How to start a gift cards franchise
Find out how to start a greeting card line as a franchisee - a highly flexible business with comparatively small overheads
Printing gift cards to sell is a popular start-up business idea, especially for creatively minded individuals. The barriers to entry to this market are low (i.e. if you do your own design and artwork, then it’s the cost of greeting card printing and packaging) .
However, because of this, selling greetings cards can be very competitive. Many will begin setting up a greeting cards business selling cards online, to local shops or at a market (it's also worth reading our guide on how to start a market stall business). When visiting a local craft fair you are very likely to find more than one stall holder selling hand-made cards.
Startups forum member Guy shares their experience: “As a small publisher of greeting cards, I can tell you that, unless you have something truly extraordinary, there is no point in trying to tackle Clintons etc. You will be up against the really big publishers who spend a huge amount on marketing/retailer support to keep their shelf space, and you’ll also be up against the retailer’s self-published designs. There are a massive number of publishers all vying for sales through the same channels.”
For this reason, tapping into the brand of a greetings card franchise can be worth considering. As a business, it is also quick to set up and can be run from home with low overheads. So while you're unlikely to be paid danger money to start up a franchise like this, greetings card distribution has much to recommend it.
What is it?
Starting out as a greetings card franchisee can be a scary to begin with. You won't be required to create a range of cute birthday cards or write a witty rhyme for inside but you will have to cold call independent businesses and persuade them to sell your particular range.
On the plus side, though, you will operate on a sale or return basis – so the retailer will only have to give you some of his or her shelf space on trust. And offering something almost for nothing is something most small businesses find hard to resist.
The operation involves providing a range of the franchisors designs in its own rack or carousel. You then leave it with the retailer for an agreed period of time before calling back to hopefully restock and invoice your share of those cards sold.
Of course none of the franchisors will let you just plunge in on your own – there would be little point in buying a franchise if that was the case. Appletree Cottage, Cardline and Colneis Marketing all offer on-site initial training in the locality where you will be selling. This allows you to get to know your area a little through the eyes of a franchisee rather than as a resident.
Most franchisees say they didn't take long to get into the swing of things, “Going into shops and talking to people was terrifying to start off with,” says Ken Glanville of Colneis in Devon. “After the first week I'd got used to it and was getting a 99% positive response if I caught the owners at the right moment.”
And getting them at the right moment is key. If you don't there's not harm in coming back, maintains Jenny Woodruff of Cardline in Poole. “If they say no they're busy, ask if you can come back later. This is cold calling but it isn't a hard sell, you're only asking for space.”
You'll also learn which type of shops to target. The obvious ones are independent newsagents, convenience stores, post offices and petrol stations. But it also pays to think on a wider scale – anywhere that people will visit day to day is a potential outlet: canteens, sandwich shops, garden centres, hospitals, libraries and so on.
It will be up to you to arrange how often you visit your retailers. Most visit every month or six weeks. If left any longer, retailers will be left without stock to sell and, as you pay upfront to the franchisor for stock, you will be out of pocket.
Aside from the initial fees and set up, costs are not huge.
You will be given stock and stands to get you started and – assuming you choose outlets where the cards sell – money will start to come in after the first month. Your franchise should give some guidance on what RRP your cards should sell at. You can also do some market research and then also some cost-up calculations and see whether your suggested RRP makes sense both for the retailer (who will expect to sell at 2.35 x wholesale price) and for you as the publisher.
All franchisees agreed that petrol was the by far the biggest overhead. The business can be run from your existing car – providing it has reasonable boot space. Ken Glanville of Colneis admittedly covers all of Devon and Cornwall but estimates that he does 35,000 miles a year – which obviously adds up in terms of petrol costs.
Although once the business is up and running you should find that your success brings your petrol costs are brought into proportion.
All the franchises can be run from a home office with franchisees either storing stock in a large spare bedroom or – as this isn't a perishable product – in the garage. Although ordering on a bimonthly or even monthly basis means the stock shifts fast and you shouldn't need to store vast quantities. So you won't have to pay out for office space and so long as you have a reasonably sized house you shouldn't be overrun with boxes.
The driving force behind this business is cold calling – and subsequently building up relationships with your retailers through regular visits. Advertising costs do not tend to figure. It's only really through word of mouth that clients will contact you.
Sundries Costs ultimately come down to sundries like your accountancy bill, bank charges for paying in cash and a mobile phone. Once your initial fees are paid, overheads are low – which can only aid your profit margin.
What can I earn?
None of the franchisees would say that cards on their own are going to make you a millionaire. With a steady income of £100 to £150 gross profit a day this works out at about £20,000 upwards a year. Where this isn't adequate for your needs, it is possible to expand and diversify for greater profit.
It is also possible to expand the range and increase your appeal without stepping outside the general greeting cards line, depending on what the franchisor produces. One franchisee said he also offers gift wrap and party invitations and seasonal items such as CDs at Christmas.
And if you really look to the future, some franchisees have people who go out and merchandise retails outlets for them, obviously allowing for greater coverage of your area.
When looking at the money involved, it's important to remember that this isn't a hard-sell operation. Most shop owners will make up their minds in the first 10 or 20 seconds whether they want to learn more about the product. And this is why you need to be friendly without being pushy.
If the retailer already has cards in the shop this is not necessarily a problem. Most customers like to be given a choice and it can only increase the profits of the retailer – a fact you can point out to them.
As you visit outlets to re-stock, you'll get an idea of what is selling the most. You then need to tailor the stock to suit the customers – for example increase the number of humour cards. If you then sell more cards each month you'll be in a position to negotiate more space in the client's shop.
Jenny Woodruff of Cardline in Dorset stresses the need to keep a tight control of stock and to note the types of card that are selling.
“In the beginning you just put a small selection with a range of everything. As you revisit, though, you quickly learn to make the most of the space you've been given. Whatever the shop, make sure you give a good range of the bestselling cards.
“Also you wouldn't provide the same stock for a student union as you would for a village shop whereas bestsellers work well all over.”
“At the end of the day,” concludes Ken Glanville of Colneis Devon, “I make a reasonable living, working for myself with the flexibility to be able to take a day off here and there if I need to.” This recurring theme of flexibility seems to be one of the main appeals of the card franchise business.
Tips for success
With most clients paying you in straight from the till, your business could be as much as 90% cash. As such one temptation is to just dip into funds when you need a £10 note for your shopping. Guard against this, says Eleanor Johnson, “£10 here and £10 there could leave you without the money to pay for your next stock.”
Also make sure you visit the retailer often – not doing so can be a problem for two reasons. Obviously a half-empty stand looks bad but also good service is very important. Just as you don't want a client to be late in paying, if you are late merchandising the shop and in collecting monies, the retailer is under pressure with extra cash in the till.
There are other providers about – as the three here demonstrate – and your client will have nothing to lose by giving your shelf space to someone else.
Another reason to visit often is that shops can disappear overnight. Watch the shelves for dwindling stock or lack of attention in the presentation. You have to run the risk with sale or return but providing you keep in contact with your clients you shouldn't experience problems.
But this doesn't mean you should stay with clients no matter what. If cards aren't selling in an otherwise apparently prosperous business then withdraw from it. There is no point in wasting your time or your stock on an outlet that won't see a satisfactory return.
The number of outlets you serve will probably fluctuate regularly – this is normal as new shops open and others close. But that is why you need to be focused on going out each day and keeping the number up. The key to the business is persistence – and of course to enjoy it.
Choosing the right outlets for your cards is an important preliminary stage. Ken Glanville of Colneis in Devon advises thoroughly sussing out an area before approaching specific retailers.
“If I'm in a village with a post office and a small shop, I check out each one and see which would be better for the cards. It's led to me buying a lot of Mars bars in the process!”
It's important to get places like villages right – as captive markets these will probably be some of your most lucrative customers. Jenny Woodruff of Cardline echoes this sentiment along with the important of looking for new markets:
“Hospitals are excellent places because people need to buy on the spot, similarly with company shops or canteens. If you can get cards where people are queuing they will buy them, that's why post offices work so well. Position is everything.”
You need to go to independent businesses because they are less likely to have an existing supplier of cards. But also there is a lot to be said for the good will of one small business towards another. They will have sympathy and understanding for what you are trying to do.
Which comes back to the importance of building a good relationship with your clients. It's worth repeating that you need to like people and be good with them. You won't see retailers everyday but you will see them on a regular basis.
This doesn't mean you need to know every aspect of all their personal lives but a friendly business manner will get you further than brusque one. A good reputation may get you some referred business and it will also make your working day more enjoyable – which is of course of equal importance.
And in the midst of being sociable with your retailers keep going out and meeting new ones. If the cold calling is the hardest bit for you, you're probably not alone. But like everything else, as you get more experienced your ability to spot a good opportunity over a potential dud will improve. A popular product like greetings cards will always find an outlet.
If you’re serious as a publisher, you’ll need to be seen so will need to take space at key trade fairs. If you’ve got a lot of stuff for spring seasons (Valentines, Mothers, Easter, Fathers) then go to Autumn Fair (also worth visiting to see how card publishers work). Otherwise, book a small stand in the Fresh section in Hall 3 at Spring Fair – it’s for up-and-coming new publishers and artists.
Also, take a look at Progressive Greetings or of Greetings Today, the two trade mags, and Greeting Card Association
Insights from Startups members
“I didn’t use agents I did it myself with some very niche cards, not occasion specific just lots of imagery and blank inside. I began with a 1x 0.5 metre stand because it was the cheapest in the card hall at the Harrogate trade show http://www.homeandgift.co.uk I prepared and made sure I was included in any free PR or promotion which the trade show was involved in to get my cards noticed. To invest this money I wanted a return. I made sure my stand was professional and well presented.
I created some offer/sales sheets and set a free delivery threshold ‘spend xx and get free delivery’ these were aimed specifically at small Independant retailers.
I asked for minimum quantities for the first order, 8 designs in quantities of 6. I then promised they could order only the cards they required after that and asked for payment upfront with no returns, this really helped with cash flow and worked for the business I was in. I worked on a 16 card cycle so I would drop 6 cards each quarter these were the low volume sellers and replaced them with another 6 keeping the range fresh.
This small stand put my cards in front of Independant retailers and multiple buyers it gave me hundred of leads some placed an order immediately others I followed up with after the exhibition.
It’s important that you don’t saturate towns with your cards be selective who you supply but always take the details of anyone who is interested. Retailers like to have a unique range selling the same card to all the gift shops on the High Street will saturate the market and prevent repeat sales.
I used the Independents to trial card designs and feedback on what did and didn’t work. Independent retailers are the bread and butter business for any small businesses and completely invaluable.
During the Harrogate show I managed to get the interest from a couple of buyers including Sainsbury’s, John Lewis and Whsmiths. In each case I looked to trial cards in each of the stores. The buyers know what there looking for and will request samples of a particular style if they’re interested. It was through sheer perseverance and 8 months of following up that eventually John Lewis took the cards in a trial, they still stock them now in various branches and that was five years ago!
I suggest you join the Greetings card association and get a copy of Greeting’s Today to see what the competition is doing and get a feel for the market. If you’re going to be part of the greetings market you need to know it inside out.”