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A Closer Look

An expert reveals the secrets to investigating a franchise.

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This story appears in the January 1996 issue of Entrepreneur. Subscribe »

There are two faces of franchising. One face offers the glittering smile of enormous financial rewards and conjures up visions of Ray Kroc (McDonald's) and Colonel Sanders (KFC) and the thousands of millionaires they've helped into business. These pioneers made franchising a household term with their motto: "Get in early, build multiple stores fast and make a million."

The other face is the darker side of the franchising story. The early years of franchising growth culminated in a "60 Minutes" TV report titled "From Burgers to Bankruptcy," which aired in December 1978. The show told the story of a couple of slick guys in rented Rolls-Royce automobiles and gaudy jewelry who sold the empty promise of phony fast-food success on the strength of their outrageous claims of instant wealth. The motto of this face of franchising: "Fast-buck artists selling hot air on the promise of success."

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