Moe Menebhi, brother of franchise owner Karim Menebhi, makes a pizza at the new Ronzio store in Smithfield.

The Providence Journal / Bob Breidenbach

It’s 11:30 on a Monday morning, and Karim Menebhi is waiting for the first customer at his brand-new Ronzio Pizza & Subs franchise in Smithfield.

Menebhi has been busy — loading boxes of supplies onto shelves, talking on the phone to suppliers. Now he’s getting a little nervous. “I was feeling just normal until about 20 minutes ago,” he said. “Now I’m feeling that I need to see some people walk in and start serving them some food.”

Finally, about 11:40, the elusive first customer arrives. He’s Ryan West, who manages a karate school, Mastery Martial Arts, in the same shopping plaza as the new Ronzio. West orders a chicken sandwich. He also represents a potential source of future business, telling Menebhi that his martial arts school frequently hosts birthday parties for its young clients. Menebhi said he could provide discounts on pizza, and West took some Ronzio menus with him when he left.

Ronzio is a local chain, with 19 locations in Rhode Island and 1 in Massachusetts. Julian Angelone, chief operating officer for the company, said it’s opening a second Massachusetts location, in Worcester.

Menebhi said that before opening the Ronzio franchise he had been in the mortgage business, owning a company called Loans for Homes in East Greenwich. With the mortgage world imploding, the company closed last January, and Menebhi began looking for a new business. Menebhi’s brother, Moe, had worked for a Ronzio franchise, and Karim Menebhi used to eat at Ronzio’s across the street from his mortgage office in East Greenwich, where the spinach pie was a particular favorite.

He said he considered a steak house, but the financial requirements were higher, and Menebhi felt that selling pizza made more sense than steak in a deteriorating economy. And Menebhi liked the idea that Ronzio is a Rhode Island company. So far, he said, he’s invested between $125,000 and $150,000 — “and still counting” — in opening his Ronzio franchise.

Menebhi said his Ronzio would employ 15 people, including his wife, two daughters and his brother.

In a space that formerly sold Spike’s hot dogs, the 56-seat restaurant has a license to sell wine and beer. Even in a bad economy, Menebhi is cautiously optimistic. “It’s a great place for a family to come in and have a meal for a reasonable price . . . you always have a concern, but not a big concern because of the product and the prices. If we serve the right product at the right price, we should be OK,” he said.

According to the International Franchise Association, the nation’s economic slump has not spared franchises. In a report issued this month, the IFA projected declines in the number of franchise establishments, jobs and economic output this year. Franchise establishments are expected to drop from 864,784 last year to 854,511 this year, a decline of 1.2 percent. Employment at franchises is expected to drop from 9,785,000 to 9,578,000, a decline of 2.1 percent.

In Rhode Island, franchises are regulated by the Department of Business Regulation under the state’s Franchise Investment Act. According to figures from the state, the total number of franchises in Rhode Island has risen from fiscal year 2006 through last year, from 805 to 868 to 990. This reflects the national trend, which saw total numbers of franchised establishments rise from 808,275 in 2006 to 864,784 last year.

The International Franchise Association divides franchises into 10 broad categories, including “quick service restaurants,” lodging, real estate, automotive business, retail products and services, and commercial and residential services, which includes areas such as contracting and construction.

John Reynolds, president of the International Franchise Association Educational Foundation, which commissioned the report, said some franchise sectors are being hit harder than others. “Quick service restaurants,” more commonly known as fast food, are projected to experience a slight growth this year. Almost everything else is expected to decline.

Reynolds said that in a bad economy, people who might have gone to what the franchise industry calls “tablecloth restaurants” will downgrade to something less expensive — but they still want to go out for a meal every now and then.

Jim Coen, president of the New England Franchise Association, said the fortunes of a franchise can depend on how essential the service turns out to be. “You still need an oil change, no matter what,” he said. “But do you really need a maid service? What’s the first thing that’s going to go?”

Franchise experts said that, in most circumstances, recessions are actually good for franchising, because when people are laid off, opening their own business is an attractive option. “Over the years, recessions have been considered good for franchise development. In a recession, franchises always grew,” said Coen.

But this year, he said, the recession is accompanied by a particularly severe credit crunch, which makes it extremely difficult to raise the money they needed to buy a franchise. Coen said the amount needed for a franchise can range from $25,000 up to $1 million for a large restaurant or store. (Ronzio owner Karim Menehbi said he was able to raise the money for the new franchise on his own and did not require financing.)

The Web site for Quiznos Subs ( www.quiznosfranchises.com) estimates the initial investment for a franchisee at between $187,300 and $341,800, depending on the size and location of the restaurant. That figure covers all initial costs, including the franchise fee ($25,000) and even the initial food order. But there are also the royalties that Quiznos franchisees must pay the company, 7 percent of the gross sales, paid weekly.

Reynolds said the “pipeline” of franchise ownership is clogged with people who would like to invest in franchises but can’t get the necessary loans. In previous recessions, such as the post-9/11 slowdown of 2002 and 2003, he said, credit availability returned fairly quickly. “Credit will come back. It’s going to happen, but at a much slower pace,” he said. “When it does happen, it’s going to release a lot of pent-up demand. I do see franchising coming back. Investors will be looking for established businesses.”

Doug Jobling, regional director for the Small Business Development Center run by Johnson & Wales University, said some of the center’s clients are attracted to the franchise idea. The advantage, he said, is “you don’t have to reinvent the wheel.” You’re selling an established product, with the clout of a big company’s marketing behind you. The disadvantage is that you’re got to pay for that clout, usually in the form of an upfront franchise fee, plus royalties.

“You’re doing all that work to give someone else a piece of the profits,” said Adriana Dawson, who covers northern Rhode Island for the Small Business Center.

Both Jobling and Dawson urged caution. “Some franchises are rip-offs. You get a name, and not much else,” said Jobling. He said the credit crunch can be a blessing in disguise if it provides potential franchisees enough time to do their homework. He urged people to very carefully read the Uniform Franchising Offering Circular (UFOC) a document required by the Federal Trade Commission that lays out the legal requirements of the franchise.

Greg Fowler has owned the Cold Stone Creamery ice cream franchise in East Greenwich for two years, and is considering buying one or two more in Massachusetts. He said Cold Stone Creamery was purchased in 2007 by Kahala Corp., which owns about a dozen franchise brands, and he thinks Kahala has been doing a better marketing job than the original Cold Stone owners.

Fowler, who bought the existing Cold Stone franchise in East Greenwich for an undisclosed price, said franchisees need to do plenty of work before they take the plunge, including extensive research into the contract, the company’s success rate, the product, the market and the location. A key source of information, he said, is other franchise holders. “The best source is other people who are living it and who are willing to talk about it,” he said.

A few key things to consider, he said, is whether you have a choice of suppliers, the impact of franchise royalties on your bottom line, how much working capital you’ll need, particularly in the first year, and how you’ll manage your labor force.

Fowler said he employs about 17 people in the winter, about 26 in the summer. So far, he said, his Cold Stone Creamery hasn’t felt the effects of the most recent economic downturn — since September, business has been ahead of last year. What does hurt, Fowler said, is the weather. His Cold Stone Creamery got a lot of business when people returned from Rhode Island beaches on summer weekends, and some rainy days last summer cut into ice cream sales.

asmith@projo.com