OpenDoor Media Launches Publishing Franchises

VENTURA, Calif. (Blue MauMau) - Entrepreneur Tom Franciskovich, President and Founder of OpenDoor Media, Inc. is now selling directory publishing franchises. But there are both advantages and disadvantages in buying a new publishing franchise. Mr. Franciskovich has been toiling for four years to increase the upside. And now OpenDoor has just signed its first franchise in Santa Barbara County.

Says Mr. Franciskovich, "Four years ago I left the New York Times, in which I was the sales manager for the western region, and decided to buy a printing company. Originally I wasn't thinking of a franchise, but wanted to grow it as a company-owned proposition. As I looked at the working capital requirements to place people in remote cities and manage them, it became clear that I needed a different concept or I needed to come up with a lot of cash to finance this thing."

OpenDoor franchises sell industry-specific consumer directories that provide contact information and descriptions of local businesses. It produces the annual directories for its franchises through its sister company, Colorworks Printing, Inc., a commercial printer of some 32 years.

Franciskovich believes that the cost advantages to franchises of buying directories through ColorWorks is great. "I haven't seen it yet where we [ColorWorks' printing costs] aren't 50% less than the next guy."

With so many franchise concepts available from fast-food to print services, why should a buyer select a franchise in publishing? Observes Franciskovich, "It [Directory publishing] is a big and steady market. I do not see the demand going away.

"There are a lot of mom and pop type publishers out there, but they all face the same problems: number one, they all have high cost to print; number two, they are so distracted with editorial, photography and layout that it takes them away from what they need to be doing.

"We provide those things to our publishing franchisees. So you have a good system of business applied to a huge market.

"It makes sense to a small business to advertise in our publications. It is a low cost investment for them and is valuable to our reader. We sell it as low as $250 per ad. By an advertiser not being in our directory, they lose the opportunity to be in front of a reader."

OpenDoor's president suggests that new franchisees work out of their home for the first year, then add people as revenues and profits build. "You don't have customers come to your office. You are going to them."

A franchise territory typically should consist of some 250,000 people to justify a center.

The company president thinks that franchisees should be quickly profitable. "The franchisee should be making money from their very first publication and the reason why is because of our cost structure," says he.

Franciskovich comments that his prototype publishing unit has been profitable from the get-go. "I would argue that our prototype has been profitable since day one. If they saw our books for the prototype, it would be profitable."

Nick Bibby, a long-time franchise consultant and president of the Bibby Group, thinks an earnings claim statement is quite useful to a prospective franchisee and wonders if OpenDoor will include the prototype's profits in the Uniform Franchise Offering Circular. "In terms of the prototype being profitable, it would be interesting to know if an earnings claim will be issued."

OpenDoor Media does not see any new technology on the horizon that is going to disrupt those profits. Mr. Franciskovich argues that the low cost structure of print advertisement makes local directories hard to compete with. "Google with their 411 search (Google’s experimental service to make local-business search accessible over the phone) and Yellow Pages are doing some nice things. They are turning in a small gain with their print and online products. I don't see anything that is going to disrupt what we are doing. Print has a very unique way of interacting with people."

However, franchise expert Mr. Bibby gives a word of caution about publishing franchises. "Among the most difficult of franchise industry segments is the publication business. For years, commercial printers, as opposed to 'instant' or 'quick' printers, have sought to create wide ranging distribution via harnessed salespeople in the form of franchisees. On the surface it appears to be logical thinking. Namely, the printer needs printing work and the salesperson needs product.

“Unfortunately, selling print advertising has to be one of the toughest jobs in the world, and two, franchisees are generally looking to follow a working system, not spend their lives knocking on doors. Those are two different types of people, and finding that combination in one body is a rare treasure. Great sales people and great franchisees are often not synonymous."

OpenDoor offers a 5% finder's fee to brokers who introduce a successful franchise candidate. Concerning franchise candidates, Mr. Franciskovich states, "We are looking for hungry sales reps. People that want to build something at a low cost. We don't want someone who is going to passively invest in the business, but someone who is going to run with it."