Fast Food Nation | Study Guide

Eric Schlosser

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Fast Food Nation | Part 1, Chapter 4 : The American Way (Success) | Summary

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Key Takeaways

  • In this chapter Eric Schlosser examines the experience of fast food franchisees, or owners of individual chain restaurants, and their climb towards management and authority in the industry. It also analyzes the meaning of success in the context of fast food's business growth.
  • Dan Feamster, owner of a Little Caesars pizza franchise in Pueblo, Colorado, is one of the entrepreneurs making his mark in the growing town of Pueblo.
  • "Becoming a franchisee is an odd combination of starting your own business and going to work for someone else." While both parties in a franchise agreement want to "make money by avoiding risk," the franchisor—the company or company's representative—usually wins when conflict arises.
  • Although not the first franchisor, McDonald's led the industry in new franchising techniques, expanding the reach of their restaurants while maintaining control of the product.
  • At first Kroc was out to expand McDonald's and sold franchises cheaply, requiring "loyalty and utter devotion" from franchisees.
  • For more money and control, the McDonald's Corporation later became landlords of all their American franchises. According to Kroc's business partner Harry J. Sonneborn, the company was "in the real estate business." Following franchise requirements was part of the lease agreement; violating or ignoring policy could mean breaking the lease and the company's refusal to renew.
  • McDonald's made its biggest impression with an "emphasis on simplicity and uniformity." All restaurants everywhere were standardized, looking the same and delivering the same product. Other retail chains followed the McDonald's example.
  • Franchising now dominates America's retail economy.
  • Fast food franchisees invest as much as $1.5 million up front, seeking a low-risk way to go into business for themselves. But franchising is risky. Up to 38% of franchises fail within five years.
  • Franchisees are not covered by consumer protection laws.
  • Fast food chains may take advantage of their franchisees by "encroachment" or putting two competing restaurants close to one another. They also may require franchisees to buy from pre-approved suppliers, accept termination for any cause, and waive their rights to file complaints.
  • Unhappy franchisees have sued their chains for better treatment.
  • In 1999 Congressman Howard Coble introduced a bill to protect the rights of franchisees. Fast food chains and the International Franchise Association opposed it, saying it would interfere with "free enterprise contract negotiations."
  • The fast food industry has consistently relied on government loans for funding, despite its championing of the free market. In fact the Small Business Association has financed new restaurants, "thereby turning a federal agency that was created to help independent small businesses into one that eliminates them."
  • Feamster worries about the future of his franchise and is dedicated to motivating his employees. He takes several employees to "Success," a business conference with celebrity speakers. Actor Christopher Reeve (1952–2004) gave an emotional speech about success beyond conventional or material goals. The other speakers stick to motivational and sales techniques.
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