Chain store blues.

• Author: Srinivasan, Amia
• Position: Book Review

FRANCHISING DREAMS: The Lure of Entrepreneurship in America by Peter Birkeland University of Chicago Press, $22.50

A FEW YEARS AGO, WALTER, A 50-something milkman, dreamed of one day owning and running his own business--getting rich and being his own boss. He also had a practical plan: Walter was going to buy a car-repair franchise. A franchise seemed just the ticket, promising a "95-percent success rate" and the security of a major trademark and corporate backing--critical for someone with no experience in the field. So Walter scrounged together all of his money to buy the franchise, ready to join the ranks of the nation's entrepreneurial class.

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...