As unemployment goes up, interest in entrepreneurship goes up and people consider starting small businesses and franchises.

After many years of working for corporate icons like Citibank, American Express, MasterCard Worldwide, JPMorgan Chase and Sony Music, Howard Cutler of Westport took a severance package last winter.

He then withdrew thousands of dollars tax-free from his 401(k) plan and reinvested that and some severance money in a Rapid Repro printing franchise in Danbury, all for the privilege of working 14-hour days and supervising 14 people.

"I always wanted to own my own business," said Cutler, 46, who has worked in marketing, product development and creative services. "I wanted to control my fate. It is going to do great. I bought a company that has been around for more than 30 years."

Cutler's shop is one of 900,000 franchise businesses in the United States, according to the International Franchise Association in Washington, D.C. They include hotels, fast-food restaurants, pet care, fitness clubs and cleaning services. Franchises provide 20 million jobs and $2.3 billion in revenue to the private sector economy, according to the association.

Starting an independent-brand company or a regional or national franchise has been a refuge from corporate layoffs and restructuring.

But it is too early to gauge whether the volatile economic climate is pushing greater numbers of people toward franchise ownership than would occur in a healthy economy, said Alisa Harrison, spokeswoman for the franchise association.

Michael Seid, who co-wrote "Franchising for Dummies" with Wendy's restaurant founder Dave Thomas, foresees a franchise slump and possible consolidation.

"Credit is the fuel of our economy and certainly the lifeblood of franchise system growth and modernization," Seid said in a report published last week by Franchise Update Media Group in San Jose, Calif. "The credit market is going to be tight through most of 2009 and franchise sales for many franchisors will slow down dramatically."

Franchisees might be fighting for smaller revenue this year and next. Operators who responded to a survey the franchise group released last week said 2008 sales were 78 percent below expectations.

In a typical franchise, the owner operator, or franchisee, agrees to run a business under a franchisor's trade name. The franchisee usually pays a fee and even a share of revenues to the franchisor in exchange for the franchisor's reputation, brand equity and national advertising.

Well-known franchisors include 7-Eleven Inc. convenience stores, McDonald's, Subway, KFC, Pizza Hut, Domino's Pizza and Dunkin' Donuts restaurants, Baskin-Robbins and Dairy Queen ice cream, Re-Max real estate, UPS postal stores, Ace Hardware stores, Super 8 motels and Jiffy Lube oil change centers.

Startup costs can range from $1 million for a chain restaurant to $16 million for a hotel. But some franchise operations, such as a Jan-Pro commercial cleaning service, require as little as $3,300 in start-up capital, according to Entrepreneur.com.

Rapid Repro demands $163,000 to $441,000 in startup costs, Cutler said. A special program enabled Cutler to finance the business with tax-free money from his 401(k) plan, he said.

Cutler used some of the initial capital to buy new computers and software. Some of the computers his predecessors used were 15 years old, he said.

He also developed a Web site and design services for companies that cannot afford to hire an advertising agency. Next month, he expects to add services such as wide-format printing for banners and signs and mailing services.

The economic slump has helped his firm, Cutler said. Rapid Repro prints direct-mail fliers and newspaper insert ads for automobile dealers, landscapers, spas, health clubs and other companies that are hungry for business now.

"Despite the economy, we are moving right along," said Cutler, who has a wife and two children. "We have a couple of big jobs in house."

The company also prints newsletters for churches and temples, hospitals, assisted-living facilities and country clubs. It produces trade show and conference promotional literature and student handbooks and football game programs for public schools, he said.

Cutler said he likes being in charge.

"I never worked for a small company until I purchased one," he said.

Opinions are mixed as to whether more corporate refugees will try to join him.

"As unemployment goes up, interest in entrepreneurship goes up and people consider starting small businesses and franchises," said Steve Lehman, a franchise consultant in Fairfield.

People can start pet care, senior citizen care and handyman services with little capital, Lehman said.

Amid scarce capital and fewer potential customers, attendance has fallen at the Small Business Development Academy the Greater Norwalk Chamber of Commerce conducts each fall.

Brian Griffin, chamber vice president, said 60 people signed up for this year's academy, compared with about 100 in an average year.

"Some people are saying, let me wait this out and start up a business at another time," Griffin said.

- Staff Writer Peter Healy can be reached at peter.healy@scni.com or 964-2276.