Five crew members work in the kitchen, putting toppings on pizzas, putting the pizzas in the oven, getting drinks, taking orders over the phone. Julio, a nineteen-year-old kid with two kids of his own, slides a pizza off the old Blodgett oven’s conveyer belt. He makes $6.50 an hour. He enjoys making pizza. The ovens have been automated at Little Caesars and at the other pizza chains, but the pizzas are still handmade. They’re not just pulled out of a freezer. Scott, another driver, waits for his next delivery. He wears a yellow Little Caesars shirt that says, “Think Big!” He’s working here to pay off student loans and the $4,000 debt on his 1988 Jeep. He goes to the University of Southern Colorado and wants to attend law school, then join the FBI. Dave Feamster, the owner of the restaurant, is completely at ease behind the counter, hanging out with his Latino employees and customers — but at the same time seems completely out of place.
Feamster was born and raised in a working-class neighborhood of Detroit. He grew up playing in youth hockey leagues and later attended college in Colorado Springs on an athletic scholarship. He was an All-American during his senior year, a defenseman picked by the Chicago Black Hawks in the college draft. After graduating from Colorado College with a degree in business, Feamster played in the National Hockey League, a childhood dream come true. The Black Hawks reached the playoffs during his first three years on the team, and Feamster got to compete against some of his idols, against Wayne Gretzky and Mark Messier. Feamster was not a big star, but he loved the game, earned a good income, and traveled all over the country; not bad for a blue-collar kid from Detroit.
On March 14, 1984, Feamster was struck from behind by Paul Holmgren during a game with the Minnesota North Stars. Feamster never saw the hit coming and slammed into the boards head first. He felt dazed, but played out the rest of the game. Later, in the shower, his back started to hurt. An x-ray revealed a stress fracture of a bone near the base of his spine. For the next three months Feamster wore a brace that extended from his chest to his waist. The cracked bone didn’t heal. At practice sessions the following autumn, he didn’t feel right. The Black Hawks wanted him to play, but a physician at the Mayo Clinic examined him and said, “If you were my son, I’d say, find another job; move on.” Feamster worked out for hours at the gym every day, trying to strengthen his back. He lived with two other Black Hawk players. Every morning the three of them would eat breakfast together, then his friends would leave for practice, and Feamster would find himself just sitting there at the table.
The Black Hawks never gave him a good-bye handshake or wished him good luck. He wasn’t even invited to the team Christmas party. They paid off the remainder of his contract, and that was it. He floundered for a year, feeling lost. He had a business degree, but had spent most of his time in college playing hockey. He didn’t know anything about business. He enrolled in a course to become a travel agent. He was the only man in a classroom full of eighteen- and nineteen-year-old women. After three weeks, the teacher asked to see him after class. He went to her office, and she said, “What are you doing here? You seem like a sharp guy. This isn’t for you.” He dropped out of travel agent school that day, then drove around aimlessly for hours, listening to Bruce Springsteen and wondering what the hell to do.
At a college reunion in Colorado Springs, an old friend suggested that Feamster become a Little Caesars franchisee. Feamster had played on youth hockey teams in Detroit with the sons of the company’s founder, Mike Ilitch. He was too embarrassed to call the Ilitch family and ask for help. His friend dialed the phone. Within weeks, Feamster was washing dishes and making pizzas at Little Caesars restaurants in Chicago and Denver. It felt a long, long way from the NHL. Before gaining the chance to own a franchise, he had to spend months learning every aspect of the business. He was trained like any other assistant manager and earned $300 a week. At first he wondered if this was a good idea. The Little Caesars franchise fee was $15,000, almost all the money he had left in the bank.
devotion to a new faith
BECOMING A FRANCHISEE IS an odd combination of starting your own business and going to work for someone else. At the heart of a franchise agreement is the desire by two parties to make money while avoiding risk. The franchisor wants to expand an existing company without spending its own funds. The franchisee wants to start his or her own business without going it alone and risking everything on a new idea. One provides a brand name, a business plan, expertise, access to equipment and supplies. The other puts up the money and does the work. The relationship has its built-in tensions. The franchisor gives up some control by not wholly owning each operation; the franchisee sacrifices a great deal of independence by having to obey the company’s rules. Everyone’s happy when the profits are rolling in, but when things go wrong the arrangement often degenerates into a mismatched battle for power. The franchisor almost always wins.
Franchising schemes have been around in one form or another since the nineteenth century. In 1898 General Motors lacked the capital to hire salesmen for its new automobiles, so it sold franchises to prospective car dealers, giving them exclusive rights to certain territories. Franchising was an ingenious way to grow a new company in a new industry. “Instead of the company paying the salesmen,” Stan Luxenberg, a franchise historian, explained, “the salesmen would pay the company.” The automobile, soft drink, oil, and motel industries later relied upon franchising for much of their initial growth. But it was the fast food industry that turned franchising into a business model soon emulated by retail chains throughout the United States.
Franchising enabled the new fast food chains to expand rapidly by raising the hopes and using the money of small investors. Traditional methods of raising capital were not readily available to the founders of these chains, the high school dropouts and drive-in owners who lacked “proper” business credentials. Banks were not eager to invest in this new industry; nor was Wall Street. Dunkin’ Donuts and Kentucky Fried Chicken were among the first chains to start selling franchises. But it was McDonald’s that perfected new franchising techniques, increasing the chain’s size while maintaining strict control of its products.
Ray Kroc’s willingness to be patient, among other things, contributed to McDonald’s success. Other chains demanded a large fee up front, sold off the rights to entire territories, and earned money by selling supplies directly to their franchises. Kroc wasn’t driven by greed; the initial McDonald’s franchising fee was only $950. He seemed much more interested in making a sale than in working out financial details, more eager to expand McDonald’s than to make a quick buck. Indeed, during the late 1950s, McDonald’s franchisees often earned more money than the company’s founder.
After selling many of the first franchises to members of his country club, Kroc decided to recruit people who would operate their own restaurants, instead of wealthy businessmen who viewed McDonald’s as just another investment. Like other charismatic leaders of new faiths, Kroc asked people to give up their former lives and devote themselves fully to McDonald’s. To test the commitment of prospective franchisees, he frequently offered them a restaurant far from their homes and forbade them from engaging in other businesses. New franchisees had to start their lives anew with just one McDonald’s restaurant. Those who contradicted or ignored Kroc’s directives would never get the chance to obtain a second McDonald’s. Although Kroc could be dictatorial, he also listened carefully to his franchisees’ ideas and complaints. Ronald McDonald, the Big Mac, the Egg McMuffin, and the Filet-O-Fish sandwich were all developed by local franchisees. Kroc was an inspiring, paternalistic figure who looked for people with “common sense,” “guts and staying power,” and “a love of hard work.” Becoming a successful McDonald’s franchisee, he noted, didn’t require “any unusual aptitude or intellect.” Most of all, Kroc wanted loyalty and utter devotion from his franchisees — and in return, he promised to make them rich.