By Michael F. Carmichael
April 2, 2009
Carl Gerhardt has been trying to retire for a long time, but he can’t stay away from what has become his passion - leading the Allegra Network, a national printing, corporate identity and now marketing franchise organization.
It was back around 1000 A.D. that moveable type was invented in China and another 400-plus years before Johannes Guttenberg came up with the idea on his own in Germany. That led to the Guttenberg Bible and the printing press and a revolution - the dissemination of knowledge beyond the limited confines of monasteries and universities. Flash forward another 500 years to 1959 and the first Xerox plain-paper copier, the 914, and the beginning of another revolution - this time one of paper overload as it became much easier and less expensive to make copies of everything from business reports to anatomical parts.
Those initial Xerox machines were expensive, even though the copies they made were considerably less costly than previous solutions. Initially they were found only in large corporations. However, as employees of the large corporations took to copying school reports and family recipes , it wasn’t long before someone came up with the idea of setting up a small business where members of the public could walk in and copy their own school reports and family recipes for a relatively small cost per copy.
In 1976 Vernon Buchanan, now a U.S. Congressman from Florida’s 13th district, started a small company with five of these storefront copier locations in Michigan and called them American Speedy Printing Centers. “That was the beginning of Allegra Network,” says Carl Gerhardt, now the CEO.
Now, with approximately 600 centers, the Allegra Network does general printing and graphic arts services primarily for business.
It has also branched out into the sign business - some 200 of them under the Signs Now brand - that do banners, vehicle wraps, and the kinds of graphic communications that are required for what’s called ‘way-finding’ for hospitals and corporate campuses - building identification, ‘you-are-here’ maps, directions to restrooms. Signs Now “are really corporate identity specialists,” says Gerhardt. “They can wrap your vehicle fleet in signs or ads or your whole building if you want.”
Picking up with the development of the company, Gerhardt continues, “In the late 1980s, early ’90s, Vern had some financial problems and brought in a couple of new investors. Rick Inatome and Isaiah Thomas [of the Detroit Pistons] came in then and bought the company out of a Chapter 11 bankruptcy situation. In 2000 new investors took over, Tom Monaghan [formerly of the Detroit Tigers and Domino’s Pizza] and his son-in-law, Michael Marcantonio.”
Carl started out in Colorado Springs. “Actually,” he says, “if you go back to the last great economic crisis in the ’80s, I was an executive in the farm equipment industry. The bloom went off that rose when interest rates went into the 18-20 percent range and inflation rose to 10 to 12 percent. My wife and I decided to get out of that business and out of Kansas City where I was working and start our own business in Colorado. We decided to bet the whole farm and in December of 1985 bought an American Speedy Printing Center franchise in Colorado Springs.” Gerhardt explains that “while it was initially primarily a walk-in small printing business, it was in a transition phase and we developed a lot of corporate accounts - small to medium sized, but also some pretty major ones. Over the 18 years that we owned it we built it from less than zero to more than $2 million a year. I knew a lot about running a $50 million a year farm equipment business, but I didn’t know beans about a small printing operation, so that’s why we bought a franchise. “
Corp! wanted to know how he made the transition from Colorado Springs to Michigan to being the CEO.
“About two years after we opened the center in Colorado Springs,” Gerhardt says, “Vern Buchanan decided to set up what’s called a master franchise system. He divided the country into geographic regions- in this case, the Rocky Mountain states - and let individual investors buy up the franchise rights for that particular piece of geography and develop the franchises in that territory.” Gerhardt continues. “Vern got me together with Bill McIntyre, who later became our chairman. Bill bought the master franchise rights to the Rocky Mountain states and asked me to come on board to run it because of my business background. So,” he explains, “I brought in a young man as the general manager of our center. There were two things I said I would never do: I would never sell my center in Colorado Springs and I would never leave Colorado Springs. Obviously, I’ve done both.”
“McIntyre - whose background was with Monroe Equipment Company, otherwise known as Monroe Shock Absorbers, a company Bill’s family had founded - was asked to help bring American Speedy out of bankruptcy,” Gerhardt continues. “I handled a variety of assignments for Bill, who had become president of the company by then, and I traveled around the country putting together a new organizational structure. Bill had been asking me to come to the corporate office, then in Bloomfield Township, but I told him ‘I’ll do anything you want but I have to do it from out here in Colorado Springs.'” Gerhardt laughs, “I was kind of ‘Have Gun, Will Travel.’ I would go where I was needed.”
Gerhardt sold the Colorado Springs store to the young man he had hired as the general manager. “My wife and I then didn’t have a lot to keep us there any more and when Bill said again, come on up to Michigan, we’ve got some wonderful new investors in Tom Monaghan and Mike Marcantonio. We’re growing the business and we want you to be a part of it and just forget that retirement nonsense,” Gerhardt continues, “my wife and I knew we were ready for a new adventure and Michigan is certainly a nice place to live [they have a small 4-acre farm with a couple of horses north of Ann Arbor] so we came up here in 2004 and I took the president’s job.”
The Allegra Network is doing relatively well, despite the economy, or perhaps because of it. “Tom and Mike have allowed us to do some pretty innovative things,” Gerhardt says. “In an industry that’s pretty much in consolidation right now we’ve put together some strategies for growth, we’re making it through the economic slowdown and think we’ve got a real bright future,” he continues. “We acquired another printing franchise company called Insty Print and then in 2002 we acquired another company in the graphic arts business called Signs Now. That helped propel us from $190 million in system-wide sales in 2000 to a little more than $350 million in system-wide sales in 2008.”
One of the innovative things that Allegra Network has done is create “a program called Matchmaker,” Gerhardt explains. “Instead of trying to open new franchises in a flat and consolidating market, we find an independent printer - the industry is about 80 percent independent and 20 percent franchise - that needs an exit strategy and we match that person up with someone coming out of corporate America, like I was doing in the early ’80s, that wants to own their own business.” Gerhardt continues, “We make the match and bring that independent into our franchise system with a new owner. It’s sort of like that online dating service where they match people together who have a number of dimensions of compatibility,” he laughs. “We’ve done about 40 of those. And with the Signs Now division we’re still opening new franchises, but we’ve taken the Matchmaker program there as well. We’re also helping our existing franchisees grow by helping them with their own version of the Matchmaker program. It’s just another example of how the industry is consolidating,” he explains.
How is the Allegra Network planning to succeed in an increasingly digital environment? “The digital revolution has helped us considerably, but we’re also encouraging our existing centers to go into direct marketing,” Gerhardt tells us. “We can design it on the front end, print it, manage the mailing lists and deliver it to the Post Office. We are actually trying to position our centers as the marketing agency for small to medium-sized businesses because ad agencies won’t give the smaller companies the time of day.”
Another program Allegra has developed, Gerhardt says, is “Marketing Central. The Allegra Network will promote a center as a Marketing Central-certified location. We train them on how to develop a marketing plan for small businesses and then take the plan and execute it completely. That would include marketing e-mail, which is really big today, and a web site,” Gerhardt explains.
Allegra Network is rolling out an innovative health care plan for its franchisees and their employees that may be a model for companies in similar situations. “This year,” Gerhardt explains, “we put together a national health care plan for our franchisees and their employees. That’s pretty unprecedented. It’s through Blue Cross and Blue Shield of Michigan, but it works for our franchisees no matter what state they’re in.”
What gets you up in the morning? Gerhardt is asked.
“I think you’ll find that retirement means a lot of different things to different people,” he says. “It’s lifestyle choices. I like golf and other ‘retirement’ activities, but I really like business. I appreciate that someone wants me to work for them at my age. Also, you’re less politically motivated, you want to do what’s right. If I can leave here, when I do, I want to leave Allegra a better place for our franchisees and our staff members here - and then I’ll consider myself pretty successful. I think you’ll find a lot of aging Baby Boomers are reevaluating things and deciding if they really want to go to Florida or do something else. Some of them are good candidates for our Matchmaker program either because they’re too young to retire or, just maybe, just possibly,” Gerhardt says with a touch of sarcasm, “their assets aren’t what they had planned on for retirement.”
“I enjoy golf,” Gerhardt continues, “I enjoy auctions, I enjoy antiques. I enjoy my family - I have two grandkids out in California - and I try to get together with them as often as I can.”
Is he happy that he made the move from Colorado Springs to Michigan?
“This state will come back strong,” he says. “It’s just going to take some restructuring to do it. When I was in the farm equipment business we used to do three- to five-year plans - and maybe some Harvard MBAs still do that, but it’s mostly wasted -now we do three- to six-month plans and readjust as we go along. It takes a lot of common sense experience in addition to business school training to understand where a company needs to fit in their market space.”