Chicago Tribune from Chicago, Illinois • 8

8 beciion 1 Chicago Tribune, Monday, Juiy 22, 1974 The -franchise hustlers Ted White and William Price: Video tennis is a 'sure thing9 II I i 4 I i "This isn't a craze thing," White said. "This Isn't going to die out, because tennis is growing in popularity every year." It is the pitch, after all, that counts. The product is secondary. They used similar spiels selling coin-operated television sets as International Television, before they skipped to the suburbs and left an Arlington Heights man demanding an $800 refund for two undelivered sets and a Downers Grove youth demanding a $1,000 refund. But now they have a Schiller Park office for the video tennis business they call Calmex Marketing International, and White loses his normal suave and soft-sell manner when anyone deigns to talk about his past, his nonexistent patent, or the victims he has left in his wake.

"I'm going to London tomorrow and then Paris and Germany," he roared last week. "Nobody's going to put me out of business." and the United States. Now he's trying to capitalize on the electronic tennis boom here in Chicago. White promises his computer toys will make $200 a week, but one distributor said he considered himself lucky to earn $40 a week per machine. WHITE BASES HIS promises of $200 a week on each game lasting only two minutes a factor he guarantees the buyer can count on.

"The machines are fixed," he explained. "We have these things worked so that if a volley lasts too long, two things happen: Either the ball moves" so fast that it's humanly impossible to hit it, or the ball merely passes thru your paddle, even tho the paddle actually hit it." Then, as if to prove they were offering a fantastic deal, William Price, White's assistant, brought out a newspaper article that told how Americans spent a quarter of a million dollars on video games last year. Now he sells the "patented" tennis games as "exclusive distributor," tho someone else actually holds the patent and the patent holder says White has no legal agreement to sell them at all. Still, White busily was selling the machines from his suburban office one weekend last month while the real patent holder, Atari of California, had representatives in town selling similar cocktail tables from a nearby motel. "WHEN YOU GET them installed in smaller paces you can make agreements with the owner on how much he's going to declare en his income tax," White said.

"If you make $8,000, you and the owner can get together and decide you're going to declare half that. "It's simple. You pocket the rest. With these machines there's no way of knowing." As head of Export Channel Canada, White claims home offices in Toronto and distributorships in London TED WHITE'S organization promises to steer you to something better than McDonald's and promises you won't have to do all that work for your money. The machines Ted White is selling are video tennis games mounted on cocktail tables.

He will sell all you want to buy for $2,800 each and throw in a "locator and repairman's services" with the distributorships. And he will add his favorite story to convince you that you'll do well. "We had one distributor who thought his machines were broken," he said. "It turned out they were filled with money and just clogged up." WHITE LIKES THAT story. He was telling variations of it a few months ago when he was selling pay television distributorships out of a plush office on North Michigan Avenue.

But that was before he abandoned the suite owing $800 back rent to get into video tennis in the suburbs. iZ, VV Clamex Marketing's William Price right and Ted White. Martin Smoler: $9,975 for a Little Nut Hut isn't peanuts i 'n. iw tt if! 4 ft STILL, SMOLER offered to sell 50 of the machines for $9,975 to provide paperwork for the business, and to send an "expert locator" to find the right places for the machines. In Washington people who bought the deal found their machines being placed in the worst dives in town, if they were placed at all.

Most of all, Smoler preferred to dwell on the use of the Planter's Peanuts name as some sort of endorsement of his nut hut product. "Now don't forget the biggest factor, the association with Planter's Peanuts and the benefit of all that Planter's national advertising," he said. Actually, according to Planter's, Smoler and his company, Food Resources, Inc. of Burlingame, do no more than buy Planter's Peanuts-just like everyone else. JUST AS OTHER salesmen had in Washington, Smoler promised the little nut hut could bring $18,000 in income the first year.

"This would be better for you than a McDonald's or a Holiday Inn franchise," he said, "because of the higher rate of profit. That is, if you even could come up with the thousands of dollars Holiday Inn and McDonald's require. "Investing in a McDonald's or Holiday Inn might bring a 40 per cent return in five years, but according to our very conservative projections, you'll make a 20 per cent profit in two years." And Smoler wasn't at all disturbed by the conflict of these projections with earlier promises of an $18,000 profit the first year. But when he wasn't talking about money, Martin Smoler just loved to talk about peanuts. "You know how people are when they drink in the evening," he said.

"They just keep stuffing peanuts into their mouths. They can't stop eating them. Those will be your peanuts." Smoler conveniently produced an elaborate graph showing that Americans consume one billion pounds of nuts each year. Smoler was expert at eliciting confidence, even to the point of warning the couple about outfits that are in business one day and out the next. "How do you know I won't be gone tomorrow morning? he asked.

"I might be packed up tomorrow and gone." THE LITTLE NUT Hut, which was run out of Washington in a flood of consumer complaints, suits, restraining orders, and Board of Health condemnations, has now turned up in Wheeling. The nut hut's custodian is Martin Smoler, a well-dressed man who oozes sincerity and leaks a little suspicion on the side. i "You know, you just don't look like the kind of people that would be interested in this ad," he told the young couple. "Most of the people we get in here are Ma and Pa types." Smoler then launched into glowing praise of the nut hut dispensers, tho the small contraptions are in reality little more than pieces of sheet metal crudely welded together and painted white. ft' wLim.

-mml jimnif iii-Mrmii'iiliianmfn- Martin Smoler in his office in suburban Wheeling. f. Irving H. Kaufman and Herschell Lewis: Be an X-6 dealer '-It. 17 I 1 exhaustive sales pitch that includes hours of snap glances at a pitch-book he never lets out of his hands.

The demand will grow, he said, but the company, Energy Research can keep up with the demand, because "We have a plant that manufactures 6,000 of these a day In Wisconsin no, Illinois actually an unincorporated area near Wisconsin," Kaufman said. Tho the pitch is pressurized thruout, the two men maintain their charm and wit, always encouraging the prospective buyer. Even when they threaten "to sell the exclusive area to another guy who is interested," they threaten with a smile. Kaufman, in fact, even opened his heart to offer what he called some "free advice." "You say you're looking at some other deals," he said. "Now, look here.

In the business opportunities line these days you have to be on the watch all the time for con men." spective buyer will have to come up with the extra $3,000 and will then receive a bunch of posters, a promotional movie on a hand-held viewer, and a television ad. And, of course, that money helps pay for the time Lewis spent creating the X-6 name. "THE GIVES It flair like the XKE car or the X-15 jet," he explained, "and the 6 gives the impression that there were five other models-before it." That promotion aid, Lewis said, is an essential part of getting the service stations to stock the X-6 for the distributorship-buyer and install it on cars. "You are buying a whole marketing system," Lewis said. "What could you do if you went out and bought the devices yourself? You couldn't sell them.

You wouldn't know how." So Lewis does that sort of thinking in the plush Wrigley Building offices he shares with Kaufman. Kaufman sticks to selling the distributorships thru an Not so with the X-6. It is only sold in blocks of 2,016 for $13,547.52 or $6.77 each. And with that deal, you also buy the right to go into business as a full-fledged X-6 distributor selling the cheap device to the public for $14.95. So goes the latest fad-motivated gimmick of Herschell Lewis and Irving H.

Kaufman, the advertising man and marketing man who make up Chicago's veteran franchise sales team. They've even pushed aside their phony abortion-clinic franchise sales drive for this one. "I'd be a liar if I didn't tell you that we're pushing everything out of the way to get in on this energy crisis," Kaufman said. But success isn't automatic, Lewis explained. That takes another $3,000.

"Without promotion," he said, explaining his role in the marketing scheme, "it won't sell. Sometimes you have to bring people kicking and screaming to success." Therefore, Lewis concluded, the pro THE PROMOTERS say it is the solution to the gasoline crisis, a tiny device spliced into the gas line of the family car. They say it will save 20 per cent on the household gasoline bill. But actually, according to a testing arm of the automotive industry, the device doesn't work. Altho the devices are advertised in dozens of trade magazines under a variety of names, they all come from the same plant in a little town in Wisconsin.

Even that doesn't stop the X-6 Energy Intensifier's promoters from claiming their device is "patented," that they are the "exclusive distributors," and that they "own" the plant where the X-6 is manufactured. IN TRUTH, A simple phone order to Wisconsin will bring hundreds or thousands of devices at $3.29 each, and anyone can buy them. Herschell Lewis Heft and a 1966 photo of Irving II. Kaufman. Tim Christian: Cleaning up the Cyclo Design way Biff H- Klllilllliil iSffi claims that "working just four hours a day, you can make $12,000 to $15,000 a year.

"My men aren't janitors, they're businessmen," he said. "They found out that the guy who owns that big house on the hill is not a computer company president, but a junkman, so they don't want a status symbol. They want in on the big money." HE AUGMENTS ins lecture with a hefty pitch-book stuffed with reprinU and handouts on the service industry. Tho they are published by other firms, Christian has them arranged to leave the false impression that they all pertain to Cyclo. Despite the huge network of "people making money" that Christian outlined, he conveniently had a distributorship open in whatever area the buyer wanted, a phenomenon other disgruntled buyers have noticed about their "exclusive territory." "The south suburbs?" he said.

"You want me to be honest? That's exactly where it's needed. That's where the big money is. We have a distributorship open in that area." But the patented floor polisher, he said, is the greatest of the benefits he offers. It massages the floor "like the motion of the human hand," he said, entwining his fingers and pumping his palms together in a demonstration. AND THE MACHINE, combined with his brand of service, offers other unique benefits.

"Do you know what it means to someone when you tell them they don't have to replace a rug that has been bleached out by the sun in spots near the window?" he asked. "We can fix that. We can make it just like the rest of the rug. That's one thing our machines can do that no others can." He explained: "I'll let you in on our little secret: Rit It We just throw it into the machine." Rit It is a well-known dye available in any drug store. who put down $3,995 and found themselves with a vacuum cleaner that sells for half the price elsewhere, two floor polishers at four times their normal retail price, and a load of chemicals.

At 42, Christian has been in the selling business for 20 years. Until eight years ago, when he bought Cyclo, he was selling vacuum cleaners. Now he talks incessantly to his prey about big money. "THERE IS big money In the service industry," he said. "All you have to do is get organized.

I've got a man from Hawaii who makes $40,000 a year in the business, and he could make more if he got organized." Dozens of other people, however, have complained to every legal office in Cook County that they were taken, that they couldn't make money, and that they were left high and dry without any support after they parted with their money. Nevertheless, Christian's sales spiel TIM CHRISTIAN idolizes Ford and Carnegie. They made a lot of money, and he wants to do it, too. Unfortunately, Ford had the automobile and Carnegie had the steel mills. All Christian has is a 13-year-old patent on a floor polisher that the inventor calls "darn near obsolete." Armed with that patent, he has sold hundreds of people on the idea of going into the business of cleaning other people's homes and offices.

But after they bought his Cyclo Design, most found that the entire idea was preposterous, that their equipment couldn't do the industrial jobs Christian said they could, and that they simply couldn't compete in the cleaning business. STILL, CHRISTIAN pitches his package every day from his Waukegan office as the chance to get rich. "I'm going to be a multimillionaire," he said. "I'm going to do it by multiplying my efforts thru others." The others are the men and women Tim Christian sells a visitor from his Waukegan office. How franchising's supersalesmen bait their costly hooks men are just as quick to realize the buyer may be panicked at the thought of missing out on a chance.

"The salesman told me that he had two other persons in the McKeesport area who were Interested In buying this area," remembers Mrs. Jean Livingston, who eventually lost $2,500 investment to a Chicago-based firm selling perfume distributorships. "He said he had to have a down payment right then, If I wanted to hold the distributorship for me." But that pressure is only one of the psychological tricks the investor can expect from the determined salesman. Here are examples of some of his best and most devious: A minister's wife hi Virginia was given a complex psychological test before being sold a $2,500 deal to distribute cologne she never received. "He said he wanted to make sure I was cut out for selling," she said.

"He said his company was very careful about whom they chose to do their selling. Then he glanced at the test "and said he didn't think there would be any problem." A faltering prospective buyer of a gas-saving device was ridiculed by a salesman when the prospect said he had to discuss the subject with his wife before parting with any money. "In my home, my wife bought the refrigerator and I bought the house," said salesman I. H. Kaufman, "but I pay for both." A suburban Schaumburg couple was thoroly questioned about their social habits because they had to bo "good enough" people to be accepted by the company.

"We had to be religious, community-minded, upstanding people with a good credit rating good citizens," said James Sanford, who lopt a $2,000 investment to a vending-machine company which sent them only broken machines and gave them no assistance. "I guess when we made the down payment that night we were automatically good enough citizens." Tomorrow: Tho celebrity gamea look behind the glamor in franchising little too close. "OUR LAW doesn't do much good when the company is based in California," said James Kaiser, an assistant attorney general in Washington. "It's like having only one net to catch a swarm of bees. They fly all over not into your net." Perhaps the most brazen offer the investor can expect from the consummate salesman is the "exclusive terri- tory" that the package contains.

"For $5,000 you're buying Oak Park," Serlin said during his pitch for a distributorship In his frozen-meat enterprise. "It's yours for life. No one can take it away from you." In truth, the exclusiveness of a territory often means little because no one else would want it anyway. But even worse, the companies often sell the same "exclusive territory" to several unrelated buyers. AND IF THE idea of having something "exclusive," something of his own, appeals to the buyer, the sales state and work In another because they know there Is no federal law to follow them across state lines.

And they know very well that it Is difficult, bothersome, and time-consuming for Illinois officials to pursue a California company or Minnesota officials to pursue an Illinois company. "THEY SIMPLY run between the paths of jurisdiction," one New York prosecutor complained. Another trick is the prosperous-looking offices quickly opened wherever the salesmen go to work and designed to give the Illusion of stability and corporate wealth. The paneled walls, the well-dressed secretary, and the lavish waiting room may be rented by the week, but the Impressionable prospective investor doesn't know that. One firm operating In Philadelphia, for Instance, rented everything in Its instant office, Like the others, it would move quickly when the prospects in the area dried up or when the arm of the law came a an amazing set of figures to convince a prospective buyer to invest in his X-6 Energy Intensifier, a gas-saving device that experts say doesn't work.

"Lei's assume you buy into the X-6 at a level where you have 10 locations in Florida," he said. "Your profit on each sale is $3.73. "Now, three installations per hour over an 8-hour 1 od is 24, times 10 locations, or 24 installations a day. That figures times a 6-day week gives you 1,440 such locations. That figure times the $3.73 you get means you gross $5,371.20 a week, or nearly a quarter of a million dollars a year." BUT KAUFMAN'S pitch leaves little time for the buyer to consider the odds against any single service station operator selling and installing three devices every hour, every day, of every month.

The potential investor also can expect this sort ot salesman to be miles from his home office, and the technique didn't happen by chance. Many deliberately keep their headquarters in one Continued from page one people know, because a person who is fleeced is not likely to talk about it." But even the ones who will talk build into an army of disenchanted investors. Each thought at one time he was getting into another McDonald's, and each was encouraged by a consummate con man to think that way, whether the words were the same or not. Tho the products change and the deals are different, most of the men who peddle them have locked themselves into general patterns of salesmanship and techniques of closing the deal. One of their favorite techniques is to baffle the Interested buyer with a bar-page of figures that Inevitably "prove" lhat the buyer can get rich.

"ONE OF THE EXPERTS In the art is Irving H. Kaufman, a Chicagoan who has marketed all sorts of franchise schemes from abortion clinics to gas-saving devices. Kaufman ran thru.