Fast Food Nation: Chapter 4: Success Summary & Analysis

Schlosser follows Matthew Kabong, a pizza delivery man in Pueblo, Colorado (40 miles south of Colorado Springs) at a Little Caesar’s pizza franchise. Schlosser is attempting to understand how one fast-food franchise operates, from the inside. Kabong was born in Nigeria, and he studies electrical engineering when he’s not delivering pizzas. Another employee, Scott, studies at the University of Southern Colorado in Pueblo. And the owner of the franchise, Dave Feamster, can also be seen on the premises—although Schlosser writes that Feamster looks “out of place” in the dim light of the store.

Feamster was a professional hockey player for the Chicago Black Hawks in the 1980s, until a freak injury at the base of his spine kept him from playing. Not knowing what to do with himself after a lifetime of playing hockey, Feamster eventually realized that he had played youth hockey with the son of Mike Ilitch, the founder of Little Caesar’s. A friend dialed Ilitch, Sr., and Feamster eventually found the courage to talk to Ilitch on the phone—he began to be trained as an assistant manager, and used 15,000 dollars (most of his remaining savings) to buy a franchise.

Schlosser goes on to explain how the franchising system, so important to fast food in America, works. “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.” Although franchising was invented by American businesses at the tail end of the 19th century, it was really the fast food industry, and Ray Kroc in particular, who pioneered and perfected the idea. Many fast-food companies, like McDonald’s, now make a good deal of their money as landlords, who own the land on which new franchises are built and maintained, and from franchise fees.

Schlosser notes that Ray Kroc encouraged “tenacity” and “competitiveness” among his early franchisees in the 1960s and ‘70s, and he “made many millionaires” of them, the way “Microsoft did in the 1990s,” helping those who had bought small amounts of stock in the company early to cash out big in ensuing years. Schlosser also writes that McDonald’s in the 1970s, during a period of franchise expansion, changed some of its stores from the original, “old-time” McDonald’s, whose Golden Arches were a structural part of the buildings, to the common “mansard roof” McDonald’s now seen—though the company retained the golden arches in their sign, as a way of pointing to the company’s rich history and powerful brand connection with its customers.

Franchising lobbying groups, like the International Franchise Association (IFA), and the big fast-food corporations argue that franchising is both a successful proposition for the franchisor (nearly always, because of the rents and fees franchisees must pay) and a good, safe investment for the franchisees themselves. But Schlosser argues that these statistics are misleading, since only those franchises still in business are included in surveys conducted by the IFA—and many franchises do not stay in business long. A Burger King or McDonald’s franchise, in the late 1990s, cost over 1 million dollars to purchase, whereas Subway franchises cost the lowest of the major chains—about 100,000 dollars.

Schlosser notes that franchises are beneficiaries of major legal loopholes, which enable the corporations to whom rent is paid, like Burger King, to make enormous profits, while pushing a great deal of the risk—and the potential for failure—onto the franchisees themselves. Subway franchises, for example, must pay extra large payments to the Subway corporation, in exchange for the smaller up-front fee to purchase the franchise. In addition, some franchises are not protected by federal laws designed to enforce fair contractual practice, since franchisees are labeled “independent contractors” and not businesses or vendors typically afforded those rights.

Moreover, federal funds designed to help small businesses, as part of a federal program called the Small Business Administration (SBA), are often used to help franchisees, on the argument that they are not representative of large corporations, like McDonald’s, but rather “small business owners” contracting with those corporations. Thus government money is taken to fund private enterprise and drive out genuinely independently owned business (mom and pops); in addition, many SBA recipients fail, thus ensuring that the federal government must foot the bill for corporations who wish to “experiment” in franchising locations, often in places where business is no good—all the for the sake of corporate profit, and at the expense of the franchisee.

Schlosser closes the chapter by writing that Feamster is a relatively rare success story in franchising. He now owns five Little Caesar’s stores in the Pueblo area, and though he began as a franchisee about 200,000 in debt, he now presides over a business that clears 2.5 million dollars a year in revenue. Feamster is active in the community, and he supports a local hockey team, as a way of reconnecting with his former NHL life. Schlosser notes that Feamster even buys tickets so his employees can attend a “Success Seminar” of Peter Lowe’s, nearby. Some of the workers are won over by a speech in which the actor Christopher Reeve notes how his riding accident (which left him paralyzed) changed his life and helped him to value what was important, although Schlosser implies that the event alternates between moments of genuine emotion and calls for personal success that are often tied to making money.