Article published March 20, 2008
Franchises show resiliency; local owners in tune with national trend
An order arrives for a group of diners at Johnny's Lunch, a franchise fast-food operation on Sylvania Avenue.
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BLADE PHOTOS/JETTA FRASER
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By TED FACKLER
BLADE BUSINESS REPORTER
Despite a rocky market, franchise businesses continue to perform well.
This message from the International Franchising Association comes on the heels of a Pricewaterhouse-Coopers study this week on growth of such businesses nationwide.
Ohio ranked seventh among states in franchise ownership at 34,941 and Michigan 10th at 28,139, according to the study. It found that, between 2001 and 2005, the industry added 140,000 businesses and 1.2 million jobs.
Tony Calamunci, who owns the restaurant chain Johnny's Lunch in Toledo, expects growth because food is always in demand. His main store is at 4204 Sylvania Ave., near Westfield Franklin Park mall. He owns four others in Ohio, Michigan, and New York and is trying to find franchisees.
"People love our products because while they're paying $3.24 for [a gallon] of gas, they can still come and have lunch for under $3," he said.
He hopes the chain, which began in New York in 1936, will open two more Toledo stores next year. The average price for a franchise is below $200,000.Ohio's 34,941 franchises account for more than $33.9 billion annually in revenues and employ 473,400 people. In an area including metro Toledo and some outlying districts, more than
5,940 franchise businesses are in operation, generating revenue of $5.3 billion and employing 79,800. Owners and industry experts expect growth this year for the franchise industry even as the economy slows.
Tiffany Hunt, front left, and Katie Martin keep the orders flowing.
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"In past recessions, we've seen an uptick in franchise sales," said Terry Hill, spokesman for the national franchise group.
During these periods, franchises survive mainly on brand recognition, reliable systems, and growth, he said.
Franchise growth is helped by banks willing to lend and by an influx of business-savvy owners.
"People who are in 9-to-5 jobs start worrying about their jobs and start looking around for alternatives," Mr. Hill said. "One of the alternatives is franchises."
Dino Piccinini, franchise owner of a PRstore at 5236 Monroe St., has helped a few such people begin businesses. The firm, which specializes in small-business marketing, advertising, and public relations, has been open in Toledo for nearly two years. It employs three.
"We have [served] people coming from corporate jobs or companies that have closed up," he said. "Sometimes it's somebody that's currently still employed but sees the writing on the wall."
Mr. Piccinini said store profits have not changed since the market became testy. He purchased his PRstore for $90,000 and plans
to expand in northwest Ohio.
The report concluded that the franchise industry, valued at $880 billion, had annual revenue increases of 9 percent from 2001 to 2005.
Contact Ted Fackler at: tfackler@theblade.com or 419-724-6199.
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