Local Ventures
Trying to put careers in gear, they simply shifted into park
“Rocky” Marchiano and Jim Gane own parking franchises. They see plenty of changes to profit.
By Wes Conard
FOR THE INQUIRER
After looking at franchises for everything from maid service to pizza, Constantino “Rocky” Marchiano couldn’t quite figure out what a valet-parking franchise was.
Paying two guys from New Jersey $39,500 to teach him to park cars for a living sounded like trading the price of a new Mercedes to learn how to mow the lawn or shovel snow.
“It sounded really dumb to me,” said Marchiano, who earned his nickname from classmates years ago.
“Who the hell would think of something like that to make money? I always thought valets were just a couple of kids with some orange cones and a milk crate.”
After studying World Class Parking, the franchise developed by North Jersey entrepreneurs Jerry Eicks and John Julie, Marchiano decided that it sounded too good to be true. Finally, in May, he decided it was worth it.
“There’s no inventory, a very low overhead, no office, and no expenses per se that you would normally have,” said Marchiano, 53, who owned a Harley-Davidson dealership for 16 years.
His franchise area is Montgomery County, and so far Marchiano, a Springfield resident, has gotten five accounts with restaurants and country clubs. He hopes to have 15 by next year. That would generate an estimated $225,000 in revenues, and allow him to hire a full-time supervisor and some salesmen, Marchiano said.
World Class Parking started marketing franchises in April, and so far, it has seen about $750,000 in sales and royalties, said Julia. The company is projecting sales of more than $1 million this year, he said.
That easy-startup, grow-as-you-go flexibility of the parking business is what attracted Eicks and Julia, both 28, to it in 1991.
“We had both recently graduated and were working in a brokerage house making cold calls,” said Eicks, in a phone interview from the company’s Clark, N.J., headquarters. “We both needed extra money, and both of us had done valet parking in college, so we thought, ‘We can do this.’”
Over the next three years, Eicks and Julia built up a clientele of 80 regular customers, and in 1994 they quit their brokerage jobs to pursue parking full time, Julia said. That fall, they decided the business had grown so much that they would have to either set up a regional management system or franchise it out.
Julia said there was no choice.
“It really comes down to how effective a regional manager is going to be if they are making $8 or $9 an hour, as opposed to a person who made a financial investment in the company,” he said. “When we weighed those factors, the franchise was the only thing that made sense.”
The economics of the idea are simple. The franchise costs $39,500 for an area that World Class Parking guarantees will have at least 100 accounts, Julia said. Additionally, rather than paying a percentage of profits, the franchisee pays a $50 monthly royalty fee that that grows to a maximum of $150 over three years, said Julia.
“To us, a percentage of sales royalty is unfair simply because, after a year, a franchise needs less and less support, but they are getting more business, so they are paying more for less,” said Julia. “This doesn’t punish the franchisee for getting more business.”
The franchise owner charges a restaurant or club $9 to $12 an hour for each valet. The franchise owner pays the valets $3 to $5 an hour plus tips and keeps the rest. The only other expense is insurance, which World Class Parking provides through an insurance carrier for about $150 a month, far less than it would cost an individual entrepreneur to buy, said Julia.
“That’s the big thing,” said Marchiano. “Garage keepers’ liability insurance would be about $10,000 for a year. Through World Class Parking it costs about 10 percent of the total contracts you have each month.”
Franchisees also get extensive training, a computer, printer and fax machine, parking software and of course, the plastic cones, key box and polo shirts needed to run the parking lots.
With the low overhead, Eicks said, most owners can expect profits of 50 percent of revenues, and the average parking account will generate about $15,000 a year.
Although that doesn’t sound as complex as running a McDonald’s, Eicks said there’s a lot more to it than most people think, and his system allows people to hit the ground running.
“It seems stupid, just the idea of parking cars, but it gets more complicated,” said Julia. “Jerry and I have a lot of experience in the parking industry. We teach techniques like stacking cars and the way we lay out the lots.”
Even a seasoned entrepreneur like Jim Gane, a 45-year-old engineer from Bryn Mawr, said it was worth paying the franchise cost for the benefit of someone else’s experience.
Gane, who owns the World Class Parking franchise in Delaware County and part of Chester County, had run his own electronics firm, a marble-countertop company and a franchise basement-waterproofing business.
“It sounds like it should be a very simple and uncomplicated procedure, but when you start getting into it, the ins and outs, it’s much more complicated,” he said. “Staffing and record-keeping are all things that they have assisted me with. When I’ve run short of guys, they’ve sent people down.”
Game has seven accounts now, and is hoping to boost that to 30 in the next year, and hire a supervisor to handle much of the day-to-day work by this summer. He estimates that there are 130 to 150 potential accounts in his area.