The company behind the Strip's neon lights is going national.
Utah-based Young Electric Sign Co. is franchising its service and repair business to grow beyond the 14 Western and Southwestern states it already serves. Since it began awarding franchises in April, YESCO has granted two franchises in Michigan and is negotiating with about a dozen other prospects.
"We want to continue to expand our service footprint. We have a good service-based model," said Josh Young, YESCO's vice president and general manager. "It's very franchisable, and it could provide some great opportunities for people who aren't currently employees."
YESCO is headquartered in Salt Lake City, but the 91-year-old manufacturing and repair company is a Las Vegas institution.
Its local managers estimate the company owns 60 percent of the sign manufacturing and service market in Las Vegas. It installed the first of the city's "neon spectaculars" -- large-scale signs with special effects and brilliant colors -- at the Boulder Club in downtown Las Vegas in 1945. The company created famous signs for the Stardust, the Golden Nugget and the Fremont Street Experience. YESCO's founder, Thomas Young Sr., made it into the Review-Journal's "The First 100" series, which chronicled the 100 people with the biggest impact on Las Vegas' first century.
"We would be a completely different company if we hadn't been in Las Vegas. Everything is bigger, better, faster and more impressive," Young said. "It demands better expertise and technology. It's caused YESCO to be more innovative and to look for new technologies to apply to signs, and that's had a ripple effect across all of our offices."
With a decades-long lock on sign manufacturing in Las Vegas and across the West, YESCO decided 11 years ago to boost the service side of its business. Sign repair provided a relatively small share of YESCO's sales and had bigger growth potential than manufacturing. Service would also hold up better than manufacturing in a business downturn: Even if new construction slowed and hurt demand for signs, existing business parks and shopping malls would always need sign-repair services.
So the company added service managers and technicians and brought on salespeople to market its repair business. Beefing up its service operation led to double-digit revenue growth for YESCO from 2000 to 2010, Young said.
Expanding the service business beyond the West, where YESCO has 42 offices and 1,500 employees, calls for a different development model.
"We've got our hands full growing in the existing areas we're in," Young said. "Taking on additional territories outside the Western United States is just too much for the company to be able to do financially and feasibly. It would just overwhelm us."
Enter franchising, a more affordable way to expand.
By partnering with business owners in other markets, YESCO could launch operations without startup hassles such as finding office space and buying trucks.
Opening a YESCO franchise costs $66,500 to $191,000, including the franchise fee, equipment purchases and other startup expenses. Existing sign companies will shell out less to get going because they already own or lease offices and trucks, Young said.
YESCO's plan could work, said Jerry Cole, a franchise consultant in Newport Beach, Calif., who's worked with franchises ranging from disaster-cleanup companies to health magazines.
"Their concept is unique. I've never heard of that niche (sign repair)," said Cole, who also helped establish franchising operations for Coldwell Banker Residential Affiliates and Prudential Real Estate Affiliates. "It might be a good thing that no one else has done it. I don't see any reason why it shouldn't make it."
Cole said YESCO also has a "very low opening cost" compared with other franchises, and that should aid in its expansion.
Young said he expects to award two to three more franchises before the month is up, and he'd like to award 20 by the end of 2011. He said he's not sure how many franchises the company will ultimately award, because territories can shrink or expand.
Contact reporter Jennifer Robison at email@example.com or 702-380-4512.