As a result, Brothers soon found herself on a cash-flow treadmill. The only way she could keep the business afloat was to sell more and more franchises. But each franchise that was signed up caused an additional drain on Brothers's time and money. Don Boroian, the consultant who helped prepare brochures for Pop-Ins, estimates that Brothers "lost $15,000 every time she made a sale," given the expenses involved with a new franchise. "If it weren't for the income from new sales, her company would have collapsed."
Henry DiBlasio, Pop-Ins' first attorney, agrees. "She was too eager to expand, to hit it too big too quickly," he says. "She was always robbing Peter to pay Paul." DiBlasio quit just after the full-disclosure rule passed, when Brothers couldn't get an audited statement and stopped paying her bills on time. "She could talk anybody into anything," he recalls of his client, "but she very seldom would listen."
Brothers's new Pop-Ins franchisees also saw the results of an organization that was overtaxed. Credit card receipts sent to headquarters would be reimbursed by check, but the check would bounce. Opening announcements were not ready on time. Pop-Ins matchbooks were delivered with the wrong address and phone number printed on them. Franchisees would call headquarters for the solutions to the screwups, or for advice or support. But Brothers would be out, working the press, selling to survive.
"They'd call us every day, some of them, expecting us to solve their problems from Columbiana," Brothers explains of her dilemma. "It was harder work than they'd imagined. In their minds, we were supposed to be running their business for them."
By 1981, franchisee grumbling about broken promises had turned into the first two fraud cases brought against Pop-Ins. Brothers settled both, giving back franchise fees and paying legal costs.
"I was an emotional wreck," she remembers. "I'd never been sued, and it hurt." It was her lawyer, she says, who convinced her that it was better to settle and move on, to concentrate on improving the package rather than enduring the pain of a lawsuit.
"It was poor legal advice," Brothers says today. "I should have sued the pants off both of them. It would have shown we could take a hard line." Instead, the settlement left a blot on her disclosure document, and set a precedent for unhappy franchisees of the future to follow.
"What we had on our disclosure document was 'Sue her, she'll give you your money back," she says. "We created a monster."
"THE CADILLAC OF THE INDUSTRY"
THE MEN AND WOMEN WHO BOUGHT INTO CAROL Brothers's franchise dream were America's middle class -- a school psychologist with a craving for a career change, a Ramada Inns employee trapped in a rut, a retired hydraulic company owner looking for something for his wife. Janet Price, who invested $16,000 to start a Pop-Ins in Morgantown, W.Va., was a branch manager at a mortgage bank looking to be her own boss; when her mother sent her a sheaf of Brothers's newspaper clippings, she was sold. Jim Kane had been with a national food-service company until a change in top management; he heard Carol interviewed on the radio while he was driving down the Garden Grove Freeway, and was impressed enough to pay $77,000 for the Los Angeles County master franchise, the "cream of the crop." Lynn Karp heard Carol on a Cincinnati talk show. Karp, a professor's wife, was looking for a maid now that she'd gone back to school, but once she met Brothers she decided to gamble $13,500 on the Cincinnati franchise.
Most of Brothers's prospects were presold before they walked in her door, convinced that franchising was their risk-free ticket to business ownership. Many had already decided on a maid service, and picked Pop-Ins because of the story in Money magazine about David Brethen, a 25-year-old former factory foreman who earned $25,000 his first year with one Pop-Ins, and then decided to buy four more.
Meeting Brothers only fired their ambitions. She was the glamorous entrepreneur, they were her followers, and each of them, in some measure, would spread the Pop-Ins gospel and share in its glory. Brothers would run a film strip showing pictures of supposedly satisfied franchise owners out driving their new Eldorados, then talk about Ray Kroc's early franchisees -- men and women whose tiny investments were now worth millions. Today, she would say, the future is in service, and together they could help make Pop-Ins the McDonald's of tomorrow. "We're on a roll," Brothers would bubble. "We're going to make it happen."
With a Pop-Ins package, franchisees were promised everything they'd need to succeed. For just $1,500 or $5,000 or $8,500 -- whatever Brothers could negotiate -- they could buy a start-up kit, complete with training tapes, trash bags, blazers, and a sign, plus the proprietary Pop-Ins cleaning products, researched and tested. They'd learn speed cleaning -- based on Japanese-style time and motion theory -- developed by experts from Youngstown State. A representative from headquarters, perhaps Brothers herself, would grace their grand opening, welcoming the press and dignitaries. Headquarters would help them at every step, even sending an experienced hand to their offices to help during launch week. A deposit of only $2,000 would reserve them a territory; within the month they could be learning the Pop-Ins system at Pop-Ins U.
