Moto Launches New Franchise Concept

Wednesday, December 01, 2004

Earlier this month, Trotwood-based Moto Franchise Corp. opened a prototype store called Portrait Avenue inside the Miami Valley Centre Mall in Piqua. The 1,200-square-foot digital portrait studio is the culmination of a $1 million research and development study and is the first of what Moto Franchise plans to grow into its second national retail chain. Moto Franchise is the franchise operator for 220 Moto Photo stores across the United States and Canada. With traditional photo processing in decline and many digital camera owners not getting prints made, the company hopes the digital portrait studios will deliver growth. The company plans to sell more than 50 Portrait Avenue franchises in 2005 and there could be hundreds of stores in a few years, said Harry Loyle, president and chief executive officer of Moto Franchise. In addition, Loyle plans to introduce a third franchise concept next year, which involve digital photography and scrapbooking. The new franchises could double or triple Moto Franchise's current $15 million annual revenue. "This could be a very dramatic growth year for us," Loyle said. "We said we wanted to make prudent investments in 2004 -- we've invested close to $1 million in new technology, new programs and new concepts -- but it's only through sales that will tell whether or not it's been prudent." Loyle said Portrait Avenue will fill a niche in the portrait industry: It will more upscale than J.C. Penney and Kmart picture studios but less expensive than most locally owned portrait shops. The average cost for a package of photos will be $120. Each store will feature two portrait studios, a consultation area, a kids playroom and photo processing equipment. People will be able to have their portrait taken and prints made in an hour. The company is still tweaking the fees, but Loyle said total cost -- franchise fee, working capital and build-out for the stores -- is $135,000, which is much less than the $250,000 to $350,000 it costs to open a Moto Photo store. Loyle bought Moto Photo Inc. in February 2003 after the company filed for bankruptcy in 2002. Since he took over the company, Loyle has been working to find new sources of revenue because of all the changes in the photo processing industry. For example, he pushed his Moto Photo stores to upgrade their equipment and embrace digital imagery. The company has lost a chunk of stores. The number of Moto Photo stores has declined from 260 last year to 220. Loyle said the declining number of stores was because of operators who didn't want to invest in digital processing. But Loyle acknowledges digital processing is still evolving. Although more people are taking photos with digital cameras, many of them aren't getting those images turned into prints. People are still having portraits taken, though. Moto Photo stores with portrait studios report that the portrait studios' sales grew 21 percent this year, Loyle said. So earlier this year, he hired Columbus-based Total Image Specialists, which helped Moto define a brand and a strategy for stand-alone digital portrait studios. Out of that came Portrait Avenue. To handle the new franchise, Loyle has hired executives such as Jim Brown, who moved here from Oklahoma to serve as vice president of brand development for Portrait Avenue. Earl Teeters, a Moto Photo franchisee who runs a store in Kettering, likes the moves Loyle has made. "Times are changing, and I don't think the old company wanted to make changes to adapt to the future," he said. "Harry is taking a more positive note, taking some opportunities and (telling us) we have to ride this out." Like 70 other franchisees, Teeters already has a portrait studio in his store. He said the stand-alone franchise is a good idea, as long as it doesn't compete with his store. Loyle said the Portrait Avenue stores likely will go in small towns with large school-age populations. He will market the new franchise concept with local and national media, Internet advertising and trade shows such as the International Franchise Expo, scheduled for April in Washington, D.C. He said the Moto Franchise has a leg-up when it comes to starting new franchise businesses. "A lot of start-up franchise companies have challenges: being a new company and they don't know franchising," he said. "(But) we have the advantage of having a new concept plus we've got the infrastructure of a 20-year-old franchise company."

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