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Posted on Mon, 01/16/2012 - 01:40 AM by
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This auditory gifted bird has heard that Blackstreet Capital Management LLC has bought out the franchisor of quick printing shops, Alphagraphics, Inc. Employees of Alphagraphics had a conference call with the new owner last week. Blackstreet reassured concerned staff that the private equity firm thought things were great in the system. No changes anticipated for now. (Where have we heard this before?) No press release or formal announcement has been made as of this moment. Franchisor insiders say the Salt Lake City-based firm has struggled being profitable these past few years.It has battled shrinkage. In 2004 Alphagraphics declared it had 281 print shops under its brand. By 2011, it had 272 locations. Franchising for over three decades, it's not just the mature, developed markets of the United States and the United Kingdom where the chain has been shrinking. The print franchisor had master franchises in over 20 countries at the beginning of the Millenium, most in emerging economies. In 2011, it was down to seven. Alphagraphics has weathered a weeding out of the quick print industry better than most. But that's not saying much. The whole sector has been shrinking for years, according to industry watchdog and publisher Bob Hall of Quick Printing magazine. "Shops have been going out of business steadily during the past 20 years. For example, in 1991 there were 5,454 franchise print shops, today there are 2,656," writes Hall in this month's issue of Quick Printing. Copying one another, many brands are stressing that the future is in consolidating with other brands, printing QR codes, and parcel delivery services. In comes Maryland-based Blackstreet Capital Management LLC, a private equity firm that sniffs out underperforming and troubled companies. In 2007, Blackstreet helped put up the money for a multi-million dollar buyout of a Papa John's franchise with 84 underperforming restaurants. The franchisee ended up not being able to earn enough money to make its payments. Rumor has it that Blackstreet helped fellow Salt Lake City-based Mrs. Fields/TCBY frozen yogurts with a whole business securitization on future franchise royalties and fees. TCBY found itself having to file bankruptcy in 2008 after it couldn't make expensive interest payments from its high debt load. Related reading: Interview with Mrs. Fields New CEO Casey MORE NEWS FROM BLUEMAUMAUTaxes and the DeficitNormally, this column is supposed to cover the tax changes over the prior year and how they impact the hospitality industry. Last year, we commented about how 2010 was an interesting year but little in the tax field had passed. 2010 was all about health care reform, the change in control of the House and the rise of the tea party. It was a very political and partisan year. If anything, 2011 was worse. Never has so little been accomplished by so many. Brinkmanship was the key word for 2011. It will be known more for what did not occur rather than what did. It is not unusual for partisan politics to take center stage in an election year. While 2011 was not, the race for the Presidency and control of the House and Senate began before all the winners from 2010 were known. National Press Writes about Restaurant FranchisingOn May 18th, the national press, both The New York Times and The Wall Street Journal, wrote about restaurant franchising. Some additional notes are warranted. Mediation: Good, Bad or It Depends?Mediation is often touted as the greatest thing since sliced bread for faster, fairer, and cheaper dispute resolution. Is it? Going International? Don’t Forget One Important ThingFranchisors that are considering exporting their franchise concept to other countries are advised to prepare by following a checklist of key items. However, there is one area that is often overlooked or shortchanged in the process. Going Green Costs Franchisees Much GreenBeing forced to buy imaginary products is just one of the nonsensical results of government policy affecting franchisors and franchisees. RELATED SMALL BUSINESS NEWSMobile Franchises: Do You Like Cars? Hot Franchise Topic: Getting a LoanIt seems like the entire franchise industry is focused on funding, and with good reason; franchise loans are still a bit challenging to secure. Good News, U.S. Hotel Profit RecoveryAccording to the new PKF Trends survey, the U.S. lodging industry produced a 12.7% profit growth in 2011. 80.5% of participating hotels enjoyed an increase in total revenue while 72.3% achieved growth in profits. The recently released 2012 edition of Trends presents data from a sample of nearly 7000 financial statements of United States hotels. For the Trends report, hotel profits are defined as net operating income (NOI) before deductions for capital reserves, rent, interest, income taxes, depreciation and amortization. Federal Court Invalidates "Quickie" Union Election Rule, For NowOn May 14, 2012, the U.S. District Court for the District of Columbia set aside a controversial final rule of the National Labor Relations Board ("NLRB") that was designed to make it easier and faster for unions to hold organizing elections. Chamber of Commerce of the United States of America, et al. v. NLRB, Case No. 11-02262 (D.D.C. May 14, 2012). Business groups are hailing the decision, but the celebration may be short lived. Because the ruling was essentially decided on a procedural point, the NLRB may seek to resurrect the rule, which creates a very short window for union elections, and leaves employers with little time to react to an organized union campaign. Field Representatives Coach Franchisees to Victory
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