FROM LAYOFF TO LIVELIHOOD THANK'S TO CARTRIDGE WORLD

[Anonymous]

http://www.njbiz.com/weekly_article.asp?aID=31679323.7972097.1002963.3978418.3180524.828&aID2=77142
Chains Offer Link from Layoff to Livelihood
Interest in franchise ownership, seen as steadier than independent ventures, is on the rise
A
wave of professionals investing buyouts and severance pay in franchises
is giving this industry a sense of cautious optimism, according to
franchise consultancy FranNet New Jersey. And existing franchisers are
looking for ways to better retain customers as consumer spending falls,
according to St. Jacques Franchise Brand Marketing in Morristown.

More
franchisees may open up shop this year, according to Jack Armstrong,
president of FranNet New Jersey in Metuchen. Armstrong said he has
heard from more prospective franchisees in the second half of 2008 than
in second half of 2007. During that time, he said his appointments to
meet with prospective franchisees increased by 20 percent; Armstrong
expects to see his appointments increase by up to 30 percent this
quarter.He said the abrupt drop in the stock market drove some
professionals to look for new investment strategies. “People weren’t
liquid,” Armstrong said, “They were leaving money in [the stock
market], hoping it would get better.” Rather than wait for a recovery,
he said, some believe a better return on investment may be possible
through a franchise.For those who have been laid off, severance
packages may be an opportunity to try running a business. “A lot of
these people have gone through downsizing before,” Armstrong said.
“They don’t want to go through it for a third time.”

Cartridge
World franchisee Peter Donnelly said he left a sales career to open a
franchise in Wall.When his father sold the family business — Atlantic
Mills, a Lakewood manufacturer of disposable towels — Donnelly used his
portion of the sale to fund the franchise, and said he’s found a niche
in the struggling economy — his nearly year-old business is perking up
as customers look to save by buying the lower-cost, refilled ink
cartridges and toner he sells. “The same people who said six months ago
they weren’t interested in [the product] are now giving us a try,” he
said.Donnelly opened his Cartridge World store last March, when the
economy seemed healthy. “There were plenty of investment companies
ready to spend money, and venture capitalists were still out there,” he
said.

Franchisers are tapping local marketing firms, such as St.
Jacques, to improve their reach with customers, according to Philip St.
Jacques, chief marketing officer. St. Jacques Franchise Brand Marketing
brought in five more franchiser clients since last August, which he
said was strong for the company during the latter half of 2008. “The
brands are looking for a change,” he said. “A sports nutrition company
said to us that they flat-out lost sight of who their customer is.” St.
Jacques works with 15 active franchisers.St. Jacques’ firm helps
franchisers create localized marketing campaigns. He said 45 percent of
his company’s sales came from new business in 2008; new business
represented 12 percent of its sales in 2007.Michael St. Jacques, chief
marketing officer and founding partner of the firm, said capitalization
plays a crucial role as franchise brands are winnowed out by the harsh
economy. “If you are not profitably capitalized to make it through this
time, the weak ones are going to fall to the wayside,” he said.

Last
July, for example, the corporate entity behind the Bennigan’s chain
went bankrupt, leaving franchisees to regroup on their own.The
International Franchising Association, in Washington, D.C., released
reports this month that reflect both concern and hope for the industry.
The Franchise Business Economic Outlook for 2009, prepared by
PricewaterhouseCoopers and released Jan. 7, projected the number of
franchise establishments in the country is expected to decline from
865,000 to fewer than 855,000 this year. With fewer venues open for
business, some 207,000 jobs are expected to be lost from the
franchising sector.

However, some industry leaders are not
deterred by the economy, the IFA said. In a survey of top executives
among its membership last November — of some 160 responders, 85 percent
expected to see the number of franchise units grow in 2009, while 70
percent expected to increase employment levels this year.While he is
concerned about the coming year, Donnelly sees his refilled cartridges
as a lower-cost option for businesses. Donnelly said he does a lot of
cold calls and is surprised to find the number of shuttered
businesses.“It’s amazing how many people have numbers that are no
longer in service, or you stop at a business with a ‘for lease’ sign
out there,” he said.

[Author]

February 19, 2009 at 3:44 PM