I purchased a Sign-a-Rama Franchise in December and opened in Kitchener-Waterloo, Ontario in February. Financially the venture was a disaster but who would have thought since the Franchise prospectus I recieved showed 13 operating locations with only one that had gone out of business. Worldwide there were over 700 stores. If your reading this you've already been looking. Looks good doesn't it?
In Ontario, franchises are governed by the Wishart Act which has specific reporting requirements. Two of the requirements which must be legally reported in a franchises prospectus are 1) the last known personal contact information for a franchisee who has terminated his business for a period of one year and 2) all franchises that have gone out of business in the proceeding 3 year period.in my case the franchises that had gone out of business in the proceeding 3 year period were not listed in the prospectus as is required by law and I found out that a Sign-a-Rama franchise had been operating in Kitchener-Waterloo up until December and had closed due to financial issues. (I have an e-mail from Sign-a-Rama coporate that confirms this as the closing date, along with a threat to coutersue should I proceed with a court case).
Why would they not report this information? Sign-a-Rama is in the business of selling franchises, they make very good money when they sell a franchise, the training and equipment expenses are marked way up, and once you're in if you re-sell you must again foot the bill to retrain the new owner to the tune of $24,500, a 2 week course that costs more than a year in University.
Their system does not work. He's part of what I saw in my 3 year stint with them, what I'm reporting here is not the entire picture only those stores that I had contact with and can remember without using the franchisee's names. London, Ontario - 2 new franchises opened and both closed (don't know if the owners went bankrupt or not)
St. Catherines, Ontario - new franchise started up, owner was forced to sell because of financial losses, new owners forced to close (this happened after I was out of the Sign-a-Rama system).
Burlington, Ontario - store was re-sold several times, don't know the status now.
Richmond Hill, Ontario - existing store was purchased, new owner forced to walk away from store, Sign-a-Rama corporate were keeping the store open trying to re-sell.
Another store in the Toronto area that I toured during my orientation visit which had just been re-sold.
Store in the Toronto area that went out of business and the owner went bankrupt.
During my stint with Sign-a-Rama I met 8 other new franchisees.By the time I sold my store 6 of them had either re-sold or been forced out of business and of the remaining 2, one was struggling despite the financial losses and I don't know about the last one other than the franchisee told me he hadn't been able to pay himself any wages.
And you still need to beware because even if the above is reported properly according to the Wishart guidelines it is only the stores that go out of business that have to be reported. Any re-sales, despite the financial losses of the previous owners, do not get reported! This is why Sign-a-Rama corporate is so aggressive in re-selling franchises and keeping stores open. If people had access to the whole picture they wouldn't sell one franchise because if I calcuate based on my numbers you have an 11% chance of success if you purchase into this franchise (and I actually believe this number to be lower).in my training class at Sign-a-Rama, about 70% of the class were re-sales, a high number for a franchise expanding about 15% a year.
If you are looking to purchase a Sign-a-Rama franchise STAY AWAY!!! They are selling a dream and you will pay for the dream. I owned 3 Subway Stores before purchasing the Sign-a-Rama, so I wasn't some kid off the street who didn't know the first thing about running a business. You aren't that special that it will only work for you when it fails for so many others. DON'T LOSE YOUR LIFE SAVINGS LIKE I DID!!!
Chris
Kitchener, Ontario
Canada
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