Safeguard takes lead in moving units
Tressa McLaughlin had spent years working at a print store, so when the owner was looking to sell, she began trying to find ways to achieve the dream of running her own business.
She approached banks, the Small Business Administration and other entities trying to find the financing, but none of them was immediately willing to provide the financing for a cash deal.
Then, through her association with the Print Services & Distribution Association trade organization, she was put in touch with representatives from Dallas-based Safeguard Business Systems. Safeguard bought the business and then sold it back to McLaughlin, who now owns IBF as a franchisee.
Safeguard has played a similar role in an estimated 90 such transactions since 2008, when the program began, and both the number of transactions and an entire management team’s dedication to the process set it apart from many franchises.
It took a few months for McLaughlin and Safeguard to figure each other out. But she says the franchisor has largely been hands off lately, except for a monthly meeting to see how things are going. The arrangement provides the best of several worlds.
IBF by Safeguard, under the leadership of McLaughlin and her business partner, gets to continue building the Idaho-based firm with the strong customer relationships that had long been established. But when necessary, she can tap into resources, such as a manufacturing plant that is much closer to her now than partners the company had previously used, that allow an even better experience.
“I’m going to run this business the best way I possibly can,” McLaughlin says. “They’ve been supportive and helpful.”
Safeguard, a subsidiary of Deluxe Corp., has been around for nearly six decades. Through its network of franchisees—or distributors, as they are known internally—the company has been providing print industry customers with products, service and expertise aimed at helping those clients grow.
The company ramped up its franchising plan in 2008 when it established the Business Acquisitions and Mergers strategy, through which it would buy existing print companies, operate them for awhile, integrate the Safeguard business elements and IT systems, and then sell them to franchisees.
The model makes sense, says Scott Sutton, vice president with Safeguard, because the printing industry is fragmented without a dominant player. A lot of the competitors started their own companies and are now looking for exit strategies. Safeguard can provide that—or in some cases, an opportunity for someone to get out of ownership but maintain a job in some capacity with the resulting ownership group.
Jamie McCormick, CFO, left, and Tressa McLaughlin, CEO, operate IBF by Safeguard, which they purchased from the franchisor.
Safeguard has around 300 distributors in the U.S. and Canada. The company traditionally has found most of its buyers inside the print industry, with those who have been involved at some level and are looking to run their own businesses. Some have had agreements to buy companies from Safeguard as Safeguard was acquiring them from previous ownership, Sutton says.
“Generally the prospects inside of our business are people who know this space and have been around this industry for awhile,” he says. “Our typical prospect isn’t necessarily a franchisee prospect, it’s more of an industry prospect.”
In recent years, however, the mix has shifted toward people with a background in franchising businesses who might want to open more than just a couple units, he says. That’s important, Sutton says, because many of Safeguard’s franchisees also are nearing retirement age, so there will be more transition in the future.
“We have Safeguard businesses that are for sale and coming for sale,” he says. “Part of what we are trying to do is market ourselves and make sure the franchisee-centric community knows who we are. We are seeing an influx.”
Sutton and his colleagues say they get great satisfaction from making dreams come true for those who have long wanted to run their own businesses. Sometimes it happens at the company’s own expense.
Amy Tiller had been a business owner in the past. She and colleague Phil Odella, however, were happy as employees at Safeguard—though Tiller had always kept an eye out for the opportunity to get back into business for herself.
That opportunity arose in 2015, when she and Odella left the franchisor to become franchisees.
Safeguard had acquired two companies in 2013 – Seattle-based Advent Print Resources and Portland, Oregon-based DocuSource Print Management, and another in 2014 – Portland-based Formit Print Management. They merged the businesses together and the resulting business operated as a company-owned store until May 1, 2015, when Tiller and Odella bought them in the largest transaction the company has done to date.
“It was very appealing to me to think about possibly jumping back into that world, and instead of being responsible for lots of businesses all over the country, being able to focus my efforts on one large entity and being able to sail that ship,” she says. “Safeguard offered a unique opportunity to do that.”
Tiller says the opportunity to remain a large, strong business with ties to the Pacific Northwest, where companies like to do business with other locals, while also being able to leverage the advantages of a growing franchisor machine, was attractive.
“We’re both really happy with the decision we made,” she adds.
While many of the businesses Safeguard acquires are tapped for quick resale to franchisees, the company has made another significant change in recent years. Company officials realized as they were operating stores that were waiting to be sold that they were learning a lot about their own business methods. As a result, Safeguard started a company-owned division and will retain at least a small percentage of the stores it buys, Sutton says.
The strategy allows Safeguard to learn first-hand what franchisees experience and to potentially test new ideas.
“When you company-operate facilities you start to really understand at a granular level what the day to day operational challenges and successes are for the franchisee,” he says. “You’re operating the business they’re operating. It was extremely beneficial for us to go through the process.”