Street vendors lose with new pact

But just why are we going

forward with this street vending program now when economic times are so precarious, and the financial climate has changed so drastically since last year?

How will the would-be

entrepreneur finance such franchises when "banks are concerned about risk" and "tight credit means ... more danger of failures that destroy just not businesses but entrepreneurs' personal finances," according to news articles in the AJC this week.

The chosen management company is a subsidiary of General Growth, which originally contracted with the city last year but then declared bankruptcy. This is a bad omen.

The city's new program would start with 20 kiosks around Woodruff Park, and then expand to Five Points, Centennial Park, the hotel district, Midtown and Turner Field, according to city official David Edwards. The first stage would be a total of 40 locations downtown, chosen according to advertising accessibility.

This is a wholesale change from the past. This new company will pick the vendors, manage the vendors and choose their merchandise. Gone are the small entrepreneurs who found their own niche in Atlanta's bustling streetscape.

Since the 2003 moratorium

on issuing new vending permits, the number of working street vendors has dwindled considerably. In 2003, the industry employed several hundred people, including vendors, vending assistants, delivery men and suppliers.

The new kiosk program could well mean bankruptcy for the present street vendors, a hard-working lot that includes disabled veterans and men who have earned their livings this way for 20 years and more.

Their assistants and suppliers would not fare any better, for the primary vendors will have to pay $500 monthly rent for the kiosks and a substantial fee to use this public space.

It would probably also mean eventual failure, if not bankruptcy, for those hapless souls who hope to launch franchises at the kiosks.

Franchises are expensive. As an example, a Planet Smoothie franchise costs $25,000 for the first store; and, including this fee, it costs between $160,000 and $275,000 to open such a store in a leased space.

The median initial investment cost for a franchise in 2006 was $25,150, and every year franchisees are required to make royalty payments in return for support in operations and advertising, according to the International Franchise Association.

This is also a bad time indeed for small businesses to ask banks for any sort of commercial loan.

The new vending contract sacrifices the city's freedom from billboards and its traditional street vending, a business enterprise that dates back to at least the 1940s.

In return, the company will donate the kiosks and give the city 5 percent of the gross revenue from selling the advertising and collecting the rental fees.

But how much retail advertising on the kiosks is there likely to be in these harsh times of declining retail businesses? The AJC could tell the city some things about precipitously falling advertising revenues.

This vending kiosk plan was devised during very different economic times. But now, would Atlanta actually realize much revenue from this speculative gamble?

Christine Gallant, an English professor at Georgia State University, chaired the Atlanta Vending Review Board from 1992 to 1993.

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