The State Journal: How did you get into the food franchising business in West Virginia?

Craigo: I owned Gino's Pizza and Spaghetti House, and operated it as a pizza chain. We did business primarily from lunch until end of evening hours, and we were missing the breakfast part, and so I bought the franchise from Bill Tudor, who owned Tudor's Biscuit World at the time. We would sell a breakfast menu with our lunch and dinner menu. We did that for a period of time, and then I bought into the business. So now I am one of the owners of the Gino's franchise and one of the owners of the Tudor's Biscuit World franchise. We are franchisors, and I manage both of them.

TSJ: How did you first get connected with Gino's Pizza?

Craigo: I've been in the real estate business for years. I would buy property and refurbish it and sell it or manage it. I bought a piece of property in Nitro, and it was a commercial piece of property. At that time -- this was years ago -- there was no pizza shop in Nitro, and so I wanted something to put in the building I had purchased, and so I got a franchise and put a pizza shop in. I loved the food business, went and bought another piece of property in South Charleston, put another store in, and I've been doing it ever since.

TSJ: How many states do you have businesses in?

Craigo: We operate primarily in West Virginia. We operate in 20 counties in West Virginia, and we have a couple stores in Kentucky, a couple stores in Ohio, and one in Virginia.

TSJ: And roughly how many employees work at each business, whether it's a Tudor's or a Gino's?

Craigo: In a single store, it would be probably 25.

TSJ: Do you try to keep the two stores together?

Craigo: When we can. When the opportunity presents itself, we do what we call co-branding, and I was one of the leaders in the country in developing that. The first co-branded store probably in West Virginia was the Malden (site). I put that store in years ago.

TSJ: And that's worked for you?

Craigo: Yes, it's worked very well.

TSJ: People talk about business climate issues in West Virginia. So what have the challenges been at least in the food franchising business?

Craigo: Obviously, workers' comp has been huge. It's getting much better now since the laws changed and it's being privatized. It's getting much better. It was really a jungle. Lawsuits have been a real problem. I don't know that the taxes are much different here than they are other places. They're higher. We pay a franchise tax; most states don't.

Corporate net taxes are high, and those should be addressed, and I think they probably will be. But we've been very blessed. We've found a little niche here in West Virginia, and it's allowed us to operate.

TSJ: What are your successes?

Craigo: Whatever success we have is the result of a lot of hard work from a lot of people. But the thing that's contributed to it the most is we have developed a product that has been accepted by the public. At the end of the day, it doesn't matter if I like it or not. It's what the general public will like and is willing to come back and buy over and over again, and we've been successful in developing that -- and that's the one huge success that we are privileged to enjoy.

TSJ: Given that you are a local franchisor competing in a lot of markets with national chains, is it hard to compete with them? Have national companies tried to come in and buy you out?

Craigo: It's extremely hard to compete against the big boys for two or three reasons. Probably the main reason is they operate off of stock money, not borrowed money, and so they have the cash to work with. They don't have an interest payment. They don't have a loan payment to the bank with some big interest. They obviously have many more advertising dollars than we do, and so they just wear us out in advertising. But we've been able to compete pretty well with it, and again that has to do with the public accepting our product.

TSJ: In West Virginia today, would you consider food franchising a growth industry?

Craigo: It certainly is, and they're all national -- they're all from somewhere else. I don't know of anybody else who is franchising food in West Virginia but us. There may be others, but I don't know who they are. Obviously there are local people franchising national chain stuff, but then you have the benefit of all those advertising dollars and all the things they do all over the country. And it's huge, huge competition.

TSJ: Would you recommend food franchising to someone looking to start a business?

Craigo: It is virtually impossible to do. It costs a huge amount of money to get ready to sell a franchise. It's controlled by the Federal Trade Commission. There's a lot of upfront expenditures for legal fees and expertise in going into it. It's not that easy to do. Probably the reason we were able to do it is we started a long time ago, and that made a big difference. So if anybody can do it, obviously it's a good business, but it's extremely difficult to do.

What I do recommend is people who have a desire to look seriously at franchising, the data shows that people who buy a franchise have a 90 percent chance of success, and the people who go in as "Oshel's whatever" have a 10 percent chance at success.

TSJ: So what you're saying is, buy a Subway franchise rather than starting your own sub shop?

Craigo: Exactly, because they've made all the mistakes, and they've done all the research, and they have an accepted product. The critical thing is getting a product that's acceptable to the public. That's so huge, and they've done that. They've done all the market research.

Take Subway -- Subway is big to us now. You hear all about it and Quizno's. Those guys have been in business for 40 years, so it didn't just happen overnight. There is a lot of time and effort, expense and expertise, trial and losses to getting into the franchise business.

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