Description of Western Capital Resources Inc's Business Segments
FRANCHISE SEGMENT
We offer business format franchise opportunities for AlphaGraphics® Business
Centers within the United States and internationally. The AlphaGraphics franchise
model permits our franchisees to market and provide customized marketing solutions
utilizing AlphaGraphics’ trademarks, operating methods and custom-developed
or licensed information technology solutions. Through our preferred vendors,
we provide site selection assistance including design and construction oversight,
assist with locating financing, and provide training to our franchisees prior
to the launch of their franchise Business Center location(s). Additionally,
throughout the term of the franchise agreement, we provide ongoing training
to franchisees, national and regional advertising, and operational procedures
to Business Center owners. Franchisees locate and operate their franchise locations
in designated territories within a predetermined geographical region. Franchisees
are also responsible to develop and maintain their customer base and operate
their Business Center(s) in accordance with the franchise agreement and such
standards as we direct from time to time.
The quick printing industry is composed of establishments primarily engaged
in traditional printing activities, such as short-run offset printing or pre-press
services, in combination with document photocopying service. These establishments,
known as “quick printers,” generally provide short-run printing
and copying with fast turnaround times.
The digital printing industry is composed of establishments primarily engaged
in printing graphic materials using digital printing equipment. Establishments
known as digital printers typically provide sophisticated pre-press services,
including the use of scanners to input graphic images and computers to manipulate
and format the images, prior to printing.
We face competition in the printing industry, an industry largely driven by
consumer demand and costs to produce, and specifically in the quick and digital
printing segments where we operate.
Investment in a franchise location is significant, both financially and in time
commitment. We believe our franchise model, with its operational advantages
and guidance, provides our franchisees with substantial advantage over competitors
with stand-alone operations.
Industry Information
According to EPICOMM (an association for leaders in print, mail, fulfillment
and marketing services), sales within the industry have shown modest gains and
corresponding offsetting losses, with the greatest declines realized in 2008
and 2009, and an overall shift to consolidation of commercial printing establishments.
Although digitization and the Internet have broken down barriers to entry, the
printing industry has found itself in highly competitive markets with little
tolerance for inefficiency and spoilage.
CELLULAR RETAIL SEGMENT
We operate cellular retail stores as an authorized Cricket dealer, selling cellular
phones and accessories, providing ancillary services and accepting service payments
from customers. Authorized Cricket dealers are permitted to sell the carrier’s
line and generally locate their store operations in areas with a strong potential
customer base where the carrier does not maintain a corporate storefront. As
an authorized Cricket dealer, we are only permitted to sell the Cricket line
of no-contract cellular phones and service at our Cricket retail stores.
We generate revenue in this business through retail sales of Cricket cellular
phones, receipt of back-end compensation from Cricket, sales of phone accessories
(e.g., face plates and phone chargers), fees charged when a customer changes
services (service activations and reactivations, adding lines, phone number
changes, etc.), or whenever a customer whom we activated on the Cricket GSM
network pays his or her no-contract cellular bill.
DIRECT TO CONSUMER SEGMENT
Our direct to consumer segment is a direct marketer of roses, plants, seeds,
holiday gifts and home restoration products. The business is composed of: 1)
a multi-channel retailer of garden and living gift products; 2) a small wholesale
seed business; and 3) a multi-channel retailer of home hardware and restoration
products. Our garden products brands are highly recognizable in the rose and
garden space as both the Jackson & Perkins and Park Seed brands were founded
more than 140 years ago.
Products and Services
Our direct to consumer segment sells product through catalogs and online under
the following brands:
· Jackson & Perkins, 145 years of history and the most recognized
brand name and the largest seller of premium roses. Jackson and Perkins is the
largest seller of bare root roses in the United States, sells 130 active varieties
of bare root roses, of which 52 varieties are patented by Jackson and Perkins.
In addition to bare root roses, we sell rose bulbs, other flowers as well as
live plants packaged as holiday gifts. Holiday gifts include wreathes, baskets
and more as well as live decorative Christmas trees and amaryllis;
· Park Seed, 148 years in the business and one of America’s oldest
and largest direct seed retailers. The # 2 brand within the seed business, Park
Seed sells premium vegetable and flower seeds and various gardening supplies
directly to consumers. Park Seed sells approximately 3,000 seed varieties. The
wholesale seed business sells seeds, plants and other horticultural products
in larger quantities to small-medium sized growers, nurseries and garden centers.
Plants and seeds sales are concentrated during the spring months;
· Wayside Gardens, which sells unique, hard to find high-end flowers,
plants and gardening supplies to the master gardener. The Wayside Gardens customer
is extremely selective and will sometimes wait 2 years to fill a garden spot
with a plant. Approximately 60% of sales occur in the three months from March
to May, during the spring planting season; and
· Van Dyke’s, sells home restoration products, focusing on wood
products and hardware. Van Dyke’s is an online and catalog retailer with
a vast assortment of vintage home restoration wood products, hardware and antique
furniture, many of which are hard to find. Historically 75% of Van Dyke’s
products are shipped through a third party logistics provider located in St.
Louis, MO, and the remaining 25% are drop shipped to customers but this is trending
to a 55/45 mix.
CONSUMER FINANCE SEGMENT
The majority of short-term consumer loans we provide are commonly referred to
as “payday loans” or “cash advance” loans. Such loans
are referred to as “payday loans” because they are typically made
to borrowers who have no available cash and promise to repay the loan out of
their next paycheck. We also provide short-term installment and pawn loans as
part of this operating segment.
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