How much does a neighborhood print magazine franchise cost to run?

I met a franchise magazine operator at a networking group, and her numbers stuck with me. Just printing and mailing costs $7 per magazine. On a monthly magazine that's somewhere around $12,000 out the door, regardless of how much money you make.

Since then I've talked to a lot more people in this world: franchisees on my calls, people pitching me, and the publishers who run these networks. The numbers move around depending on who's talking, but the shape is always the same. Big fixed costs, a cut to the franchisor, and a threshold you have to clear before you get paid.

What are the costs, line by line?

These are what franchisees and their materials told me, relayed secondhand, so treat them as data points and not a quote sheet:

Item	What I've heard
Upfront franchise fee	$10,000 to $20,000 is normal; one print-guide franchise I read about asks about $50,000, plus a photography budget around $12,000
Franchise royalty	10% to 15% of ad revenue (one operator keeps 85%)
Print and mail, per copy	about $7 (another time I heard $17 per house, and I'm honestly not sure which)
Monthly print and mail	about $12,000 by one operator's numbers; I've also heard $17,000
Homes per neighborhood	1,800 to 3,000
Ad contracts they sell	$500 to $1,000 a month, on 12-month to three-year terms

The 1,800-home number matters as much as the cost. That neighborhood had $800,000 to $4 million homes, which is why advertisers pay. But 1,800 homes caps how many advertisers will care, not just how many people read it.

How much do you have to sell before you make money?

This is the part that floors me. Because the print bill comes every month whether you sold anything or not, there's a threshold:

• One network told its franchisees you sell about $10,000 in ads a month before they print, and you keep about 70% of everything above that. Sell $10,100 and you make $70.
• By my understanding of other networks, it's $10,000 to $15,000, or $12,000, before you make a dollar.
• My understanding is you sell $15,000 a month in ads to make about $4,000, or sell $25,000 and keep about $8,000.
• If printing really runs $17,000 a month and you sold $15,000 in ads, you'd lose money.

Compare that with the digital model I pitch to licensees. They pay us around $2,000 a month and the content gets done for them.

"If you sell $10,000 of ads with [a print franchise], you make zero. You sell $10,000 of ads for [our brand] you make $8,000."

If the math is that bad, why do these companies make so much money?

Salespeople. The biggest of these magazine companies are nine-figure businesses. Their whole pitch to a franchisee is: if you're good at sales, we have the infrastructure that makes it easy to sign business owners to $500 or $1,000 a month on 12-month deals. You sign up, and you are a sales rep. That's the job.

And a lot of them do well. Some flail, but many make $200,000 to $300,000 a year pounding the pavement and selling one- and two-year contracts, on a magazine that gets at most about 3,000 impressions a month. Good salespeople can overcome a bad offer, especially in something as confusing as local advertising.

Most of us running newsletters are solopreneur types with another job. These legacy companies have full-time salespeople who are experts, with years of comparables behind them. That's the real gap.

Is the ad actually worth it for the business?

I don't think so. I think it's more of a status game for the types of businesses they sell. Here's how the pitch works: print 5,000 copies, assume four people per household read it, and tell the advertiser that's 20,000 impressions. They probably get something like 500.

• These magazines run 60 to 80 pages. What are the odds someone looks at your ad in the bottom left corner of page 28?
• The copies are mailed to people who never asked for them, because they have your address from the Postal Service. I'd guess one in five gets looked at.
• If a reader does see the body shop ad, they have to go to their phone or computer to look it up later. You probably lost them.

A newsletter reads in order, so the reader hits the ad on the way to the next section, and it's one click to the business. I have 30,000 people reading my newsletters just in Williamson County, more than half of them open it and about 7% click. That's the comparison I put in front of advertisers.

How does a digital local brand compare on cost?

"Our costs are near zero by comparison, so this model, done right, has far more potential."

A digital brand pays for software and audience growth, not paper and postage. The same advertiser dollar leaves a very different margin. My estimate has ranged from 5x cheaper to 90% or even 95% lower cost, and the reach is wider: 2,000 or 3,000 homes is nothing next to a list of 20,000 or 30,000 people in a town.

Then why do print magazines still sell?

Because business owners love holding things they paid for. That's real, and I don't dismiss it. On one of the big business podcasts, a guest who runs it with one partner described making about $10 million a year sending real estate magazines to the richest zip codes, with realtors paying to feature listings.

On my own podcast, David Grant told me about a Texas local media company that scaled from a kitchen table to $35 million-plus, mostly on print ad revenue. My view has moved from "why would you do print?" to "how do I figure this out?" It's still a whole other ballgame for one person compared with Meta ads and a newsletter.

One more thing I noticed: the franchise owner I met didn't ask me one question. The only thing she said about newsletters was that she didn't think people read them. We can track that, and about 60% of people are reading. That lack of curiosity is the norm, and it's an opening.

Is there an opening for franchisees?

I think so. A franchisee jumped on a call with me because he needed more to offer his advertisers than one magazine a month to 3,000 people. Unhappy print franchisees already know how to sell local ads, and some are frustrated by commission cuts under private-equity ownership.

An all-digital version sold to them, at around $1,000 a month or with no upfront fee, could be compelling. One franchisee told me their network has no upfront cost, and I think if you don't charge upfront you're going to crush. I'm not telling people they'll get rich on ads, though. You might, but that's not why you'd sign up. The real bottleneck in both models is finding the right people who will actually sell.

Whether to add print to your own digital brand is a separate question. I cover it in should a local newsletter launch a print magazine.