"We want to be the McDonald's of ink and toner," says Burt Yarkin, chief executive of Cartridge World North America, based in Emeryville, Calif. "We're going right into people's neighborhoods and becoming part of their daily lives."

It's a good idea that may be bad news for big printer and copier makers, who count on sales of ink and toner cartridges for a dependable revenue stream. As recently as two years ago, 100% of H-P's profits were derived from recurring cartridge sales, although other sectors of its business have since become profitable. Cartridge-refillers, driven in large part by the aggressive franchisers, are ramping up sales at a rate of 10% a year, compared with growth for big tech companies along the lines of 6% a year, according to Lyra Research Inc., a Newtonville, Mass., research firm.

The franchises are winning converts such as Bill Dirzulaitis, a graphics consultant in Wantagh, N.Y., who discovered a Cartridge World store in his neighborhood in March. Mr. Dirzulaitis, 65, previously bought cartridges for his Epson home printer at a Staples Inc. office-supply superstore. But he liked Cartridge World's cut-rate prices and its convenient location just a mile and a half from his home.

"I'd go an extra mile or two even if the store wasn't so close," says Mr. Dirzulaitis, who estimates he saves 50% each time he refills his old cartridges instead of buying new ones. "It's just a good deal."

JUST LIKE NEW? Refilling a used printer cartridge instead of buying a new one can cut costs.   Retail Refill At Caboodle Canon i80 Ink-jet Printer Black $11.95 $4.99 Color 21.95 7.99 HP 1100D Color Ink-jet Printer Black, Cyan, Magenta or Yellow 33.99 18.99 Lexmark Z816 Ink-jet Printer Black 22.89 9.99 Color 25.19 9.99 Note: Prices as of yesterday Sources: Staples; Caboodle Cartridge

Daniel Wencel, president of Caboodle Cartridge, says H-P and other manufacturers are "gouging" consumers who buy new branded cartridges to replace their spent ones. "When we refill, it costs us just 60 cents to 70 cents a cartridge, so we can sell the refills for half off regular cartridge prices," he says.

Boris Elisman, H-P's vice president of supplies marketing and sales, insists the company isn't gouging consumers. Instead, he says, consumers get the best value for their money from an H-P cartridge, because of the higher quality of the company's inks and the way new cartridges work seamlessly with H-P printers. "Our cartridges still provide superior value," Mr. Elisman says. A May 2004 article from the magazine Consumer Reports, he adds, decried off-brand inks as "lower-quality" and "messier" than regular name-brand cartridges.

H-P says it hasn't tried to mount a legal challenge to Cartridge World's business, and Cartridge World says no other cartridge supplier has done so, either. The problem for the big branded cartridge makers is that it just isn't that hard to figure out how to get ink back into an empty cartridge. Until the day the big companies make a cartridge that permanently seals or self-destructs as soon as it is empty, refillers will have a business.

H-P's Mr. Elisman says large printer makers don't feel threatened by the franchise stores, because refillers and other companies that re-engineer cartridges have only about 20% of the overall cartridge market.

The refill-cartridge chains acknowledge the quality of their products is sometimes perceived as poor. But their inks, purchased from specialized German ink makers, are just as good as those of the name-brand manufacturers, they say. And refilled cartridges are environmentally friendly, they argue: No need to throw used cartridges in landfills.

Spurring the proliferation of cartridge franchises is the declining cost of refilling equipment over the past few years. Jim Forrest, an analyst at Lyra Research, says refilling machinery was traditionally very expensive, with some pieces costing $100,000 or more. That meant cartridge remanufacturing was confined to large wholesalers who could afford to hire dozens of workers to run big operations. But lately, machines the size of a personal computer, designed to refill 30 or more different cartridge models, are selling for as little as $1,800.

A franchise from Cartridge World costs around $150,000; Island Ink-Jet requires about $68,000 and Caboodle about $60,000. Prices cover a franchising fee, marketing materials, training and the fitting-out of a store. Franchisee candidates have to pass a screening: Island Ink-Jet, for example, wants franchisees to have liquid assets of $30,000. Franchisers may demand royalties of as much as 6% of the franchisees' monthly sales.

Many franchisees say the business is worth the high price of admission. Ashley Goolsby opened a Cartridge World franchise in June in Austin, Texas, and says she has about 20 transactions a day. She expects to break even on her $150,000 investment in six months. She also projects her initial investment will generate 20% to 25% returns by the end of the first year, and 30% to 50% gains every year thereafter.

"Do you know any businesses out there that don't have a printer?" asks Ms. Goolsby, 37. She plans to open another Cartridge World in Austin in December.

Mr. Wong, the Berkeley, Calif., franchisee who opened his Cartridge World in January, hopes to open his second location later this year in nearby Oakland. He expects the first store to break even on the $150,000 investment in coming months.

Indeed, activity is picking up. His store refills 40 to 50 ink cartridges and five to 10 toner cartridges every day. "This is a store where you can just walk in, meet the owners, establish a rapport and get customer service," says Mr. Wong. "It's simple to do. This isn't rocket science."

Write to Pui-Wing Tam at pui-wing.tam@wsj.com¹