Trish Harrington brought her 6-year-old daughter to a birthday party at Snip-its in North Attleborough and fell in love with the children’s hair salon. A CPA and controller at a Rhode Island financing company, she went home, did her homework, and four months later signed an agreement with the Natick-based franchise to develop three new locations.

For Gina and Gregg Monastiero, it was a five-year journey of investigation and negotiation on the road to opening the region’s first Sonic Drive-in restaurant, which has obliterated company sales records since it opened in late August.

Mehran Atoufi translated the customer service and management skills he learned working for Hilton Hotels into running a revived Subway restaurant near Northeastern that he hopes is the first of many.

Not only has the recession not stopped these entrepreneurs, but in some cases, it helped them. Historically, the number of new businesses spikes during economic downturns, in part because people who lose their jobs are motivated to control their own destinies, small business specialists say. But taking the plunge into franchising by starting up new ventures based on solid brands, proven track records, and corporate support can take some of the uncertainty out of the equation.

“When you have increasing unemployment, a lot of people look at starting a business as a way to provide for themselves,’’ said Robert Nelson, district director for Massachusetts in the Small Business Administration. “Franchising is one aspect of entrepreneurship that people can try to help get their business off the ground.’’

It’s too early to say how many new franchises were opened this year, but the International Franchise Association predicted a 1 percent drop in new franchises based on tighter lending, reversing a trend of annual increases since 2001. In Massachusetts, the proportion of Small Business Administration loans to new franchises was 3.3 percent for the fiscal year ended Sept. 30, compared with 3.9 percent the year before, which ended just as the economy was crashing and lending was stalling. Nelson called the dip small and unlikely to deepen after the SBA waived fees and increased its loan guarantees earlier this year.

Franchises are attractive for some entrepreneurs because they can offer opportunities for those with an appetite for some risk - just not as much as starting an entirely new venture, new owners and industry observers say. Depending on the type of business, franchises offer different levels of training and support. According to the International Franchise Association, prospective franchisees should research a company’s financial health, ask if it helps them find and develop a location, and determine how to get inventory and supplies once they’re up and running.

“Buying a good franchise means you get an operations manual that leads you through how to unlock the door in the morning and how to lock it back up at end of the day,’’ said Steve Dubin, president of the New England Franchise Association.

Franchisees can also draw on peers for help, said Les Winograd, a spokesman for Subway Restaurants. “They join a team of like-minded individuals,’’ Winograd said. “They are able to learn from a group of previously established franchisees from the same system.’’

Atoufi, the new Subway franchisee, reasoned that his chances for success were greater than if he had started from scratch. “The reason I opened a franchise was I couldn’t afford losing my first business,’’ said Atoufi, who got a loan from his family that he used to buy an existing franchise in Boston, which opened in February. “I wanted to minimize the risk as much as I can.’’

He said Subway’s marketing complemented customer service and management skills that he honed while working at the Hilton while still a student. Originally from Iran, Atoufi came to Boston from Budapest to attend Boston Architectural Center. “Being a franchisee, I don’t have to go out there and advertise,’’ he said.

Gerry Pellissier agrees that having the support of an established company is key. In July, he bought a new franchise: selling advertising for hand-drawn Resort Maps on Cape Cod that are distributed free of charge. “Back when I was 28 years old, I had the drive and the entrepreneurship in my blood,’’ said Pellissier, who once had a drive-in gourmet coffee business. “I just turned 50 this year and I said to myself, ‘Let’s not create a new wheel.’ There’s a lot less risk in purchasing an existing franchise.’’

For the Monastieros, their purchase was made easier by the poor economic climate. They began pursuing a Sonic franchise before the chain was ready to expand into the state. When the deal was finally done, the cost of both buying land and building on it had come down dramatically because of the downturn, Gregg Monastiero said.

Gina Monastiero already runs her own real estate development business and Gregg Monastiero works on mergers and acquisitions in high technology, so they were looking for an investment that would give them a good return.

Even with their management and financial acumen, they’re still relying on Sonic’s support to eventually expand beyond Peabody.

“We didn’t look at this as a mom-and-pop opportunity. Building 20 to 25 restaurants is a very large, $50 to $60 million operation,’’ he said. “To do that, we need strong management.’’

Trish Harrington, the Snip-its kids’ hair salon franchisee, said it’s exciting to think about the growth potential of her new business. In March, she was ready to sign a lease on a store next to Linens ‘N Things in Seekonk when the big-box retailer went out of business; fearing the loss of traffic, she decided not to sign. Now, she’s ready again, reviewing another lease for the same space, now that an electronics retailer will be her neighbor in the formerly vacant 33,000-square-foot space. She’ll keep working part time at Shamrock Financial Corp. in East Providence, but her plan is to expand.

“I want to do something that’s more fun than accounting,’’ she said. “There are 61 Snip-its. I’m number 62 and hopefully number 63 and 64.’’

By Elizabeth Cooney
Globe Correspondent / October 11, 2009
Source: boston.com