Broke and unable to afford a prolonged court battle, Mackarness and Notley settled out of court as quickly as possible, which meant forgoing a noncompete agreement. Still, after running up $43,000 in legal fees and spending $40,000 to buy Fridge's shares back, they had their school back as of September 23. Now divorced, they tried to rebuild their program by expanding--and escaping--to Prague. Last September they gave up and filed Chapter 7 bankruptcy, liquidating their assets. Notley remains in Prague. Mackarness, who is unemployed, resides in San Francisco.
Fridge wasted no time getting back into the industry. Shortly after settling with Mackarness and Notley, he opened New World Teachers. A number of Transworld staffers went with him. Kane, who visited both schools while researching his book, notes, "New World Teachers was a photocopy of what I had just seen over at the other place." Mackarness claims that both the curriculum and the marketing materials of New World Teachers borrow too heavily from Transworld. "It looked like New World Teachers was using her curriculum," agrees Kane.
When you enter New World Teachers, it's hard to miss the engraved elevator doors. They portray pioneers bearing flags labeled "The Spirit of the West." A few floors above, Fridge sits at his desk, a cheap plywood school table. Though he refuses to discuss Transworld, he expounds on the demand for overseas English-language instructors.
Around the corner, Sue Mackarness sits in a cafe, smoking a long, thin Capri cigarette. She's never been inside the school where five of her former employees run a business using a curriculum she insists is hers. If she could visit, she would see remnants of Transworld Teachers. Pictures of smiling graduates line the halls. Huge maps plaster the walls. In one classroom, a graduate of Transworld critiques a teacher trainee. She is writing furiously as the trainee tries to coax a group of immigrants to join in the same kind of role-playing exercise Mackarness used.
Former Transworld employees eagerly discuss the challenges of running a new company, having been instructed not to talk about their former employer. Robin Niemeyer and Suzanne Mankin hired all the trainers at New World--something they didn't get to do at Transworld. They also hold board seats. "It's the first time I've been in upper management and have a say in the direction of a company," says Niemeyer. "That's exciting."
Recounting the past, Mackarness chooses her words carefully, ever the patient teacher. She seems composed, apparently no longer enraged by the loss of her company. "I have been in the industry 24 years, and I expect to be in it for the next 24," she says. Her brown eyes twinkle at the absurdity of everything that happened. "It had its comical moments," she says. "The whole cast of characters was such a horror." She picks apart every mistake she and her ex-husband made: not tracking expenses, getting too close to employees. Understandably, she saves the harshest criticism for Fridge, the business manager who was supposed to save them. In retrospect, she says, they should have seen what was coming. "But when you're desperate," she adds, "you don't look at red flags."
Stephanie Gruner is a staff writer at Inc.
Resources
Few small-business owners will fail to recognize at least some aspect of their entrepreneurial selves in Michael E. Gerber's The E-Myth Revisited (HarperBusiness, 800-331-3761, 1995, $15). The easy-to-read follow-up to Gerber's first book, The E-Myth, illustrates various entrepreneurial personality types and demonstrates how founders of growing companies often destroy their own businesses.
Convinced you should share equity with employees? Call your lawyer first. Then consider adding these legal references to your library: Start-up Companies: Planning, Financing and Operating the Successful Business, by Richard D. Harroch (Law Journal Seminars-Press, 800-888-8300, 1985, updated through 1996, $149), is a two-volume loose-leaf guide designed for both lawyers and entrepreneurs. It's updated twice a year and includes detailed legal guidance covering everything from incorporating your company to issuing stock. It also includes sample forms, such as a restricted stock-purchase agreement for employees. For a simpler legal reference book about documenting key business decisions like issuing stock, check out Taking Care of Your Corporation, Volume 2: Key Corporate Decisions Made Easy, by Anthony Mancuso (Nolo Press, 800-992-6656, 1995, $39.95). It comes with a computer disk of sample forms, such as stock-issuance resolutions. Also, the National Center for Employee Ownership, in Oakland, Calif., is coming out with a revised edition of its book Equity Based Compensation Programs. For $35, it gives both legal and practical advice about various types of nonqualified stock plans, such as phantom stock. Call the center at 510-272-9461, or check out its Web site.
TOM KANE, Worldwide Teachers, 266 Beacon St., Boston, MA 02116; 617-262-5722 72
NEW WORLD TEACHERS, Neville Fridge, 605 Market St., Suite 800, San Francisco, CA 94105; 415-546-5200 72
CHRISTOPHER NOTLEY, International TEFL Certificate, Spanielova 1292, 163 00 Prague 6 - Repy II, Czech Republic; (42 2) 301 9784 72
