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 user 2009-02-19 at 3:44:36 pm Views: 129
  • #21815
    Chains Offer Link from Layoff to Livelihood
    Interest in franchise ownership, seen as steadier than independent ventures, is on the rise
    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.

    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.”

    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

    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.

    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.