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Actually it doesn't return null, http://codepad.org/A34KdUf5.
Maybe your PHP version doesn't support json_encode().
From the manual:
Note that if you try to encode an array containing non-utf values, you'll get null values in the resulting JSON string. You can batch-encode all the elements of an array with the array_map function:
$encodedArray = array_map(utf8_encode, $myArr);
echo json_encode($encodedArray);
Works for me on 5.2.13. Ensure you're using at least PHP 5.2.0 and that PHP wasn't compiled with --disable-json. You may also want to check that error reporting (and/or logging) is enabled.
The simpler way is $store_name = utf8_encode(name_of_varaible)
but please make sure that your character set is ISO-8859-1.