Business: FRANCHISING: NEW POWER FOR 500,000 SMALL BUSINESSMEN

THE garish profusion of hamburger stands, fruit-juice parlors, pancake emporia and muffler-repair shops stretches for ten miles along Ventura Boulevard in Los Angeles' San Fernando Valley. It could be called Franchise Row. Though hardly a landscape to captivate the eye, the phenomenon is increasingly common to cities and suburbs. Franchising—an arrangement by which local entrepreneurs lease their firm name, product and operating methods from large chains—has become one of the fastest-growing sectors of U.S. business. Through franchising, thousands of independent small businessmen have acquired improved techniques, new economic power and a greatly enhanced chance for survival.

The system thrives because it combines the incentive of personal ownership—the best goad man has yet devised to spur hard work—with the managerial talents of big business. For a fee (average: 3.8% of receipts), the typical franchise operative buys professional expertise he could otherwise scarcely afford—notably, cost controls, promotion and buying advice, and tested operating methods. The main advantage for the parent company is that franchising enables it to expand while putting up little of its own capital.

Spreading Ranks. With scores of new franchised outlets opening their doors every day, the industry has lately been expanding by about 15% a year. The nation's 500,000 franchise operators enjoy a $90 billion-a-year business, accounting for 10% of the total U.S. output of goods and services and a remarkable 28% of retail sales.

Franchising's leading practitioners include Hertz car-rental agencies, Walgreen drugstores and Coca-Cola bottling plants, as well as thousands of gasoline stations and all new-auto dealers. In recent years, the ranks have been joined by both Sears, Roebuck and Montgomery Ward, which together have franchised 1,300 small-town catalogue-order outlets. Franchising has spread to businesses as disparate as art galleries, nursing homes, dating bars, travel agencies, shoe-repair shops, lawnmower-sharpening services and dental-technician schools. There is even a franchised diet service (Weight Watchers, Inc.) and a franchised system for correcting nocturnal bed-wetting (Enurtone Co.). Recently, the fastest growth has been concentrated in the quick-service food field. It includes such enterprises as the 93-outlet H. Salt, Esq. Fish & Chips operation —whose founder, Haddon Salt, brought the idea from England in 1964—and the 110-outlet hot-dog-and-beer operation called Frank 'n' Stein.