Sir Speedy, Inc. History

Address:

26722 Plaza Drive
P.O. Box 9077
Mission Viejo, California 92690-9077
U.S.A.

Telephone: (714) 348-5000
Fax: (714) 348-5066

Wholly Owned Subsidiary of KOA Holdings, Inc.
Incorporated: 1968
Employees: 8,000 (est.)
Sales: $400 million (1995)
SICs: 6794 Patent Owners and Lessors; 7334 Photocopying and Duplicating Services; 7379 Computer Related Services, Not Elsewhere Classified

Company History:

Sir Speedy, Inc. is one of the world's largest franchisors of printing, copying, and digital-network centers. In 1995, the Sir Speedy network comprised more than 800 centers operating under the Sir Speedy name and over 40 centers under the Copies Now name. These centers were located throughout the United States and in 16 foreign countries, including Canada, Brazil, Mexico, Taiwan, Saudi Arabia, and elsewhere.

Birth, Bankruptcy, and Sale

Sir Speedy was founded in 1968 by James A. Merriam. It leased facilities in Newport Beach, California, licensing quick-print shops under the name Sir Speedy Instant Printing Centers. The company lost $190,000 on revenues of $765,000 in 1970 and lost $75,000 on revenues of more than $1 million in 1971. In 1972 it had net income of $277,000 on revenues of $4.5 million.

By late 1974 Sir Speedy was the nation's largest instant-printing franchise chain, with 350 outlets, many of them in southern California. As a consequence, however, of the recession of the early 1970s, business dropped off, and the company found itself unable to meet lease payments. In October 1974 Sir Speedy filed papers in federal bankruptcy court, going into Chapter 11 receivership.

Sir Speedy was still the third-largest franchiser of quick-print stores when Kampgrounds of America, Inc. (later KOA Holdings, Inc.) acquired a controlling interest in the company in 1977 for $1.3 million. At that time there remained more than 235 Sir Speedy Instant Printing Centers, located primarily in major metropolitan markets. Under its new ownership, Sir Speedy saw as its major strength its concentration on professional management techniques at the store level. It provided a number of support services for its franchised shops, including market research, advertising and promotion, research and development, quality controls, technical services, franchisee training, and long-range planning. It also saw as a selling point its ability to purchase printing supplies, film, inks, and other supplies for the franchisee at volume discount with no markup. Franchisees also received help in finding a location and in negotiating and setting up a lease, and two weeks of full-time support by a service representative.

The Sir Speedy franchise price was $48,000 in October 1978, which included a $10,000 franchise fee, a build-up fee for training, and $27,000 for an equipment package. Sir Speedy also received 5 percent of gross income from its franchisees, returning royalty rebates once a store reached a certain volume of sales. Store owners were at the time averaging gross revenue of about $14,000 per month, of which 25 to 35 percent was profit. Sir Speedy had sales of $2.2 million in 1978, or about 15 percent of the parent company's total. Its earnings that year came to about $138,000, or some 6 percent of KOA's earnings.

The quick-print industry was then specializing in short-run, one- or two-color printing jobs for customers ranging from a neighborhood church, local law firm, or wholesale distributor to the overflow from a big corporation's in-house print shop. It was filling a wide range of needs for graphic printed materials that fell between the office duplicator and the commercial printer. Sir Speedy generally was serving organizations that required 100 to 10,000 copies of a single sheet or simple brochure or pamphlet.

Focusing on Small and MidsizedBusinesses in the 1980s

When Don Lowe became president of Sir Speedy in 1981, there were 320 franchisees in the network, with combined sales of some $50 million a year. One of the first things he did was to order a survey to get a better understanding of who Sir Speedy's clients were. The company thought it was running neighborhood copy shops, but Lowe found, to his surprise, that nine out of ten of the customers were businesses. Accordingly, he put the store owners to work making presentations to business clients and created a four-point marketing plan to sell to this market segment. Lowe had the company logo and store layouts redesigned and launched a new advertising campaign to position Sir Speedy as a business printer.

Lowe also commissioned focus groups that found most of Sir Speedy's order placers worked in businesses with fewer than 50 employees and that most of them were low-level buyers. Further research revealed that for every business customer Sir Speedy saw, there were scores of other prospects who didn't have the time or staff to get out of their offices. Lowe then held a series of regional "town meetings" in which he implored franchisees to get out in the field in order to hunt down clients. This was not easy: one store owner recalled that it took two hours for him to work up the courage to make a sales call, after which he was "drenched with sweat." Follow-up calls, Lowe stressed, were also necessary, noting 80 percent of the company's accounts came only after six contacts.

Building on this basis, Sir Speedy became, in 1985, the first franchise network to advertise and market nationally as business printers specializing in graphic design, printing, and copying for small and midsized businesses as well as corporate communications departments. These were customers whose needs were beyond what most quick printers could provide, yet too limited for commercial printers. By 1995, 90 percent of Sir Speedy customers fit this description, comprising a business market estimated at $20 billion to $25 billion, compared to the traditional quick-printing market, valued at about $9.5 billion.

During the 1980s Sir Speedy moved from photocopying to offset printing and electronic services. By late 1987 Sir Speedy had moved to second place in its industry, with about 800 stores. Now based in Laguna Hills, California, the Sir Speedy chain was expected to show a pretax profit of $4.4 million for the year on revenues of $220 million. Also in 1987, the company launched FastFax, a facsimile network that initially included not only 600 Sir Speedy shops in the United States but also franchises in Canada, Great Britain, and Hong Kong. Franchisees were able to lease a fax machine from headquarters for $12 a week.

New Electronic Services in the 1990s

Continuing their phenomenal growth, quick-printing and copying franchises had estimated sales of $1.9 billion in 1991, compared to only $9 million in 1969. Sir Speedy's sales reached $320 million in 1990, by which time it was offering computer-enhanced graphic design, layout, typography, black-and-white and full-color printing, binding, photocopying, and electronic publishing. In that year the company introduced Digital Quickcolor, Inc., the first completely digital full-color printing operation in the world. This wholly owned subsidiary operated as a wholesale production facility and a research and development arm of Sir Speedy. In 1991 Sir Speedy was named the nation's best-managed printing franchise in a study conducted by the accounting firm Arthur Andersen and Co.

Sir Speedy's strategy now was to acquire and convert smaller franchised print shops, adding to his 875-member chain. Unlike newcomers, converted franchisees, Lowe told a Nation's Business reporter, "understand the business, and they also understand the benefits of belonging to a franchise organization." Sir Speedy also preferred owner-operated franchises to units owned by absentee investors, feeling that they would provide more personalized and detail-oriented service to business clients. The start-up cost for a franchise now had reached $120,000, of which the initiation fee came to $40,000.

By April 1993 Sir Speedy was operating in eight countries, dealing only with entrepreneurs willing to buy the franchise rights for an entire country and to develop a region by subfranchising to owner-operators. The company also insisted that its foreign franchisees be bilingual. International franchisees were invited to participate in the two-week training sessions offered to American store owners. Among Sir Speedy's star franchisees in 1993 was Ken Mathes and his wife, Cookie, who were doing more than $1 million a year in sales with two franchises in Long Beach, California. Rod Rodenmeyer, owner of five Sir Speedy printing centers in Memphis, had no printing experience but attributed his success over the past four years to 18 years with companies in which growth dominated thinking at every level. The average sales volume for a Sir Speedy center was more than $450,00 in 1994. The top 25 franchisees averaged more than $1 million each in gross sales.

Sir Speedy in 1994 became the first service provider for distribution of Eastman Kodak Co.'s Photo, Portfolio and Writable CD system, which stored photos on compact disks so they could be viewed and edited on television sets and computers. Sir Speedy offered this system, for use in pamphlets and brochures, initially in 40 percent of its 885 stores. (By now Copies Now had been established as a Sir Speedy subsidiary specializing in electronic imaging.) A Photo CD could hold the equivalent of 100 color photographs, 500 floppy disks, or 250,000 pages of text. The Sir Speedy and Copies Now franchisees would now be able to create affordable multimedia presentations for customers, including photos, graphics, text, and sound on a computer, a television monitor, or a CD-I, a playback unit developed by Kodak for the Portfolio CD. "We are positioning ourselves as being not only in the printing business but also in the business of information distribution," Dave Collins, director of franchise development, told Nation's Business. "And CD technology is a natural extension, he added."

In 1994 the company established Sir Speedy Net, a national online electronic bulletin-board service to communicate with the 350 or so franchisees equipped to receive it. The system provided a message service, operating manuals, repair advice, and clip art. Text and graphics could be downloaded to the local units' personal computers at no charge. The following year the company established Sir Speedy Online. This allowed customers to send electronic files via modem to individual centers for printing or copying around the clock, every day in the year. Also in 1995, Sir Speedy became the first franchised printing company to develop a home page on the Internet's World Wide Web. Its installed base of more than 1,000 computers was the largest in the quick-printing industry.

The company already was offering discounts ranging from 10 to 30 percent on computers and software for its franchisees. "Every Sir Speedy is different," one affiliate told the trade magazine CIO. "There are those of us who are on top of things electronically and those who are in the Dark Ages." He said he made most of his purchases through company headquarters because "The royalty you pay is offset by what you can save because they can negotiate better pricing for us."

Aiming at the Fortune 1000 and Home Markets

Interviewed by Franchising World in 1995, Lowe saw Sir Speedy's digital network as enabling the company to broaden its customer base to serve Fortune 1000 companies as well as small and midsized local businesses. Instead of printing documents in large quantities, carrying them in inventory, and then mailing or shipping them, Sir Speedy's network enabled documents to be sent over telephones lines in electronic form and then printed in the location and quantity needed, saving storage and shipping costs. "While traditional offset printing and production copying will continue to generate the majority of revenue in the immediate future," said Lowe, "we are prepared to take full advantage and be a major player in the digital-technology revolution."

Sir Speedy also saw digital technology as expanding its client base downward, taking in the small-office, home-office, or telecommuting customer. Research suggested that 41 million Americans were working out of their homes, up from 27 million in 1990. Another potential customer was the digital-information and communication specialist, including graphic designers, large corporate communications departments, and others sophisticated in digital technology who had access to state-of-the-art equipment.

Lowe said that, in order to be successful, every Sir Speedy center should have the following minimum services: graphic design; color printing in one, two, or four colors; copying in black and white, color, and oversized; folding, collating, laminating, die cutting, embossing, binding, and other finishing services; and mailing and shipping services. In addition, minimum digital services should include CD-ROM, computer disks, fax, and Sir Speedy Online.

In 1995 Sir Speedy was charging a franchise fee of $17,500, with $120,000 in start-up investment and $60,000 in working capital required to operate a unit. One of the company's model franchisees was Bill Tallent, who opened a Nashville store in 1991 and soon topped the company's growth chart, recording sales increases of greater than 30 percent for 21 consecutive months. He expected to gross $1.6 million in 1995 for his two stores, nearly twice the industry average. Tallent, who told Inc., "I didn't get into this business to get ink under my fingernails," was reinvesting 80 percent of his earnings in new technology. He also served on an "image redesign" task force that recommended a more up-to-date logo and colors for the company.

At the beginning of 1996 Sir Speedy announced that it would purchase for an undisclosed sum MultiCopy International, B.V., the largest full-service quick-printing franchiser operating in continental Europe, from Moore Corp. Ltd. of Toronto. Included in the purchase were 19 company-owned locations in France, Austria, and the Netherlands, and 78 franchise locations in the Netherlands. In addition to the United States and Puerto Rico, Sir Speedy at this time was also operating centers in Argentina, Brazil, Canada, Colombia, Costa Rica, El Salvador, Guatemala, Indonesia, Mexico, Peru, Saudi Arabia, and Taiwan.

In 1996 Sir Speedy centers provided a full range of black-and-white and color professional printing and copying services for business applications, including letterheads, business cards, brochures, newsletters, business forms, catalogues, and manuals. It also offered the latest in digital services, such as networking, computer-disk transfer and conversion, digital storage capability, electronic original transmission, and "on-demand printing." Copies Now centers specialized in high-speed copying, color copying, and reproduction of special format work, such as engineering drawings. Both Sir Speedy and Copies Now centers offered graphic design and typography by electronic publishing. Each also offered facsimile transmission and reception through the Sir Speedy FastFax network, a full range of finishing and bindery services, and even direct-mail fulfillment.

Principal Subsidiaries: Digital Quickcolor, Inc.; Comprehensive Business Services, Inc.; MultiCopy International, B.V. (Netherlands).

Sir Speedy, Inc. History

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