Interview with Proforma's Co-CEO
INDEPENDENCE, OH - There's something unusual about Proforma, the fast growing printing and multimedia solutions franchise. Franchisor Proforma has been listed three times in the Inc Magazine list of 500 fastest growing companies. But more interesting is that this year, six of Proforma's franchisees have been listed in another of Inc. Magazine's lists, its fastest growing 5,000 companies. Six! And if that weren't enough, Forbes, with the help of franchise research firm FranData, just listed the 700-unit franchise chain as one of its top 20 franchise investments for under $100,000.
The chain's founder and co-CEO Greg Muzzillo shares some of his thoughts with Blue MauMau's readers on how that happened. Before founding Proforma, Mr. Muzzillo was with the auditing firm of Haskins and Sells (predecessor to Deloitte & Touche). Since the founding of his company, he has served as a member of the board of directors of the International Franchise Association. He is an advocate for a number of franchise issues, including providing franchise performance representations.
BMM: The quick print industry is quite mature. It seems that Quick Printing magazine each year for the last 10 years has been reporting that the number of quick print shops has been shrinking. What's your take on this?
Muzzillo: Quite candidly, it is hard to keep up with the investments required in this digital printing age to really give consumers the breadth and depth of solutions that are needed. What is antiquated and outdated is owning equipment in this industry [the quick print industry]. Printing is not antiquated. In fact, the industry is growing. Check your mailbox. I think you'll see that the industry is growing. End users are looking for solutions to market their business with print and promotional products. It's just the path of the marketplace. Owning equipment is becoming obsolete because it is difficult and the investments are very high.
BMM: What made you get interested in the print brokering business?
Muzzillo: When I graduated from college in 1977, I went to work for one of the Big 8 CPA firms when there were eight of them. I was an auditor for General Motors and Westinghouse. I was part of what is now Deloitte & Touche. A buddy of mine that became my roommate after we graduated from college was working for a small print and commercial products broker. And I really didn't pay attention originally to what he did. But we'd go out on Friday nights when 22-year-old kids, looking for dates for Saturday night. We'd be sitting around talking and he'd be telling me about a $10,000 order with $4,000 in profit and a $25,000 order he had received with $10,000 in profit. Eventually my ears perked up.
After about six months of him telling me about the business, he was such a salesman at it that it didn't take long to see that you don't need to own any equipment in this industry. You don't have the limitations of a retail store. Let's go. You know sales. I know accounting. So together we each put in $100. We bought a phone answering machine. We bought some business cards and a box of letterheads. We sent some letters to suppliers asking them for a line of credit. And in 1978 we started Proforma from the dining room of the little apartment that we shared, with a $200 investment and a whole lot of big dreams and big wishes.
BMM: How did Fred DeLuca, the founder of Doctors Associates, Inc., also known as the Subway sandwich chain, get involved with Proforma?
Muzzillo: Our opportunity became big enough that we needed investment. Fred DeLuca and I had become friends through being on the board of directors of the International Franchise Association. He expressed an interest in making an investment in Proforma at the time we needed an investment – in the early 1990s. So he and his partner Pete Buck made an injection of capital. And he has been a very good friend of Proforma all along the way.
He is an investor and we talk whenever we need to talk, if I want to chat with him or he wants to chat with me.
Hear more from Greg in Blue MauMau’s 20-minute podcast.
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Related Reading:
| Attachment | Size |
|---|---|
| Proforma Franchise Disclosure Document 2009 | 3.84 MB |
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interesting interview
Hello from Russia!
Can I quote a post in your blog with the link to you?
My friend originally hails from Utah and that may explain his dyslexia and why he employs staff. I know he can read a check. He has over $12M tied up in equipment and a year ago he mentioned that one piece purchased for $750,000 just over 4 years ago, and replaced when outdated, virtually had scrap value. It sits in a back corner and I can understand the grieving process when he considers giving it away.
Bob, in Australia we let almost anyone in so if you are heading our way you might want to check the anyone register of unwelcome aliens.
I've sent this link to a friend in the printing industry in Australia. I just hope he can read.
Is it that he's Australian or a Quick Printer that has you doubting if he can read?
http://bloodyfranchise.wordpress.com/2009/09/27/greg-muzzillo-go-buy-a-mirror/
"preferred supplier fund" - Kickback is the real term - ask any franchisee about the pressure that Greggy puts on them to buy from suppliers that push kickbacks! You can buy from anyone you want, they say, but don't believe it. Once the volume kicks in, they're on you like flies on excrement!
"credit insurance" - Find a Proforma franchisee that has ever received a nickel in reimbursement - NOT A CHANCE!
"He is an investor and we talk whenever we need to talk" - Don't believe it! Freddy is the majority share holder and Greg is his little peon. Go study the UFOC and FDD changes since Freddy took over the reigns and you'll see a glaring likeness to the Subway UFOCs. Freddy gave Greggy about a million dollars when Greggy was down and out and Freddy took a majorty stake. Now Freddy rules and Greggy obeys!
The preferred supplier funds and credit insurance are good ideas. And vendor rebates aren't inherently a bad thing.
It's a strange quirk of human nature that we focus our efforts at the man on top of an institute instead of understanding the more abstract business constructs that the chief sits atop of. Put your management hat on for a second. Even if a franchisee became Proforma's CEO like the former operator/founder Muzzillo now is, they would still have a fiscal responsibility to maximize the firm's wealth. If Greg were out and someone else were in, there would still be vendor rebates. They would also feel a responsibility to grow additional revenue streams.
I would.
Bloody has the responsibility to show if what she/he alleges has a shred of truth, not us. Contrary to what "Bloody Franchisee" would have us do, readers won't go study and compare franchise disclosure document similarities between Proforma and Fred Deluca's DAI. We aren't going to go "google" it. Besides, I'm baffled on how having similar agreements necessarily show that "Greg is his [DeLuca's] peon." There are other explanations for alleged similarity -- like Greg thought it was a good idea, or that he thought DAI's lawyers were better in constructing franchise agreements. And even if it were the case that DeLuca is secretly calling the shots, Bloody Franchisee doesn't explain why DeLuca's influence would be a bad thing.
Bloody Franchisee, with logic like yours, don't buy a small business. Your assumptions and jumps in logic are going to get your business in trouble.
You don’t really tell us much of anything. Rebates/kickbacks; a franchisor, just like any other business person and every franchisee, has a legitimate right to make a legitimate buck although in franchising I argue that such monies should never be gained to the detriment of franchisees who rightfully expect to be advantaged by group buying power.
I like this concept but I know nothing of the model other than it sounds as if I would never sell one to anyone but a person with sales skills and real drive. I would be interested to know how sophisticated is the package for under $100,000 because if it offers the basis of a business model with good earning potential greater than the investment suggests then I can understand why these businesses are growing.
Ray said:: "I've sent this link to a friend in the printing industry in Australia. I just hope he can read."
Nah, he's a quick printer, he'll send ya back 50 copies right quick, but HE WON'T READ THEM....
Mr. Muzzillo is right. The franchised quick print chains that require capital investment in equipment have been shrinking for years. Here's how this year's annual report of the industry from Quick Printing magazine starts out:
That message of franchise chain consolidation by now seems like a broken record that is played every year. System-wide sales for all systems except one are down. And at least this individual is quite skeptical of Minuteman's reported sales numbers that supposedly bucked the trend.
15 years.
Anyone who invests in a QP franchise today is simply ignorant and wishes to remain ignorant - in other words, a FranWad.
That QP franchisors are still out there representing themselves to be offering positive investment value is ridiculous and dishonest.
It was in its heyday bacl in the late 60s - early 70s, when offset printing came into the industry. That has long been replaced with desktop capabilities that eliminate the need for the fully equipped franchised print shop. Today you send your "stuff" in pdf to Kinkos and magic happens. For any newbie to throw hundreds of thousands into that stiff wind today is not explainable in any rational investment scenario.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
there have to be quick printers in the market to take the work at the brokered price. I have also been involved in the QP business since 1984, and I too know its history.
I also know that ther QP franchisors are still out there saying that they have an investment opportunity good for the life of their franchise agreements - at least 5 years. Thankfully, they sell very few franchises and those who buy them are extremely short lived.
Mr Muzillo thinks there is a market for people wishing to invest in being brokers for print jobs directed to QP shops. My understanding of brokering is that it is the process of selling print jobs primarily on low price.
Does anyone have any idea how low that price can go before no quick printer can afford to do the work. At some point the quick printer loses less money by not doing the work in a declining market.
Maybe Mr Muzillo knows things that the rest of us don't know. It would be nice to ask him to respond to this issue.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
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