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                                                                  EXHIBIT 10.7



                              EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") is made as of the 30th day of July, 2001, between
JO-ANN STORES, INC., an Ohio corporation (the "Company"), and ALAN ROSSKAMM
("Executive").

The Company is entering into this Agreement in recognition of the importance of
Executive's services to the continuity of management of the Company and based
upon its determination that it will be in the best interests of the Company to
encourage Executive's continued attention and dedication to Executive's duties
as a general matter and in the potentially disruptive circumstances of a
possible Change of Control of the Company. (As used in this Agreement, the term
"Change of Control" and certain other capitalized terms have the meanings
ascribed to them in Section 17 at the end of this Agreement.)

The Company and Executive agree, effective as of the date first set forth above
(the "Effective Date"), as follows:

1. SEVERANCE BENEFITS UPON CERTAIN TERMINATIONS OCCURRING BEFORE A CHANGE OF
CONTROL. If, before the occurrence of a Change of Control, Executive's
employment with the Company is terminated (a) by the Company without Cause, or
(b) by Executive for Good Reason, Executive shall be entitled to the following
as Severance Benefits:

          (a) The Company shall pay Executive an amount equal to one and one
     half times Executive's Base Salary payable in consecutive bi-weekly
     installments over the 18 months following the Termination Date at the same
     times and in the same amounts as if Executive had remained in the employ of
     the Company and had continued to earn Executive's Base Salary over that 18
     month period.

          (b) The Company shall continue to provide Executive with the welfare
     benefits of medical insurance, dental insurance, and group term life
     insurance through the end of the 18th full calendar month following the
     Termination Date, except that

               (i) the Company may stop providing medical insurance and dental
          insurance coverage earlier if and when Executive accepts full time
          employment with a subsequent employer that generally makes medical
          insurance available to its executives and Executive is eligible for
          that coverage with the subsequent employer, and

               (ii) the Company may stop providing group term life insurance
          earlier if and when Executive accepts full time employment with a
          subsequent employer and that employer provides Executive with group
          term life insurance coverage.


     The benefits to be provided by the Company pursuant to this paragraph shall
     be provided to Executive at the same cost to Executive, and at the same
     coverage level,

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     as is applicable to continuing executives in comparable positions from time
     to time during the period the benefits are continued.


          (c) Except as provided in the last sentence of this Section 1(c), the
     Company shall continue to provide Executive, at least through Executive's
     attainment of age 70 (or his earlier death), with life insurance coverage
     that will pay to one or more beneficiaries designated by Executive an
     aggregate life insurance death benefit of $769,000 payable upon Executive's
     death. Unless otherwise agreed by Executive, the Company shall provide this
     insurance coverage to Executive pursuant to the Split Dollar Insurance
     Agreement entered into between Executive and the Company on September 6,
     1988, with such amendments as are necessary to carry out the purpose and
     intent of this Section 1(c) and are approved by Executive. Executive will
     not be required to pay any premiums but will recognize any imputed income
     arising out of the provision of this insurance coverage. In addition to
     providing this coverage through Executive's attainment of age 70, the
     Company shall continue this coverage beyond attainment of age 70, assuming
     Executive survives to and beyond attainment of age 70, for so long as the
     policy underlying the September 6, 1988 Split Dollar Insurance Agreement
     can be maintained by the Company from year to year under circumstances such
     that the sum of (i) the annual premium payable with respect to the policy
     for any particular year plus (ii) the amount of any interest payable on
     loans outstanding under the policy for that year, does not exceed (x) the
     amount of any loan that is available to the Company under the policy during
     that year plus (y) the pro forma amount of tax savings resulting from
     payment of the interest referred to in (ii) during that year. For these
     purposes, the "pro forma" tax savings will be determined using the
     assumption that the Company is profitable to such an extent that it pays
     income taxes at the highest marginal rates applicable to corporations each
     year whether or not the Company in fact pays income taxes at those rates.
     At any time, Executive may elect to have the Company stop providing
     insurance coverage to him pursuant to this Section 1(c) by written notice
     to the Company given 30 days in advance of the date on which the coverage
     is to cease.

2. CHANGE OF CONTROL SEVERANCE BENEFITS UPON CERTAIN TERMINATIONS OCCURRING
AFTER A CHANGE OF CONTROL. If, after the occurrence of a Change of Control,
Executive's employment with the Company is terminated (a) by the Company without
Cause, or (b) by Executive for Good Reason, Executive shall be entitled to the
following as Change of Control Severance Benefits:

          (a) The Company shall make a lump sum cash payment to Executive, not
     later than ten business days after the Termination Date, in an amount equal
     to two times the sum of (i) Executive's Base Salary plus (ii) the greater
     of (A) Executive's average annual bonus earned over the three full fiscal
     years of the Company ended before the Termination Date, or (B) Executive's
     target annual bonus established for the bonus plan year in which the
     Termination Date occurs. If Executive has been employed by the Company for
     fewer than three but at least one full fiscal year of the Company ended
     before the Termination Date, the average of the bonuses earned in the two
     full fiscal years of the Company ended before the Termination Date, or the
     amount of the bonus earned in the one full fiscal year of the Company ended
     before the Termination Date, as the case may be, shall be substituted for
     the average referred to in (A) above.

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          (b) If the Termination Date occurs after the end of a bonus year under
     any Company sponsored bonus plan and before the bonus with respect to that
     bonus year has been paid, the Company shall pay to Executive, not later
     than ten business days after the Termination Date, an amount equal to the
     bonus for that bonus year to which Executive would have been entitled had
     the bonus plan for that bonus year remained in effect without any change
     and had Executive remained in the employ of the Company through the date on
     which bonuses for that bonus year were paid.

          (c) The Company shall make a lump sum cash payment to Executive, not
     later than ten business days after the Termination Date, in an amount equal
     to the greater of (i) Executive's unpaid targeted annual bonus, established
     for the bonus year in which the Termination Date occurs, multiplied by a
     fraction, the numerator of which is the number of days Executive was
     employed by the Company in the bonus year through the Termination Date, and
     the denominator of which is 365, or (b) the bonus amount specifically
     guaranteed to Executive for that bonus year under any other agreement
     between the Company and Executive.

          (d) The Company shall continue to provide Executive with the welfare
     benefits of medical insurance, dental insurance, group term life insurance,
     and split-dollar life insurance through the second anniversary of the
     Termination Date, except that

               (i) the Company may stop providing medical insurance and dental
          insurance coverage earlier if Executive accepts full time employment
          with a subsequent employer that generally makes medical insurance
          available to its executives and Executive is eligible for that
          coverage with the subsequent employer, and

               (ii) the Company may stop providing group term life insurance
          earlier if Executive accepts full time employment with a subsequent
          employer and that employer provides Executive with group term life
          insurance coverage.


     The benefits to be provided by the Company pursuant to this paragraph shall
     be provided to Executive at the same cost to Executive, and at the same
     coverage level, as in effect as of the Termination Date.

          (e) Except as provided in the last sentence of this Section 2(e), the
     Company shall continue to provide Executive, at least through Executive's
     attainment of age 70 (or his earlier death), with life insurance coverage
     that will pay to one or more beneficiaries designated by Executive an
     aggregate life insurance death benefit of $769,000 payable upon Executive's
     death. Unless otherwise agreed by Executive, the Company shall provide this
     insurance coverage to Executive pursuant to the Split Dollar Insurance
     Agreement entered into between Executive and the Company on September 6,
     1988, with such amendments as are necessary to carry out the purpose and
     intent of this Section 2(e)and are approved by Executive. Executive will
     not be required to pay any premiums but will recognize any imputed income
     arising out of the provision of this insurance coverage. In addition to
     providing this coverage through Executive's attainment of age 70, the
     Company shall continue this coverage

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     beyond attainment of age 70, assuming Executive survives to and beyond
     attainment of age 70, for so long as the policy underlying the September 6,
     1988 Split Dollar Insurance Agreement can be maintained by the Company from
     year to year under circumstances such that the sum of (i) the annual
     premium payable with respect to the policy for any particular year plus
     (ii) the amount of any interest payable on loans outstanding under the
     policy for that year, does not exceed (x) the amount of any loan that is
     available to the Company under the policy during that year plus (y) the pro
     forma amount of tax savings resulting from payment of the interest referred
     to in (ii) during that year. For these purposes, the "pro forma" tax
     savings will be determined using the assumption that the Company is
     profitable to such an extent that it pays income taxes at the highest
     marginal rates applicable to corporations each year whether or not the
     Company in fact pays income taxes at those rates. At any time, Executive
     may elect to have the Company stop providing insurance coverage to him
     pursuant to this Section 2(e) by written notice to the Company given 30
     days in advance of the date on which the coverage is to cease.

3. EARNED BUT UNPAID BASE SALARY AND ACCRUED PAID TIME OFF PAY PAYABLE UPON ANY
TERMINATION OF EMPLOYMENT; TREATMENT OF LONG-TERM INCENTIVE AWARDS. Upon any
termination of Executive's employment for any reason and at any time, the
Company shall pay to Executive (or, where appropriate, to Executive's
Beneficiary), not later than ten days after the Termination Date, (a) all earned
but unpaid Base Salary through the Termination Date, and (b) an amount equal to
the aggregate dollar value of all paid time off earned but not taken by
Executive ("Accrued Paid Time Off Pay") before the Termination Date. In
addition, upon any termination of Executive's employment, all outstanding
long-term incentive awards shall be subject to the treatment provided under the
applicable long-term incentive plan of the Company.

4. TERMINATION DUE TO RETIREMENT, DISABILITY, OR DEATH. If Executive's
employment is terminated due to Retirement, Disability, or death while this
Agreement remains in effect (whether before or after the occurrence of a Change
of Control), neither Executive nor Executive's Beneficiaries will be entitled to
Severance Benefits or Change of Control Severance Benefits under either of
Sections 1 or 2 but Executive or Executive's Beneficiaries, as appropriate, will
be entitled to the payments provided for in Section 2(e) and to such benefits as
may be provided under the terms of the Company's disability, retirement,
survivor's benefits, insurance, and other applicable plans and programs of the
Company then in effect.

5. TERMINATION FOR CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON. If
Executive's employment is terminated either by the Company for Cause or by
Executive other than for Good Reason while this Agreement remains in effect
(whether before or after the occurrence of a Change of Control) and Section 6
does not apply, neither Executive nor Executive's Beneficiaries will be entitled
to Severance Benefits or Change of Control Severance Benefits under either of
Sections 1 or 2 but Executive or Executive's Beneficiaries, as appropriate, will
be entitled to the payments provided for in Section 2(e) and the Company shall
pay to Executive such other amounts to which Executive is entitled under any
compensation plans of the Company, at the time such payments are due. Except as
provided in this Section 5, the Company shall have no further obligations to
Executive under this Agreement.

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6. SPECIAL PROVISION APPLICABLE ONLY IF EXECUTIVE IS TERMINATED BOTH IN ADVANCE
OF AND IN CONTEMPLATION OF A CHANGE OF CONTROL. If Executive is terminated by
the Company (a) in contemplation of and not more than six full calendar months
before the occurrence of a Change of Control, and (b) under circumstances such
that if the termination had occurred immediately after that Change of Control
Executive would have been entitled to Change of Control Severance Benefits under
Section 2 above, then the Company shall pay and provide to Executive all of the
amounts and benefits specified in Section 2, reduced by such amounts and such
benefits, if any, that the Company has otherwise paid and provided to Executive
pursuant to Section 1 above. The Company shall make any cash payment required
pursuant to this Section 6 within ten days of the occurrence of the Change of
Control.

7. CHANGE OF CONTROL IGNORED IF EMPLOYMENT CONTINUES FOR MORE THAN TWO YEARS
THEREAFTER. If Executive's employment continues for more than two years
following the occurrence of any Change of Control, that particular Change of
Control will deemed never to have occurred for purposes of this Agreement.

8. TERM OF AGREEMENT, RIGHT TO SEVERANCE BENEFITS UPON DETERMINATION BY COMPANY
NOT TO RENEW.

         8.1. TERM. This Agreement shall be effective as of the Effective Date
and shall thereafter apply to any termination of Executive's employment
occurring on or before July 31, 2004. Unless this Agreement is earlier
terminated pursuant to its terms, on July 31, 2004 and on July 31 of each
succeeding year thereafter (a "Renewal Date"), the term of this Agreement shall
be automatically extended for an additional year unless either party has given
notice to the other, at least one year in advance of that Renewal Date, that the
Agreement shall not apply to any termination of Executive's employment occurring
after that Renewal Date.

         8.2. RIGHT TO SEVERANCE BENEFITS. If the Company gives Executive notice
that this Agreement shall not apply to any termination of Executive's employment
occurring after a particular Renewal Date, Executive shall have the right to
terminate Executive's employment at any time during the first three months of
the final year during which this Agreement is thereafter scheduled to be
effective (e.g., if the Company gives notice that the Agreement is not to apply
to any termination after July 31, 2005, at any time during the months of August,
September, and October 2004) and Executive shall thereupon be entitled to
receive Severance Benefits to the same extent as if all of the conditions to
Executive's right to receive Severance Benefits under Section 2 had been
satisfied.

9. EXCISE TAX.

         9.1. EXCISE TAX. Notwithstanding any other provision of this Agreement
(but subject to the following sentence), if any portion of the severance
benefits or any other payment under this Agreement, or under any other agreement
with or plan of the Company (in the aggregate "Total Payments") would constitute
an "excess parachute payment," then the payments to be made to Executive under
this Agreement shall be reduced, but not below zero, to such amount that the
value of the aggregate Total Payments that Executive is entitled to receive
shall be One Dollar ($1.00) less than the maximum amount which Executive may
receive without becoming subject to the tax

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imposed by Code Section 4999 and without the Company suffering a loss of
deduction under Code Section 280G(a). However, the payments shall be reduced as
described above only if the reduction results in Executive receiving greater
total severance benefits (on an after-tax basis, including excise taxes) than if
such severance benefits were not reduced. For purposes of this Agreement, the
terms "excess parachute payment" and "parachute payments" shall have the
meanings assigned to them in Section 280G of the Code, and such "parachute
payments" shall be valued as provided therein.

         9.2. PROCEDURE FOR ESTABLISHING LIMITATION ON TERMINATION PAYMENT.

                  (a) Within 60 days following delivery of notice by the Company
         to Executive of its belief that there is a payment or benefit due to
         Executive which will result in an "excess parachute payment", Executive
         and the Company, at the Company's expense, shall obtain the opinion of
         such legal counsel, which need not be unqualified, as Executive may
         choose, which sets forth: (i) the amount of Executive's "annualized
         includible compensation for the base period" (as defined in Code
         Section 280G(d)(1)); (ii) the present value of the Total Payments; and
         (iii) the amount and present value of any "excess parachute payment."
         The opinion of such legal counsel shall be supported by the opinion of
         a certified public accounting firm and shall be binding upon the
         Company and Executive.

                  (b) If the opinion of legal counsel indicates that there would
         be an "excess parachute payment," the severance benefits hereunder
         shall be reduced or eliminated as specified by Executive in writing
         delivered to the Company within 30 days of Executive's his receipt of
         such opinion, or, if Executive fails to so notify the Company, then as
         the Company shall reasonably determine, so that under the basis of
         calculations set forth in such opinion, there will be no "excess
         parachute payment."

                  (c) The calculations, notices, and opinion provided for herein
         shall be based upon the conclusive presumption that: (i) the
         compensation and benefits provided for herein; and (ii) any other
         compensation earned prior to the effective date of termination by
         Executive pursuant to the Company's compensation programs (if such
         payments would have been made in the future in any event, even though
         the timing of such payment is triggered by the Change of Control), are
         reasonable.

         9.3. SUBSEQUENT IMPOSITION OF EXCISE TAX. If, notwithstanding
compliance with the provisions herein, it is ultimately determined by a court or
pursuant to a final determination by the Internal Revenue Service that any
portion of the Total Payments is considered to be a "parachute payment," subject
to excise tax under Section 4999 of the Code, which was not contemplated to be a
"parachute payment" at the time of payment (so as to accurately determine
whether a limitation should have been applied to the Total Payments to maximize
the net benefit to Executive), Executive shall be entitled to receive a lump sum
cash payment sufficient to place Executive in the same net after-tax position,
computed by using the "Special Tax Rate" as such term is defined below, that
Executive would have been in had such payment not been subject to such excise
tax, and had Executive not incurred any interest charges or penalties with
respect to the imposition of such excise tax. For purposes of this Agreement,
the "Special Tax Rate" shall be the highest effective Federal and state marginal
tax rates applicable to Executive in the year in which the payment contemplated
under this Agreement is made.

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10. OUTPLACEMENT ASSISTANCE. Following a termination of employment in which
Severance Benefits or Change of Control Severance Benefits are payable hereunder
the Company shall provide Executive with outplacement services obtained by the
Company at its cost and commensurate with the outplacement services typically
provided by the Company to Executives who left the employ of the Company before
the Effective Date of this Agreement until Executive obtains subsequent
employment or self employment.

11. THE COMPANY'S PAYMENT OBLIGATION.

         11.1. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to make
the payments and provide the benefits provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances, including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against Executive or anyone else. All amounts
payable by the Company hereunder shall be paid without notice or demand. Each
and every payment made hereunder by the Company shall be final, and the Company
shall not seek to recover all or any part of such payment from Executive or from
whomsoever may be entitled thereto, for any reasons whatsoever.

         11.2. NO MITIGATION. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or benefits to be provided under
any provision of this Agreement, and the obtaining of any such other employment
shall in no event effect any reduction of the Company's obligations to make the
payments or provide any benefits as required under this Agreement, except to the
limited extent provided above in cases where a subsequent employer provides
medical insurance and/or group term life insurance coverage.

         11.3. SOURCE OF PAYMENTS AND BENEFITS. All payments under this
Agreement shall be made solely from the general assets of the Company (or from a
grantor trust, if any, established by the Company for purposes of making
payments under this Agreement and other similar agreements), and Executive shall
have the rights of an unsecured general creditor of the Company with respect
thereto.

12. LEGAL REMEDIES

         12.1. PAYMENT OF LEGAL FEES. Unless prohibited by law, the Company
shall pay all legal fees, costs of arbitration and/or litigation, prejudgment
interest, and other expenses incurred in good faith by Executive as a result of
the Company's refusal to provide the Severance Benefits or Change of Control
Severance Benefits to which Executive deems Executive to be entitled under this
Agreement, as a result of the Company's contesting the validity, enforceability,
or interpretation of this Agreement, or as a result of any conflict between the
parties pertaining to this Agreement, provided, however, that the Company shall
be reimbursed by Executive for all such fees and expenses if, but only if, it is
ultimately determined by a court of competent jurisdiction or by the
arbitrators, as the case may be, that Executive had no reasonable grounds for
the position propounded by Executive in the arbitration and/or litigation (which
determination need not be made simply because Executive fails to succeed in the
arbitration and/or litigation).

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         12.2. ARBITRATION. Subject to the following sentences, any dispute or
controversy arising under or in connection with this Agreement shall be settled
by mandatory arbitration (in lieu of litigation), conducted before a panel of
three arbitrators sitting in a location selected by Executive within 50 miles
from Hudson, Ohio, in accordance with the rules of the American Arbitration
Association then in effect. Any dispute which arises with respect to Executive's
alleged violation of the prohibition on competition or any other restriction
contained in Section 14 of this Agreement shall be settled by judicial
proceedings (in any court of competent jurisdiction with respect to such dispute
or claim). Except as provided above for claims or disputes under Section 14,
judgment may be entered on the award of the arbitrator in any court having
proper jurisdiction.

13. WITHHOLDING. The Company shall be entitled to withhold from any amounts
payable under this Agreement all taxes as legally shall be required (including,
without limitation, any United States federal taxes, and any other state, city,
or local taxes).

14. NONCOMPETITION.

         14.1. PROHIBITION ON COMPETITION. Without the prior written consent of
the Company, during the term of this Agreement, and, if Severance Benefits are
paid hereunder, thereafter during the 18 month period beginning on the
Termination Date or if Change of Control Severance Benefits are paid hereunder,
thereafter through the second anniversary of the Termination Date, Executive
shall not, as an employee, an officer, or as a director, engage directly or
indirectly in any business or enterprise that engages to any significant extent
within the United Sates of America in the sale at retail or direct marketing to
consumers of fabric and craft components. Notwithstanding the foregoing,
Executive may purchase and hold for investment less than two percent of the
shares of any corporation whose shares are regularly traded on a national
securities exchange or in the over-the-counter market.

         14.2. DISCLOSURE OF INFORMATION. Executive acknowledges that Executive
has and has had access to and knowledge of certain confidential and proprietary
information of the Company, which is essential to the performance of Executive'
s duties as an employee of the Company. Executive will not, during or after the
term of Executive's employment by the Company, in whole or in part, disclose
such information to any person, firm, corporation, association, or other entity
for any reason or purpose whatsoever, nor shall Executive make use of any such
information for their own purposes.

         14.3. COVENANTS REGARDING OTHER EMPLOYEES. During the term of this
Agreement and thereafter during any period during which Executive is subject to
the restriction set forth in Section 14.1, Executive shall not to attempt to
induce any employee of the Company to terminate his or her employment with the
Company or accept employment with any competitor of the Company and Executive
shall not interfere in any similar manner with the business of the Company.

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15. SUCCESSORS AND ASSIGNMENT.

         15.1. SUCCESSORS TO THE COMPANY. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
of all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent that the Company would be
required to perform them if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effective date of
any such succession shall be a breach of this Agreement and shall entitle
Executive to notify the Company that, unless the failure is remedied within 30
days after delivery of the notice from Executive, Executive's employment will
terminate as of the 31st day after the delivery of the notice. If any such
notice is given and the failure is not so remedied, Executive will be entitled
to receive the same payments and benefits from the Company, and on the same
schedule, as if the Company had undergone a Change of Control on the date of the
succession and Executive had thereupon terminated his employment for Good
Reason.

         15.2. ASSIGNMENT BY EXECUTIVE. This Agreement shall inure to the
benefit of and be enforceable by Executive and each of Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributes, devisees, and legatees. If Executive dies while any amount would
still be payable to Executive hereunder had Executive continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement, to Executive's Beneficiary. If Executive has not
named a Beneficiary, then such amounts shall be paid to Executive's devisee,
legatee, or other designee, or if there is no such designee, to Executive's
estate.

16. MISCELLANEOUS.

         16.1. EMPLOYMENT STATUS. Except as may be provided under any other
agreement between Executive and the Company, the employment of Executive by the
Company is "at will," and, prior to the effective date of a Change of Control,
may be terminated by either Executive or the Company at any time, subject to
applicable law.

         16.2. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties with respect to severance benefits to be provided upon any
termination of Executive's employment and supersedes any and all prior
employment, retention, and/or change of control agreements between Executive and
the Company.

         16.3. BENEFICIARIES. Executive may designate one or more persons or
entities as the primary and/or contingent Beneficiaries of any Severance
Benefits or Change of Control Severance Benefits owing to Executive under this
Agreement. Such designation must be in the form of a signed writing acceptable
to the Committee. Executive may make or change such designation at any time..

         16.4. SEVERABILITY. In the event any provision of this Agreement shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included.

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         16.5. MODIFICATION. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in writing and signed by Executive and by an authorized representative of the
Company, or by the respective parties' legal representatives and successors.

         16.6. APPLICABLE LAW. To the extent not preempted by the laws of the
United States, the laws of the state of Ohio, applicable to contracts made and
to be performed wholly within that state, shall be the controlling law in all
matters relating to this Agreement.

17. DEFINITIONS. Whenever used in this Agreement, the following capitalized
terms shall have the meanings set forth below:

         17.1. "BASE SALARY" means an amount equal to Executive's base annual
salary at the highest rate payable at any time before the date of a termination.
For this purpose, Base Salary shall not include bonuses, long-term incentive
compensation, or any remuneration other than base annual salary.

         17.2. "BENEFICIAL OWNER" shall have the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

         17.3. "BENEFICIARY" means the persons or entities designated or deemed
designated by Executive pursuant to Section 15.2 herein.

         17.4. "BOARD" means the Board of Directors of the Company.

         17.5. "CAUSE" shall mean the occurrence of any one or more of the
following:

                  (a) The willful and continued failure by Executive to
         substantially perform his or her normal duties (other than any such
         failure resulting from Executive's Disability), after a written demand
         for substantial performance is delivered to Executive that specifically
         identifies the manner in which the Committee believes that Executive
         has not substantially performed his or her duties, and Executive has
         failed to remedy the situation within 30 business days of receiving
         such notice;

                  (b) Executive's conviction for committing an act of fraud,
         embezzlement, theft, or other criminal act constituting a felony; or

                  (c) The willful engaging by Executive in gross negligence
         materially and demonstrably injurious to the Company. However, no act,
         or failure to act on Executive's part, shall be considered "willful"
         unless done, or omitted to be done, by Executive not in good faith and
         without reasonable belief that his or her action or omission was in or
         not opposed to the best interest of the Company.

         17.6. CHANGE OF CONTROL. A "Change of Control" shall be deemed to have
occurred if at any time or from time to time while this Agreement is in effect:

                  (a) Any person (other than the Company, any of its
         Subsidiaries, any member of either of the Founding Families, any
         employee benefit plan or employee stock ownership plan of the Company,
         or any person organized, appointed, or established


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         by the Company for or pursuant to the terms of any such plan), alone or
         together with any of its affiliates, becomes the beneficial owner of
         15% or more (but less than 50%) of the Common Shares then outstanding;

                  (b) Any person (other than the Company, any of its
         Subsidiaries, any employee benefit plan or employee stock ownership
         plan of the Company, or any person organized, appointed, or established
         by the Company for or pursuant to the terms of any such plan), alone or
         together with any of its affiliates, becomes the beneficial owner of
         50% or more of the Common Shares then outstanding;

                  (c) Any person commences or publicly announces an intention to
         commence a tender offer or exchange offer the consummation of which
         would result in the person becoming the beneficial owner of 15% or more
         of the Common Shares then outstanding;

                  (d) At any time during any period of 24 consecutive months,
         individuals who were directors at the beginning of the 24-month period
         no longer constitute a majority of the members of the Board of the
         Company, unless the election, or the nomination for election by the
         Company's shareholders, of each director who was not a director at the
         beginning of the period is approved by at least a majority of the
         directors who (i) are in office at the time of the election or
         nomination and (ii) were directors at the beginning of the period;

                  (e) A record date is established for determining shareholders
         entitled to vote upon (i) a merger or consolidation of the Company with
         another corporation in which those persons who are shareholders of the
         Company immediately before the merger or consolidation are to receive
         or retain less than 60% of the stock of the surviving or continuing
         corporation, (ii) a sale or other disposition of all or substantially
         all of the assets of the Company, or (iii) the dissolution of the
         Company;

                  (f) (i) the Company is merged or consolidated with another
         corporation and those persons who were shareholders of the Company
         immediately before the merger or consolidation receive or retain less
         than 60% of the stock of the surviving or continuing corporation, (ii)
         there occurs a sale or other disposition of all or substantially all of
         the assets of the Company, or (iii) the Company is dissolved; or

                  (g) Any person who proposes to make a "control share
         acquisition" of the Company, within the meaning of Section 1701.01(Z)
         of the Ohio General Corporation Law, submits or is required to submit
         an acquiring person statement to the Company.

Notwithstanding anything herein to the contrary, if an event described in clause
(b), clause (d), or clause (f) above occurs, the occurrence of that event will
constitute an irrevocable Change of Control. Furthermore, notwithstanding
anything herein to the contrary, if an event described in clause (c) occurs, and
the Board either approves such offer or takes no action with respect to such
offer, then the occurrence of that event will constitute an irrevocable Change
of Control. On the other hand, notwithstanding anything herein to the contrary,
if an event described in clause (a), clause (e), or clause (g) above occurs, or
if an event described in clause (c) occurs and the Board does

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not either approve such offer or take no action with respect to such offer as
described in the preceding sentence, and a majority of those members of the
Board who were Directors prior to such event determine, within the 90-day period
beginning on the date such event occurs, that the event should not be treated as
a Change of Control, then, from and after the date that determination is made,
that event will be treated as not having occurred. If no such determination is
made, a Change of Control resulting from any of the events described in the
immediately preceding sentence will constitute an irrevocable Change of Control
on the 91st day after the occurrence of the event.

         17.7. "CHANGE OF CONTROL SEVERANCE BENEFITS" means those payments and
benefits that may become payable pursuant to Section 2 below.

         17.8. "CODE" means the United States Internal Revenue Code of 1986, as
amended.

         17.9. "COMMITTEE" means the Compensation Committee of the Board, or any
other committee appointed by the Board to perform the functions of the
Compensation Committee.

         17.10. "COMPANY" means Jo-Ann Stores, Inc., an Ohio corporation, and
its successors.

         17.11. "DISABILITY" means permanent and total disability, within the
meaning of Code Section 22(e)(3), as determined by the Committee in the exercise
of good faith and reasonable judgment, upon receipt of and in reliance on
sufficient competent medical advice from one or more individuals, selected by
the Committee, who are qualified to give professional medical advice, provided,
however, that Executive must be entitled to disability benefits under the
Company sponsored disability plans or programs.

         17.12. "EXCHANGE ACT" means the United States Securities Exchange Act
of 1934, as amended.

         17.13. "FOUNDING FAMILIES" means the families consisting of Betty and
Martin Rosskamm and Alan and Justine Zimmerman and their respective issue.

         17.14. "GOOD REASON" (AFTER A CHANGE OF CONTROL) means, without
Executive's express written consent, the occurrence, after the occurrence of a
Change of Control, of any one or more of the following:

                  (a) Any reduction in Executive's Base Salary below the amount
         in effect immediately before the Change of Control or, if higher, the
         amount in effect before any reduction in Executive's Base Salary made
         in contemplation of the Change of Control.

                  (b) Any significant reduction in Executive's duties,
         responsibilities, or position with respect to the Company from the
         duties, responsibilities, or position as in effect immediately before
         the Change of Control or as in effect immediately before any reduction
         in any such item made in contemplation of the Change of Control.

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<PAGE>

                  (c) Any significant reduction in Executive's benefits package
         from the benefit package in effect immediately before the Change of
         Control or as in effect immediately before any reduction of the benefit
         package made in contemplation of the Change of Control.

                  (d) Any reduction in Executive's long-term incentive
         opportunity with the Company.

                  (e) Any shift of Executive's principal place of employment
         with the Company to a location that is more than 50 miles (by straight
         line measurement) from the site of the Company's headquarters in
         Hudson, Ohio at the Effective Time.

                  (f) Any dissolution or liquidation of the Company.

Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason under this
Section 17.14 unless the Company has given Executive written notice of the
change and Executive has voluntarily agreed in a writing that specifically
refers to this section of this Agreement to accept the change and to waive any
possible reliance on that change as constituting Good Reason.

         17.15. "GOOD REASON"(BEFORE A CHANGE OF CONTROL) means, without
Executive's express written consent, any reduction in Executive's Base Salary
other than a reduction that is in the same proportion as the reduction of the
base salaries of every other executive officer of the Company in connection with
an across-the-board reduction of executive base salaries.

         17.16. "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).

         17.17. "RETIREMENT" means a voluntary termination of Executive's
employment other than for Good Reason after Executive has either (a) attained
age 55 and has completed at least ten full years of continuous service with the
Company, or (b) has attained age 65 (without regard to length of service).

         17.18. "SEVERANCE BENEFITS" means those payments and benefits that may
become payable before the occurrence of a Change of Control pursuant to Section
1 below

         17.19. "TERMINATION DATE" means the date on which any termination of
Executive's employment becomes effective.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                                    JO-ANN STORES, INC.


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                                                    By______________________



                                                    "EXECUTIVE"


                                                    -------------------------
                                                    ALAN ROSSKAMM






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