Brothers would soon change attorneys, but her contretemps with Rudnick seemed to have no impact inside the franchising industry. At its convention at the end of 1983, the IFA named her to its membership committee. And a few months later, Pop-Ins franchisees received a "news flash" that Brothers had addressed an audience of 8,000 minority women in Washington, D.C., on a platform shared by President Reagan, Geraldine Ferraro, the Rev. Jesse Jackson, and Andrew Kostecka. In fact, Ronald Reagan never addressed the crowd. Neither did Carol Brothers.
A NEW PRESIDENT
WHILE OTHERS WERE HOLDING UP POP-INS AS A national model, the new franchisees were struggling to hold on. Like those who preceded them, they complained about start-up packages delivered late or incomplete, inadequate training, and broken promises. Stephanie Zajac remembers Brothers's promises to her about the "publicity blitz" that would accompany her opening. As it turned out, there was a single radio show broadcast at four o'clock on a Sunday morning.
But while the problems were the same, the franchisees were not. These were not the business novices of earlier years. While most lost money and eventually went out of business, a few were able to establish successful businesses in spite of headquarters' efforts. They had put their own capital into the effort -- significant amounts in the case of master franchisees. Now they were determined to protect their investments and their success. After a tumultuous early spring meeting of the master franchisees and stockholders in Cleveland, Brothers was given an ultimatum: clean up her act, or face a second, terminal, franchisee revolt.
The solution worked out among Brothers, the franchisees, and the company's Cleveland stockholders was probably long overdue. Like many entrepreneurial ventures, Pop-Ins had become too big for its founder; to keep growing, the company needed more professional management. Brothers had never liked the administrative end of things. Couldn't she make a bigger contribution if she concentrated on what she did best -- selling and marketing -- and turn day-to-day operations over to somebody else? The stockholders agreed to invest another $250,000 in Pop-Ins in exchange for 30% of the equity and a promise from Brothers to step down as president.
To E. Anne Murphy, hired in May 1984, the presidency of Pop-Ins seemed a giant career step to take after five years in a franchised accounting service. It was the chance to take a hot company in a hot industry and really make it happen. Her friends at the IFA, she recalls, told her the company had "a few financial problems," but that Carol was "a real nice gal." Once she was assured by the investors of an infusion of new capital, she quit her job, put her Chicago condo up for sale, and moved to Columbiana.
Murphy's first day at work proved discouraging. The sight of Main Street was disheartening enough, but the scene when she stepped through headquarters' door was worse. There sat 13 new franchisees waiting for their first day of classes, scheduled to have been conducted by the training director who had quit the Friday before. "It should have given me a clue that Carol didn't walk out of her office and help me teach," Murphy admits in hindsight.
That afternoon, called into the CEO's office, Murphy found her boss in tears. "Crawford just called -- he's not giving us the money," Carol told her. There wasn't, she admitted, even enough cash to meet payroll. "To heck with Crawford," Murphy said bravely. She'd defer her own salary until the two of them could turn problems around.
It would be a long wait. By the end of the week, after combing through the books, Murphy says she found the company had $485,000 in overdue bills, including more than $100,000 owed to attorney Rudnick. Nor would there be any outside capital: having worked through the books in detail, the Cleveland investors themselves now were demanding 80% of the equity for their $250,000, an offer Brothers found unacceptable.
Murphy stayed -- she found her new boss's determination infectious, and she agreed with Brothers that Crawford's takeover attempt merely proved the strength of the Pop-Ins concept. Given Murphy's management skills and Brothers's sales brilliance, why couldn't they pull it off without his money?
Nancy Eversman, the Pop-Ins accounts payable manager, saw the new president's influence firsthand. They were still awash in bills from lawyers and suppliers, but Murphy called all their creditors, personally, buying time. Working together, the president and Eversman were able to squirrel away the money franchisees paid for start-up packages, so Brothers could not spend it for general operations. They were less successful in preventing raids on the advertising fund, which the franchise contract required be kept in escrow, or in convincing Brothers to pay the Ohio state sales tax, which she insisted was being paid through her husband's chemical firm.
Not that Brothers was taking money out of Pop-Ins for herself. "Carol took around $2,000 out of Pop-Ins the months I was there -- and $1,000 of that was for her daughter's wedding," Murphy remembers. "Carol knew how to spend money, but she didn't have it to spend. She was dirt poor -- she didn't even have her own car. She was living off her husband."
