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Why Franchises Rule the Road

And why they're not such a bargain

March 1, 2000 | By Patty Cantrell
Great Lakes Bulletin News Service

Fast food restaurants. Big Box stores. The decline of locally owned businesses. All are synonymous with sprawl. The rise of the franchise and the fall of the independent operator is so much a part of the suburban landscape that it seems as natural to America's soccer moms and dads as driving 50 miles round-trip for daily practices and daily bread.
Like traffic congestion, however, the local-to-franchise business turnover that takes place when a town stretches its commercial real estate out along major roads is a predictable result of public investments in such sprawl supports as more car lanes, expanded water and sewer lines, and far-flung schools. This pattern of growth channels people and profits toward those companies that have the power to draw hurried families off the freeway with big, tall signs and claims of low, low prices
Big franchises are simply responding to the business conditions communities have created. If consumers and voters don't like it, it is up to them to change how they shop so that their money builds up the community's foundation of local commerce instead of tearing it down.

Basic Business
The hard part is looking past the apparent mega-store savings to the real costs of doing business with companies that don't do much business in return with the community.
"People will drive 10 miles up the road to save a nickel on a gallon of milk," says Bob Yeager, president of Honor State Bank in Benzie County. Ma and Pa grocers are not usually the ones to offer such discounts because they don't have the wholesale buying power to get a price break themselves. "You and I both know that if you buy 10,000 gallons of milk from somebody you're going to get a better price," Mr. Yeager said.
But if consumers were to perform a few more calculations, they would find the extra nickel goes a lot farther when spent at a locally owned or regional store. One local purchase actually supports many local businesses and their employees, because locally owned and regional businesses tend to buy from other area companies.
The small, independent grocery chain, for example, is more likely to use a local accounting service, work with a local bank, and put a hometown company's jams and juices, made from locally grown fruit, on its shelves. Large chains tend to buy their supplies in mega amounts from huge distributors located elsewhere. It's nearly impossible for a cottage-industry jam maker, with total production of a few thousand jars, to make it onto their purchasing lists. National chains also tend to centralize all services -- from accounting to financing to printing -- back at headquarters, according to research by the Institute for Local Self-Reliance.
When people buy locally as much as possible, local businesses not only gain strength but return the favor generously, according to a 1990 U.S. Small Business Administration study.The study found that smaller companies donate more than twice as much per employee to community efforts, and had an employee volunteering rate five times higher than large businesses.
These are good reasons to question the predictable suburban growth pattern of subsidizing sprawl with tax dollars, and to support all the local businesses you can find.

CONTACTS: Institute for Local Self-Reliance, 1313 Fifth St. SE, Minneapolis, MN 55414-1546, Tel. 612-379-3815, Web <www.ilsr.org>; Sprawl-Busters, 21 Grinnell St., Greenfield, MA 01301, Web <www.sprawl-busters.com>; "Business Contributions to Community Service," a U.S. Small Business Administration-funded study by the Austin Family Business Program, Oregon State University, Bexell Hall 201, Corvallis, OR 97331.

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