Worldwide Online coverts another commercial printer to franchise benefits

Large consolidated companies, new business models and digital technology are making life for the average A3 printer practically unsustainable. There comes a time when a new direction is an imperative and for Graham Johnson it became a question of either getting out of the business he and his wife Susan had spent years building up, or taking on a World Online Printing franchise.

It's a familiar story that is being played out more frequently around the country. Johnson, a printer by trade, bought the A3 commercial printer in 1989. He and his wife built it up with a couple of Fuji 52 single colour presses, a Solna single colour A2 press, a Wohlenberg 92 guillotine, a camera and metal plate making facilities. This made his business fairly representative of an estimated 3,000 A3 commercial printers in Australia.

He installed a Xerox colour copier in 2000for proofing and general "off the street" traffic, just as business turn over peaked, at just under $450,000 per annum. At the time two printers were employed and Susan, who came in for around 25 hours per week to help with the bindery and dispatch functions.

When the business started to slow from 2002-2004, with hefty margin reductions, shorter run lengths and more colour work, Graham could see the writing on the wall.

"I couldn't see that we could survive long term without major capital investment, so I decided the best option was to sell the business," Graham stated. "We were still profitable, but digital printers and copy centres were starting to erode our market. At 55, I didn't want to reinvest too much money to keep up, so selling seemed the only option".

Graham appointed a business broker to sell his business, and was a little disappointed with the market value placed on his business. "After all these years of toil, the business was worth little more than the value of the machinery," he reflected

Worldwide Online Printing was introduced as an alternative to selling the business.


A different business model for printers

There are now over 60 Worldwide Online franchises in Australia, working on a hub and spoke system. The franchisees are the spokes that handle customer interaction; they have in-house design and send all the printing work to central manufacturing facilities (the hubs). The centrally located hubs have a wide range of the digital and offset equipment as well as all the finishing equipment you could possibly require. The hub's focus is on bringing down the cost to manufacture to as low as possible.

Clive Denholm, CEO of Worldwide Online Printing, says that the H&K Davis business was a perfect fit to join the group. "Printers such as Graham are a valuable asset for the group. They have an intimate knowledge of the technicalities of print and have great relationships with their clients.

"A key benefit for someone joining the group is access to business support systems such as marketing and KPI benchmarking. Also when they join our group we take away their need to make any major capital investments by providing them with access to our state of the art equipment and systems. For A3 printers, they are also able to competitively offer a far wider range of products.

"We anticipate that as things get tougher in the industry it will be important for most small printers to join a network, the financial and marketing benefits are compelling. Worldwide are looking to increase the number of locations in its network by 15-20 in the next 12 months, so we see it as a great opportunity for existing print shops to maximize the value of their existing business."

First a cynic, now a convert

"Worldwide were keen to take on some of the equipment for their central production facility. I must admit I had my doubts," said Johnson. "I had more questions than answers such as, would I make more money from their system, paying a royalty, than in my traditional on-site manufacturing system?"

Before he signed up he put Worldwide to the test on the issue of pricing. He had the company price all his previous month's production through its computer model and compared the costs and margins.

In all print jobs the new business model achieved higher margins, even with Worldwide's royalties. For each job he knew the actual buy price, compared to his existing system where he always struggled to match quoted costs to actual. "The Worldwide system takes all the guess work out, I know exactly what my costs will be before I take on the job." Graham saw that he would no longer have to worry about print production issues and would have a firm handle on actual costs.

Working in a franchise

He now tells his clients he works with a large national company that offers a wide range of printed products, at very competitive prices. "My clients have been very supportive, I thought this may have been an issue, but in fact they have embraced the change. They see they can order more print from the one supplier. It makes sense from their perspective.

"It's early days in the franchise agreement - we've only being going since June this year, but so far they [Worldwide] have been excellent. The fastest turnaround in the first month was a day, the norm is around three days, so really I don't see a problem"


He has come to terms with the fact that he is not at the press to view the jobs. "They have good equipment, I've now seen the results and proofing is no longer an issue for me. In fact they output better quality in most jobs than I ever could"

He now competitively quotes on a far wider range of work than he ever thought possible for an A3 printer. One of his customers has just ordered a 16pp four-colour 1,000 run magazine. "There's no way I could have even quoted that before. All the work I used to sub out is now done in-house - forme-cutting, folding, design, etc. How can a small traditional print shop compete with that?"