Peculiar Capitalism: Fast-Food Franchising and Entrepreneurship in Postwar America

Alan S. Brody

Major Professor: Zachary Schrag, PhD, Department of History and Art History

Committee Members: Michael Hugh O'Malley, Paula Petrick, David Kirsch

Online Location, Zoom Link Forthcoming
November 18, 2020, 12:00 PM to 03:00 PM

Abstract:

This dissertation uses business history and food history to tell the story of a peculiar form of capitalism, in which entrepreneurs find themselves inhabiting a liminal world. Franchising exists as a hybrid form on a continuum between independent businesses and corporations. Throughout the postwar era, fast food franchising was at the center of legal, political, and social debates. This study covers the period from the 1953 creation of the Small Business Administration to the passing of the 1978 FTC Franchise Rule. It relies on franchise brochures, industry magazines, company records, and government documents.

This work begins with suburban growth during the 1950s, when the baby boom, new highways, and processed foods helped to usher in the drive-up fast food restaurant era. Emerging companies turned to the sale of business format franchises to meet their need for new capital. In so doing, they focused on recruiting, training, and servicing their local outlets. Despite adopting systems, technology, and management science, many failed, and even well-known companies like Kentucky Fried Chicken could not expand to new business lines. Attention to these failures challenges existing historiography that emphasizes successes, such as McDonald's.

This study argues that by the 1960s, the numerous failed enterprises show an industry beset by risk while defending its declining reputation. The franchise industry was complicit in overselling the promise of success. Many potential entrepreneurs fell victim to fraud, while others encountered a powerful industry propaganda machine. Some firms, such as Carvel Ice Cream and Dunkin' Donuts, did succeed.

The barriers for aspiring entrepreneurs, whether franchisors or franchisees, are much more significant than previously documented. This applied to celebrities, working people, and those with prior food service experience. People of color faced prejudice and systemic barriers. Government programs became mired in red tape or politicized. Concurrently, consumers attacked fast food as unhealthy and opposed new outlets.

This work recovers the inherent tensions during franchising's growth phase to show a fragile and contingent business model. Given the number of closures, the needed infrastructure, and changing consumer tastes, franchising's reality deviated from its popular image.