Small Business: Profits for Mom & Pop

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For their income, most of the small franchisers (and usually their wives) must work at least a ten-hour day, six days a week. Los Angeles' International Industries Inc., which has franchised 68 pancake houses and snack bars in the past five years, confines its franchises to single men under 50 and turns down those who want their weekends free. Personality tests, aimed at measuring "persuasion index" and "frustration tolerance", are used to screen applicants at Chicago's Servicemaster Co., a 650-branch rug cleaner. Western Auto Supply, with 3,906 dealers, screens the wives of owners as closely as their husbands, and frowns on inherited money because it thinks that people who have had to earn their own will know better how to manage a shop.

Loose Standards. Franchiser David Lawson points out the greatest shortcoming of the business: "Quality control is mediocre at best." He is president of Nationwide Safti-Brake Centers, whose inspections of its 51 garages—run mostly by people with small experience in the auto servicing business consist of infrequent, casual drop-in visits. Arthur Murray teaches dancing in a hurry—by mailing film clips of new steps to his 400 franchised studios. The studios have been restrained by the Government from selling lifetime lessons at exorbitant fees to lonely little old ladies.

But for all its loose standards, unfortunate esthetics and troubles with the Government, franchising is likely to continue its headlong expansion simply because the rewards exceed the risks: franchised small businessmen averaged better than a 10% profit. When the Internal Revenue Service recently charged that the holder of a car-accessory franchise in a small Missouri town was way behind in his taxes, he simply dug up a tin can buried in his backyard. He took out $80,000 and paid up.