Franchisors Getting a Foot in the Door

When David Meltzer lost his job as CEO of a local wireless company because of a reverse merger with a firm in Ireland, he started looking around for a local non-wireless business to buy.

At the same time, he was building a home in Rancho Santa Fe and looking for a good on custom doors. Frustrated

"I found this door company that was 7 years old up in Mountain View, and they had just started franchising," Meltzer said. "I thought it was a great business concept, so I bought all three franchises in San Diego."

And he got his doors.

According to the first-ever comprehensive survey on franchising conducted for the Washington, D.C.-based International Franchise Association and released March 9, more than 760,000 franchise establishments generate nearly 10 million direct jobs nationwide and account for nearly 10 percent of the nation's private sector economic output.

The figures, based on various 2001 economic drivers, are contained in a massive 630-page survey conducted by PricewaterhouseCoopers.

California had the greatest number of jobs in franchised businesses in 2001 at just over 1 million, according to the survey, followed by Texas, Florida, Illinois, and Ohio. However, considered relative to the size of a state's economy, franchising had the greatest impact on jobs in Nevada, accounting for 20 percent of its private sector work force.

The survey results are broken-out by congressional districts. There were more than 40,000 franchise establishments in 2001 in those districts that include San Diego County.

The largest number of franchising jobs locally were in U.S. Rep. Darrell Issa's 49th District at 137,663 franchise employees. Issa's district includes the Riverside County cities of Lake Elsinore, Perris, and Temecula, and the San Diego County towns of Bonsall, Julian, Fallbrook, Oceanside, Rainbow, San Marcos, and Vista.

This was followed by 98,327 jobs for U.S. Rep. Bob Filner's 51st District, which includes the southern half of the city of San Diego, Chula Vista, National City, and all of Imperial County.

The results shouldn't come as a surprise, said George Whalin, president and CEO of San Marcos-based Retail Management Consultants.

"That's where the big growth is, certainly in California right now. It follows housing, and it follows population. The population growth is exploding both in the South Bay and North County all the way up into Riverside County," Whalin said. "There's certainly going to be lots of jobs there for people to work in, everything from restaurants to photo copy places to any service that you can offer through a franchise; it makes a lot of sense."

Meltzer opened his first Interior Door Replacement Co. franchise in Poway a year ago, then opened his Carlsbad location this January. By the end of the year, he will open in National City.

He has 85 percent ownership as president and two of his contractors own the rest. The upfront investment for each store was about $250,000, he said, including tooling up, three months of capital, franchise and training fees.

Meltzer said he has already recouped his investment in the Poway store, which employs 11 people, and soon will do the same in Carlsbad, which employs eight people. Last year's revenues were $1 million, he said.

Franchising doesn't come without pitfalls.

Said Meltzer of his door business, "I enjoy the freedom and the creativeness and control. But in San Diego it's very expensive. In California with workers' comp and a few other issues, it's a little more difficult than I anticipated."

Business growth is slow but steady for Charles Black, who left 30 years of retail management and his most recent job in Iowa a year and a half ago to buy a franchise in San Diego. He has not recouped his investment yet in Aussie Pet Mobile, a pet grooming service that employs four people, and wouldn't disclose revenues, but he's hopeful about the industry even in a crowded market.

"There's quite a few mobile services around San Diego. It takes a while for people to get to know that you're out there," Black said.

Black owns the Dana Point-based Aussie Pet Mobile franchise for Oceanside, Carlsbad, Vista, and part of the San Clemente area. His startup cost was $200,000, which included three dog and cat grooming trailers plus the territory. He found out about the business, which is in 150 cities nationwide, through a franchise broker and started with no experience in pet grooming. Now, according to Ian Moses, president and cofounder of Aussie Pet Mobile, his business is No. 2 for number of pets groomed in the Aussie franchises.

Black and Meltzer garnered two of 33 national franchisee-ofthe-year awards given by the International Franchise Association at the group's annual convention last week.

Said retail analyst Whalin, "I think franchises are a viable business and there's lots of them around and they're a perfectly wonderful way to beg into business."

San Diego a Fertile Ground for Franchisors

Some franchises founded in San Diego are Jack in the Box Inc., Postal Annex+, Mailboxes Etc., and Image Arts Etc.

Jack in the Box, traded as JBX on the New York Stock Exchange, was founded in 1951 in San Diego, opening its first franchise in 1982. It now operates and franchises two restaurant chains - Jack in the Box and Qdoba Mexican Grill - in a combined 32 states.

Mail Boxes Etc., Inc., acquired by UPS in 2001, is the largest national franchisor of retail shipping, postal, and business service centers. Its first franchise was sold in 1980 in Carlsbad.

The UPS Store and Mail Boxes Etc. together comprise more than 4,000 independently owned locations around the world.

Postal Annex+, the third-largest postal service company in the U.S., has 270 franchises worldwide. Headquartered in San Diego, it was founded in 1985 with three stores, with its first franchise sold in December 1986.