PERHAPS IRONICALLY for a company that stresses trust in its advertising, this 700-shop transmission repair franchise has a 35-year history of defrauding consumers with unneeded overhauls and unhonored warranties.

Founded by high school drop-out Anthony A. Martino in 1959 as a shop that specialized in repairing the newly available automatic transmissions, AAMCO went national as a franchise in 1962 with the help of franchising expert—and later company president—Robert Morgan. As with many franchise operations, AAMCO's ideal franchisee was not a shop owner with relevant technical skills, but an energetic, inexperienced entrepreneur who was willing to learn a system. Arthur Glickman reports in Mr. Badwrench that AAMCO actively sought non-mechanics to operate its franchises. The AAMCO system emphasized bringing customers in with promised low prices, then selling ...

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