is already oversaturated with multiple businesses offering similar services. You would be competing with other established brands with solid marketing grounds.
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The signage industry, worth $ 49 Billion in the U.S. market alone, is fast shifting its demand from traditional signages to digital signs. Signarama is one of the largest sign-making companies in America. As it strives to expand its franchise network, many franchise owners report complaints against the company. They claim that they were fooled into getting into this business.
So what exactly is the company doing wrong? And how can you make a rational decision while acknowledging the pitfalls in Signarama Franchise?
The reason for not taking this franchise relates to the saturation in signage business in the U.S. market, which has led to a considerable decline in the profits of individual franchises of Signarama, which does not justify the investments in this business.
Signarama Franchise: Business Overview
Sign*A*Rama, the franchisor, is part of the United Franchise Group. Present in 50 countries, it is the world’s largest sign franchise with over 800 stores in its network. Signarama claims to utilize the latest technology in computerized sign making. The network works to produce, fabricate and install at retail centers, industrial parks, large corporates, primary businesses, and other places.
Signarama group has the following products in its portfolio:
- Magnetic signs
- Boat and vehicle lettering
- Banners and posters
- Laminated and paper signs
- Showcards
- Menu boards
- Vinyl lettering
- Reflective signs
- Nameplates
- interior/ exterior signages
- Mobile signs
- Retail displays
- Wood signs
- Engraved signs
- Window lettering
- Storefronts
- Trade show graphics
- Architectural and directional markings
- Americans with Disabilities Act (ADA) signage
- Electronic and neon signs
Financials for the Signarama Franchise:
Liquid capital: $55,000 – $65,000
Net worth requirement: $ 60,000
Franchise Fee : $49,500
Total Investment: $180,000 – $315,000
Royalty Fee: 2-6%
Ad royalty fee: 1%+
The Signarama Franchise Woes:
We have researched through the FDD of Signarama and various portals to understand, analyze and bring you the benefits and perils of taking a Signarama franchise. While the company has built a strong brand with a vast network of franchisees, they seem to lack adequate support to their franchisees. In short, the franchisees never seem satisfied with the support provided by the company.
# 1 Declining Profits in a Mature Market:
The signage industry is highly competitive and has many players, both big and small. The major competitors of Signarama include the franchisees of other sign companies — such as The Sign N Display Store, Granite Signs & Lende Signs. — as well as individual commercial sign shops and even other vendors such as FASTSIGNS and Vista Outdoor. That has led to a significant decline in profits for a successful Signarama franchise. The revenue, which was $535k annually a few years back, has become less than half for franchises in recent years.
#2 Increasing demand for Digital Signage in the industry Affecting the Business Of Other Signage Makers:
Digital signage is one of the fastest-growing trends in the signage business. The digital signage market is currently valued at $5 Billion and is expected to double by 2028. The demand for digital signage is taking business away from traditional Signarama franchisees. A lot of people are asking themselves, “Should I buy a Signarama franchise or not? Since conventional business signs are losing value to digital signs, it does not seem worth it for anyone to take up a Signarama franchise right now.
#3 Franchise Fees and Royalty fees to be Paid for a Signarama Franchise Are Not Worthy:
The Signarama Company charges a franchise fee of $49,500 and an additional $65,000 for opening the store. The Signarama Company also charges a royalty of 3-5% of the monthly revenue. The franchisees argue that these charges are very high compared to the company’s inadequate training and support.
The average Signarama franchise owner is said to earn $128,343 after years of ownership. But, on the other hand, some Franchise stores in the fast-casual restaurant industry make more than the average, for instance, Taffer’s Tavern, Brooklyn Dumpling.
To evaluate the accurate profit of Signarama franchise owners, watch the video below, which gives you the potential financial model of how much profit is earned by any franchise owners after making investments and operating costs.
https://www.youtube.com/watch?v=Cn8z-twy3wY.
#4 Signarama Not The Best Loved Name Among Its Franchises:
Signarama has been accused of threatening franchisees to push sales. Franchisees had reported being pressured to purchase additional items, even when they weren’t needed to meet the quota. Others noted that Signarama’s equipment is challenging to use and that the company offered inadequate training. However, some also said that customer support has been available, even in challenging circumstances. Many franchisees find the company less than supportive. The dealer policies also look unfair to many dealers who feel they were misled about the cost of running a Signarama franchise.
Conclusion:
Though Signarama has come at the top of the signage industry, its continued success in the future remains doubtful. With the market being quite mature, it has many big and small players present in it. With the demand fast shifting to other signage products, the investment in the Signarama franchise right now will not be the best business idea. There have been many issues with Signarama franchisees, but in reality, these incidents are pretty rare. To ensure both the company and the franchisee are protected from any legal action, a Franchise Agreement of FDD is signed that ensures both parties abide by a specific code of conduct. This includes everything from product quality to advertising to customer service and much more.
Sources:
https://www.franchisedirect.com/directory/signarama/ufoc/200/
https://www.franchisegator.com/franchises/signarama/
https://www.franchiseopportunities.com/franchise/sign-a-rama
https://www.franchisehelp.com/franchises/sign-a-rama/
https://www.entrepreneur.com/franchises/signarama/282817
http://www.thesignsyndicate.com/forums/index.php?/forums/topic/5951-sign-a-rama-franchise-fraud/
https://www.vettedbiz.com/signarama-review-2020-fdd/
U.S. Digital Signage Market Size Report, 2021-2028 (grandviewresearch.com)