October 2, 2006
Spreading the news | From his Bangor base, Bill Buckley oversees U.S. and international operations of Coffee News
By Whit Richardson
People spend countless hours every day waiting, whether it's for a table at a restaurant, in line at a grocery store or at the doctor's office. Most waiting is time spent doing nothing, but where some people see nothingness, the owners of the weekly publication called Coffee News see a market.
Many coffee shop and restaurant patrons in Maine probably recognize Coffee News, a single sheet of brown paper printed on both sides with funny stories, trivia and horoscopes boxed in between columns of local advertising. The content is designed to be a quick read, just enough to keep your attention while waiting to be seated, sipping your coffee or waiting for your clothes to dry at the laundromat. The weekly publication has a simple look and lists local activities and events, which often leads readers to believe it is the brainchild of a local entrepreneur. The truth, however, is that Coffee News USA is one of the fastest growing franchises in the country ˆ the 23rd fastest, in fact, according to a recent survey by Entrepreneur magazine ˆ and is based out of the home of Bangor resident Bill Buckley.
Buckley, however, doesn't discourage people from thinking each copy of Coffee News is a grassroots effort. "We like the idea of the local franchisee being the one behind it all," he says. "They're the ones making it happen in their community."
Since securing in 1996 the U.S. franchising rights to Coffee News ˆ which was founded in Winnipeg, Manitoba, in 1988 ˆ Buckley has overseen the steady growth of the publication in the United States and has been integral in spreading the franchise worldwide. Coffee News now has more than 800 franchises in 52 countries and an estimated weekly global readership of more than 7 million. He says Coffee News USA will have revenue of roughly $2.1 million this year, with franchisees paying between $4,000 and $6,000 per franchise, plus a weekly royalty of $20-$75 per week, depending on the number of franchises they own.
Coffee News USA has roughly 600 franchises nationally, a significant increase from last year when, as of July 31, there were only 352 U.S. franchises. Because of that growth, Entrepreneur magazine recently ranked Coffee News USA first in the advertising services category in its annual Franchise 500 rankings, 32nd in both the top 101 home-based franchises and the top low-cost franchises, and 129th overall. (Maine has one of the highest concentrations of Coffee News franchises in the world, with 33 franchises owned by 12 franchisees, and an estimated 200,000 readers every week.)
That growth is not surprising given the company's franchising model, according to Michael Seid, a West Hartford, Conn.-based franchising consultant and author of Franchising for Dummies. Franchising is growing amazingly well across the country, Seid says. During the past three years more than 900 different business concepts have begun franchising, 500 of those in 2005 alone, according to the Washington, D.C.-based International Franchise Association. And a franchise such as Coffee News, which doesn't need a large investment and can be produced from a home office, is the type that's growing the fastest. "Low-cost, home-based franchises always have a bigger audience than those that require real estate and a lot of money," Seid says. "But it's all going to come to sustainability."
Much of the responsibility for ensuring Coffee News' stability has fallen to Buckley, who has built up the kind of management systems and protocols that govern much bigger franchises. He carefully screens potential franchisees and has developed training programs for new publishers. And following the recent illness of founder Jean Daum, Buckley has also taken on the added responsibilities of the worldwide franchisor, keeping an eye on the global application of the Coffee News model. "The big problems are always internal," Buckley says. "The TV station doesn't fail, it's the station manager who fails."
Taking over the U.S. market
For Buckley and franchisees, the appeal of Coffee News is the simplicity of its business model: providing easy reading while offering advertising opportunities for small- and medium-sized businesses. It's what Buckley, 63, says he noticed right away when in 1995 he stumbled upon Coffee News while traveling in New Brunswick as a sales and marketing executive for an injury prevention consulting company.
A friend there was interested in purchasing a Coffee News franchise and asked Buckley to look over the information. When he did, "it was like a light came on," Buckley says. "I said, 'Holy mackerel! This is fantastic. I can just see how this works; this is a great niche-marketing publication for small- and medium-sized businesses.'"
Buckley called Coffee News in Canada and acquired the rights to publish the product in Bangor, Ellsworth and Mount Desert Island. His wife, Sue-Ann, was skeptical at first, but Buckley assured her the business model made sense. And it wasn't long before she was convinced: After Buckley's first day he had sold over $1,000 worth of advertising. She now works full-time for Coffee News USA, as does their son, who is the chief sales person.
Buckley eventually was able to break the greater Bangor area into four separate editions (Buckley sold the Bangor editions in 2003). That early success caught the eye of the head office in Canada, which asked Buckley if he wanted to take over U.S. franchising operations. As U.S. franchisor, Buckley sold 20 franchises around the country by the end of 1996. By the next year the number of franchises had increased to 40, then 80 the year after. "It just kept progressively getting bigger and bigger," Buckley says. "It was still a small business, but it was growing very, very fast."
Reid Stanley, who publishes three editions of Coffee News and distributes 7,000 copies every week in southern and central Aroostook County and northern Penobscot County, also was attracted by the publication's simplicity. But he was impressed that the publication was centered on the advertisers. "That said mountains to me about how effective this could be," says Stanley.
Traditional newspaper, TV and radio advertising don't properly serve many small- and mid-sized businesses, Buckley says. Those businesses often are forced to pay a premium to reach an audience far larger than they need. A neighborhood hair salon, for instance, doesn't necessarily benefit from buying an advertisement on a radio station that broadcasts in a 100-miles radius, when the business only draws clients from a six-mile radius. Coffee News also is egalitarian ˆ every ad is the same size and color, and ads are rotated every week so a company can't buy a specific location. But the publication only allows one business of each type to advertise, and clients appreciate that exclusivity, according to Paul McLellan, who publishes seven Coffee News editions in greater Portland and the nearby Lakes Region.
While the advertising is local, the editorial content is intended to be universal. All the short articles and trivia questions are created by part-time writers in Canada and then edited by Sue-Ann Buckley before they are distributed to franchisees worldwide. From there, individual franchisees, if need be, translate copy into the local language; sell, design and add the local advertising; then print and distribute the publication.
Creating the franchise infrastructure
For all its homespun content ˆ a recent edition featured the story of Emily the cat, who wandered from her Wisconsin home and into a nearby paper company's distribution center, only to be shipped in a box overseas ˆ Coffee News isn't a product designed to make people laugh, says Buckley. "We're not in the business of entertaining restaurant patrons," Buckley explains. "As a matter of fact, there are a number of techniques built into Coffee News to get people to not read the center section," where the editorial content is, "but to get them to read the ads."
With most print media, he says, borders separate the ads and compartmentalize the page. Coffee News ad borders always have an opening facing the editorial content. "Just like McDonalds has a formula for a hamburger, we have a formula for designing ads," Buckley says. "And we teach all of our publishers to design ads that work."
As the largest Coffee News franchisor, Buckley has made it a priority to properly train publishers in the model. Over the past 10 years he developed Coffee News College, which holds training sessions for new franchisees every few months across North America. He also created a mentoring program, an annual conference, a newsletter and an online network for publishers, with a chat room and message board to share stories and lend advice.
Buckley also won't sell a franchise to just anyone willing to spend the $6,000 initial cost (additional franchises are $4,000). He carefully vets potential franchisees, watching out for false expectations ˆ such as expecting to create content for their publication ˆ or someone who has no interest in sales or networking. Because of this careful screening he only sells a franchise to one in every 12 people that apply, and has kept his franchise failure rate below the 10% industry average, Buckley says. "We are not aggressive when it comes to getting people in this business because we don't want people to fail," Buckley says. "And because I don't want the quality to slip."
The lure of self-employment
Paul McLellan is a good example of the typical franchisee. He looks through a small stack of that week's Coffee News sitting near the reception desk at the Village Café in Portland. After inspecting one, he holds it up and compares it with another. "This one has been read before,' he says. "You can tell by the fold."
McLellan, who recently bought into the seven franchises he owns with partner Brian Campbell, spent 31 years in the out-of-state corporate world before returning to South Portland, where he grew up, four years ago. The opportunity to buy a franchise like Coffee News was just what he was looking for. "Coffee News allows me some of the freedom I'm looking for at my age and at the same time allows me to make a living and not have to be the full-time traveling guy," he says.
One advantage of the model, he says, is that once he gets his 32 ad spaces filled ˆ with most advertisers signing on for at least a 13 week run ˆ the hardest part of the job is essentially done. But there is always turnover, and McLellan is always looking for new advertisers.
He tries never to leave the house without sporting at least one piece of Coffee News apparel. (Sue-Ann Buckley manages the company's product line, which consists of roughly 100 products from clothing and luggage tags to coffee cups and ties. It brings in around $100,000 in revenue each year.) McLellan does this not only to promote the brand and attract new advertisers, but also because he likes hearing people's reactions to the publication. "It is so recognizable," he says, adding that nine out of 10 prospective advertisers he cold calls has seen Coffee News before.
While franchisees have the freedom to set their own advertising rates, Buckley says the average cost of an ad is $35 to $40 a week for 13 weeks. But even in a market like Portland, a business can buy an ad for as little as $29 a week if it commits to running for a full year ˆ which many do, McLellan says, because if they give up their space, another business in their market can take it over.
Some companies also choose to advertise with Coffee News because it reaches a different audience than other media. "I feel [Coffee News] reaches different people that tend not to read the local paper," says Betsy Gilbert, owner of Earth's Bounty, a health food store in Lincoln that has been an advertiser in Reid Stanley's northern Penobscot County edition for the past six years. "A lot of summer people won't read the local paper, but they're in the laundromats, the restaurants, and that's where the Coffee News is."
The model also is scalable to any market size, says Dennis Kelly, who recently purchased a franchise in Chicago. Despite the competition in that city's media market, Kelly says Coffee News works because the city of 3 million is broken up into many small neighborhoods. His pitch to small business owners centers on the prominent spacing an advertisement can command in Coffee News, compared to a small ad in one of the larger papers like the Chicago Tribune. "Coffee News definitely appeals to that business owner that's running a small business and understands the value of advertising," says Kelly, who will publish his first edition in October.
Ultimately, the future success of Coffee News will rely on the cultivation of successful franchisees in new markets, whether they are untapped small towns or neighborhoods within big cities. Kelly is already considering launching a Polish language edition in an ethnic neighborhood in Chicago and Reid Stanley is considering starting a northern Aroostook County edition around Fort Kent and Madawaska.
There is still plenty of room for growth, Buckley says. He figures the United States alone could probably handle roughly 7,500 franchises before reaching the saturation point. And now that Buckley has temporarily taken over responsibilities for worldwide operations ˆ if Jean Daum doesn't recover Buckley says he will have the option to purchase the worldwide franchising rights ˆ he deals with much larger questions connected with operating a global franchise, from creating international payment networks to securing royalties from franchisees in places as remote as Swaziland.
But when it comes to growing the franchise globally, his priority is developing training programs for foreign franchises similar to the systems he developed for the U.S. market. "We have a great one here, but now we have to implement that same level of training programs worldwide," Buckley says. "Otherwise they're just going to be spinning their wheels in foreign countries."
Many coffee shop and restaurant patrons in Maine probably recognize Coffee News, a single sheet of brown paper printed on both sides with funny stories, trivia and horoscopes boxed in between columns of local advertising. The content is designed to be a quick read, just enough to keep your attention while waiting to be seated, sipping your coffee or waiting for your clothes to dry at the laundromat. The weekly publication has a simple look and lists local activities and events, which often leads readers to believe it is the brainchild of a local entrepreneur. The truth, however, is that Coffee News USA is one of the fastest growing franchises in the country ˆ the 23rd fastest, in fact, according to a recent survey by Entrepreneur magazine ˆ and is based out of the home of Bangor resident Bill Buckley.
Buckley, however, doesn't discourage people from thinking each copy of Coffee News is a grassroots effort. "We like the idea of the local franchisee being the one behind it all," he says. "They're the ones making it happen in their community."
Since securing in 1996 the U.S. franchising rights to Coffee News ˆ which was founded in Winnipeg, Manitoba, in 1988 ˆ Buckley has overseen the steady growth of the publication in the United States and has been integral in spreading the franchise worldwide. Coffee News now has more than 800 franchises in 52 countries and an estimated weekly global readership of more than 7 million. He says Coffee News USA will have revenue of roughly $2.1 million this year, with franchisees paying between $4,000 and $6,000 per franchise, plus a weekly royalty of $20-$75 per week, depending on the number of franchises they own.
Coffee News USA has roughly 600 franchises nationally, a significant increase from last year when, as of July 31, there were only 352 U.S. franchises. Because of that growth, Entrepreneur magazine recently ranked Coffee News USA first in the advertising services category in its annual Franchise 500 rankings, 32nd in both the top 101 home-based franchises and the top low-cost franchises, and 129th overall. (Maine has one of the highest concentrations of Coffee News franchises in the world, with 33 franchises owned by 12 franchisees, and an estimated 200,000 readers every week.)
That growth is not surprising given the company's franchising model, according to Michael Seid, a West Hartford, Conn.-based franchising consultant and author of Franchising for Dummies. Franchising is growing amazingly well across the country, Seid says. During the past three years more than 900 different business concepts have begun franchising, 500 of those in 2005 alone, according to the Washington, D.C.-based International Franchise Association. And a franchise such as Coffee News, which doesn't need a large investment and can be produced from a home office, is the type that's growing the fastest. "Low-cost, home-based franchises always have a bigger audience than those that require real estate and a lot of money," Seid says. "But it's all going to come to sustainability."
Much of the responsibility for ensuring Coffee News' stability has fallen to Buckley, who has built up the kind of management systems and protocols that govern much bigger franchises. He carefully screens potential franchisees and has developed training programs for new publishers. And following the recent illness of founder Jean Daum, Buckley has also taken on the added responsibilities of the worldwide franchisor, keeping an eye on the global application of the Coffee News model. "The big problems are always internal," Buckley says. "The TV station doesn't fail, it's the station manager who fails."
Taking over the U.S. market
For Buckley and franchisees, the appeal of Coffee News is the simplicity of its business model: providing easy reading while offering advertising opportunities for small- and medium-sized businesses. It's what Buckley, 63, says he noticed right away when in 1995 he stumbled upon Coffee News while traveling in New Brunswick as a sales and marketing executive for an injury prevention consulting company.
A friend there was interested in purchasing a Coffee News franchise and asked Buckley to look over the information. When he did, "it was like a light came on," Buckley says. "I said, 'Holy mackerel! This is fantastic. I can just see how this works; this is a great niche-marketing publication for small- and medium-sized businesses.'"
Buckley called Coffee News in Canada and acquired the rights to publish the product in Bangor, Ellsworth and Mount Desert Island. His wife, Sue-Ann, was skeptical at first, but Buckley assured her the business model made sense. And it wasn't long before she was convinced: After Buckley's first day he had sold over $1,000 worth of advertising. She now works full-time for Coffee News USA, as does their son, who is the chief sales person.
Buckley eventually was able to break the greater Bangor area into four separate editions (Buckley sold the Bangor editions in 2003). That early success caught the eye of the head office in Canada, which asked Buckley if he wanted to take over U.S. franchising operations. As U.S. franchisor, Buckley sold 20 franchises around the country by the end of 1996. By the next year the number of franchises had increased to 40, then 80 the year after. "It just kept progressively getting bigger and bigger," Buckley says. "It was still a small business, but it was growing very, very fast."
Reid Stanley, who publishes three editions of Coffee News and distributes 7,000 copies every week in southern and central Aroostook County and northern Penobscot County, also was attracted by the publication's simplicity. But he was impressed that the publication was centered on the advertisers. "That said mountains to me about how effective this could be," says Stanley.
Traditional newspaper, TV and radio advertising don't properly serve many small- and mid-sized businesses, Buckley says. Those businesses often are forced to pay a premium to reach an audience far larger than they need. A neighborhood hair salon, for instance, doesn't necessarily benefit from buying an advertisement on a radio station that broadcasts in a 100-miles radius, when the business only draws clients from a six-mile radius. Coffee News also is egalitarian ˆ every ad is the same size and color, and ads are rotated every week so a company can't buy a specific location. But the publication only allows one business of each type to advertise, and clients appreciate that exclusivity, according to Paul McLellan, who publishes seven Coffee News editions in greater Portland and the nearby Lakes Region.
While the advertising is local, the editorial content is intended to be universal. All the short articles and trivia questions are created by part-time writers in Canada and then edited by Sue-Ann Buckley before they are distributed to franchisees worldwide. From there, individual franchisees, if need be, translate copy into the local language; sell, design and add the local advertising; then print and distribute the publication.
Creating the franchise infrastructure
For all its homespun content ˆ a recent edition featured the story of Emily the cat, who wandered from her Wisconsin home and into a nearby paper company's distribution center, only to be shipped in a box overseas ˆ Coffee News isn't a product designed to make people laugh, says Buckley. "We're not in the business of entertaining restaurant patrons," Buckley explains. "As a matter of fact, there are a number of techniques built into Coffee News to get people to not read the center section," where the editorial content is, "but to get them to read the ads."
With most print media, he says, borders separate the ads and compartmentalize the page. Coffee News ad borders always have an opening facing the editorial content. "Just like McDonalds has a formula for a hamburger, we have a formula for designing ads," Buckley says. "And we teach all of our publishers to design ads that work."
As the largest Coffee News franchisor, Buckley has made it a priority to properly train publishers in the model. Over the past 10 years he developed Coffee News College, which holds training sessions for new franchisees every few months across North America. He also created a mentoring program, an annual conference, a newsletter and an online network for publishers, with a chat room and message board to share stories and lend advice.
Buckley also won't sell a franchise to just anyone willing to spend the $6,000 initial cost (additional franchises are $4,000). He carefully vets potential franchisees, watching out for false expectations ˆ such as expecting to create content for their publication ˆ or someone who has no interest in sales or networking. Because of this careful screening he only sells a franchise to one in every 12 people that apply, and has kept his franchise failure rate below the 10% industry average, Buckley says. "We are not aggressive when it comes to getting people in this business because we don't want people to fail," Buckley says. "And because I don't want the quality to slip."
The lure of self-employment
Paul McLellan is a good example of the typical franchisee. He looks through a small stack of that week's Coffee News sitting near the reception desk at the Village Café in Portland. After inspecting one, he holds it up and compares it with another. "This one has been read before,' he says. "You can tell by the fold."
McLellan, who recently bought into the seven franchises he owns with partner Brian Campbell, spent 31 years in the out-of-state corporate world before returning to South Portland, where he grew up, four years ago. The opportunity to buy a franchise like Coffee News was just what he was looking for. "Coffee News allows me some of the freedom I'm looking for at my age and at the same time allows me to make a living and not have to be the full-time traveling guy," he says.
One advantage of the model, he says, is that once he gets his 32 ad spaces filled ˆ with most advertisers signing on for at least a 13 week run ˆ the hardest part of the job is essentially done. But there is always turnover, and McLellan is always looking for new advertisers.
He tries never to leave the house without sporting at least one piece of Coffee News apparel. (Sue-Ann Buckley manages the company's product line, which consists of roughly 100 products from clothing and luggage tags to coffee cups and ties. It brings in around $100,000 in revenue each year.) McLellan does this not only to promote the brand and attract new advertisers, but also because he likes hearing people's reactions to the publication. "It is so recognizable," he says, adding that nine out of 10 prospective advertisers he cold calls has seen Coffee News before.
While franchisees have the freedom to set their own advertising rates, Buckley says the average cost of an ad is $35 to $40 a week for 13 weeks. But even in a market like Portland, a business can buy an ad for as little as $29 a week if it commits to running for a full year ˆ which many do, McLellan says, because if they give up their space, another business in their market can take it over.
Some companies also choose to advertise with Coffee News because it reaches a different audience than other media. "I feel [Coffee News] reaches different people that tend not to read the local paper," says Betsy Gilbert, owner of Earth's Bounty, a health food store in Lincoln that has been an advertiser in Reid Stanley's northern Penobscot County edition for the past six years. "A lot of summer people won't read the local paper, but they're in the laundromats, the restaurants, and that's where the Coffee News is."
The model also is scalable to any market size, says Dennis Kelly, who recently purchased a franchise in Chicago. Despite the competition in that city's media market, Kelly says Coffee News works because the city of 3 million is broken up into many small neighborhoods. His pitch to small business owners centers on the prominent spacing an advertisement can command in Coffee News, compared to a small ad in one of the larger papers like the Chicago Tribune. "Coffee News definitely appeals to that business owner that's running a small business and understands the value of advertising," says Kelly, who will publish his first edition in October.
Ultimately, the future success of Coffee News will rely on the cultivation of successful franchisees in new markets, whether they are untapped small towns or neighborhoods within big cities. Kelly is already considering launching a Polish language edition in an ethnic neighborhood in Chicago and Reid Stanley is considering starting a northern Aroostook County edition around Fort Kent and Madawaska.
There is still plenty of room for growth, Buckley says. He figures the United States alone could probably handle roughly 7,500 franchises before reaching the saturation point. And now that Buckley has temporarily taken over responsibilities for worldwide operations ˆ if Jean Daum doesn't recover Buckley says he will have the option to purchase the worldwide franchising rights ˆ he deals with much larger questions connected with operating a global franchise, from creating international payment networks to securing royalties from franchisees in places as remote as Swaziland.
But when it comes to growing the franchise globally, his priority is developing training programs for foreign franchises similar to the systems he developed for the U.S. market. "We have a great one here, but now we have to implement that same level of training programs worldwide," Buckley says. "Otherwise they're just going to be spinning their wheels in foreign countries."
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