But a few years later, author Peter M. Birkeland finds Walter nostalgic for his milk-delivery days. With unreliable labor, Walter is in his shop constantly, missing family events like his niece’s Saturday wedding. With high staff turnover, he finds himself behind the counter, at the receiving end of the wrath of unsatisfied customers. And the corporation that promised to help Walter is nowhere in sight; Walter calls his competitors down the street to figure out how to run his business. Despite the fact that Walter owns a franchise unit under one of the most successful companies in America, he is continually on the verge of failure.
Instead of a successful entrepreneur, Walter has become a character in Franchising Dreams, Birkeland’s three-year case study of this steadily growing form of business activity. Birkeland begins by telling us that currently 2,000 companies in 75 industries manage 400,000 franchises, and the numbers continue to grow. But Birkeland takes a closer look at these impressive figures, examining the daily workings of franchises and the challenges endemic to the business. From working on the frontline of franchise units and attending countless trade shows and expositions, to interviewing franchisees and CEOs, Birkeland exposes franchising for the cutthroat, competitive, and often disillusioning world it is. He begins by exploding the myth of the 95-percent survival rate for new franchises’ success, figuring that the success rate of new franchises is closer to 25 percent.
To make his point, Birkeland examines three different franchises, which he dubs King Cleaners, Star Muffler, and Sign Masters. Interviews with franchisees as well as franchisers are revealing, invariably reflecting the disillusionment that apparently settles into most franchise owners within weeks. One such person tells Birkeland, “I was naive when I bought this. I thought it’d be really cool to own my own business. Well, I’m 27 and I’ll be broke by the time I’m 30.”
Indeed, after about 20 pages of Franchising Dreams, the book turns into an updated version of John Steinbeck’s Of Mice and Men, set in car-repair shops and cramped printing offices in small-town America. Birkeland demonstrates the numerous obstacles that stand in the franchisee’s path to success. Despite the rhetoric of help from the corporations (“Work for yourself not by yourself” is the motto of one of the franchises), most franchisees are left to fend for themselves after a few days of initial training, often leading them, like Walter, to seek help from competitors. Other challenges include the difficulty of finding reliable employees, whimsical customers, and the corporation’s insistence that the chain stores strictly adhere to the corporate formula, regardless of the local environment–a denial of the flexibility most small, independently owned businesses desperately need. For instance, when certain Star Muffler franchisees complained that their units’ opening hours were not compatible with local consumers’ shopping patterns, they were still not allowed to deviate from the corporate strictures, even when this might have increased their profit margins.
The corporations also encourage the franchisees to cannibalize one another by refusing to give them exclusive territories, which not only oversaturates particular markets but also sets franchisees–otherwise probable allies in a system weighted against them–permanently at odds.
Birkeland does find a few success stories, which brighten up the book’s otherwise rather bleak findings. But for the most part, while the benefits of franchising are clear from the corporate side–growth with no risk and the use of what the Sign Masters’ CEO refers to as “OPM” (other people’s money)–they are harder to see from the franchisee end. The American dream of entrepreneurship traps ambitious but naive men and women in a system that forces them to assume all the risk of corporate expansion with few of the benefits. Birkeland, however, does propose a remedy. He suggests that individual franchisees could wield immense power if they banded together to negotiate better arrangements with their corporate superiors. But this sort of collectivist outlook runs contrary to the individualism that motivates franchisees in the first place.
Birkeland’s book originated as his dissertation at the University of Chicago, and the book’s origins are still glaringly apparent. Although free from the usual turgid academic prose, the narrative is held to a tight focus, and Birkeland never comments on the issues normally raised about this rapidly growing segment of industry. The implications of the changing nature of American entrepreneurship, the effects of franchising on the American economic and social landscape, and the predictions of the future are all outside the realm of Franchising Dreams. But answering these questions was never Birkeland’s intention. Rather, he wrote the book to provide an inside look at the operations of franchising on the daily level; and by doing so, he has provided a cautionary tale for those seeking their fortune behind the counters of the nation’s chain stores.
