(FORTUNE Small Business) – It is ridiculously easy to draw Julius the monkey. I know, because I'm watching Paul Frank--the man behind the eponymous clothing and accessories company, best known for Julius-emblazoned T-shirts--do it right now. First he sketches a horizontal oval; then he sticks a circle on top. He adds a couple of dots for eyes, a line for the mouth, and he's done. Frank, 36, looks up at me and grins. "I don't know why people buy my products," he says. "I want to tell them, 'Go draw your own T-shirt.'"

That simple doodle has become an international icon. Once the domain of downtown hipsters, Frank's wares can now be seen on soccer moms and teens all over the country. Julius graces pajamas, snowboards, and underwear in 13 Paul Frank stores worldwide, from Dallas to Tokyo. Bloomingdale's, Nordstrom, and Urban Outfitters all stock his gear.

"It's, like, ironic or something," Frank says. "I wanted to make things that the mainstream didn't like."

By that measure--and only by that measure--Frank has failed. Now he faces the kind of challenge that only the most privileged firms ever tackle: Can his company survive such rapid, widespread acceptance? To avoid the pitfalls of faddishness that dragged down casual-apparel companies such as Joe Boxer and Ocean Pacific, Frank and his business partners have adopted a philosophy of slow, patient growth, careful partner picking, and creative diversification. "Remember the dot-coms?" Frank asks. "I don't want to be like that--over fast."

No matter where I walk through Paul Frank Industries' headquarters in Costa Mesa, Calif., I can feel Julius's eyes on me. A four-foot-tall vinyl Julius statue greets visitors at the top of a staircase. Special-edition Julius surfboards and skateboards hang from the hallway walls. The three guitars in the 600-square-foot Jam Room--complete with soundproofing, a drum set, and a digital-recording device--sport Julius's face as well.

Without a doubt, this mod, candy-colored, shag-carpeted building is the house that Julius built. Last year T-shirts featuring Julius's likeness--and to a lesser extent those of other Frank characters such as Scurvy the skeleton and Clancy the giraffe--brought in about $6.5 million in revenue to the private, profitable company. Altogether, mascot-bearing goods--the purses and bathing suits and underwear--were responsible for about 50% of Paul Frank's $37 million in sales last year.

It's startling, then, to think how much money Frank could have made had he not turned down so many deals. Wary of glutting the market with Julius merchandise, Frank did not follow up on opportunities to design Julius coffee mugs for Starbucks, create Julius stationery for Staples, or develop a line of Julius clothing for Target. "With that much instant exposure, Paul Frank could shoot straight up and then straight down," says CEO John Oswald, 36. "We're turning down tremendous offers for the promise of brand longevity."

And then there's another reason: Frank, the firm's creative director, is a control freak. For the privilege of selling his clothes, retailers must agree to Frank's display specifications: all merchandise must be presented on sky-blue, orange, and white fixtures--everything from shelves to eyewear cases and nesting tables--that he provides. (Closer to home, he specified the placement of each red, black, and white linoleum tile in his office.) That's not just a personality quirk, says Rose Apodaca Jones, L.A. bureau chief for Women's Wear Daily. "If Paul Frank loses control over how its product is presented, public perception could drastically change," Jones says. "There's a fine line between the coveted cool place they've maintained and the novelty area."

Frank's slow and steady approach extends to marketing as well. The company eschews all traditional advertising and won't even let its retail partners advertise its clothes. "When people try too hard to convince you, you get suspicious," Frank says. "Like the way a creepy guy asking you out is a turnoff." The company's biggest promotional presence is its website, which it likes because customers have to seek it out. And though 150,000 people have registered as fans on the site, the company refuses to send them promotional e-mails more often than once a quarter.

When Frank wants to connect with his fans, he prefers to do it directly--making appearances, signing autographs, and hosting win-a-dinner-with-Paul-Frank contests. Last year half the marketing department loaded into a Winnebago to drive cross-country to meet with suppliers in New York City, stopping on the way to hand out merchandise and "spread good will" at college campuses and historical landmarks, including the St. Louis arch, Dallas's grassy knoll, and the Alamo.

But the best example of Paul Frank's road-less-traveled philosophy may be this: It's moving away from the monkey. In the past two years the company has focused on expanding its Julius-free clothing lines: Frank's men's line consists of Western-inspired button-down shirts and upscale-casual jeans; the upcoming women's line targets twenty- and thirty-somethings with tailored shirts, sweaters, and slacks. That's not to say that the company won't continue to introduce new Julius-branded wares; see this year's debut of bed sheets and luggage. But, as Frank puts it, "I want people to love my clothes without knowing they're Paul Frank. I [want to win over] the total stranger."

"We can't be too dependent on the characters or the market share they represent, which is teens," says Ryan Heuser, 31, the company's president. "Because teens' tastes change. We're too smart to put all our eggs in one basket."

Rock & Roll, Frank Maintains, is an important muse for his company; in addition to noodling in the Jam Room, Frank plays electric guitar for a garage band called the Moseleys. And last year Frank made a deal to develop products for another guitarist: Elvis Presley. As part of the deal, Frank created a $140 special-edition guitar-shaped purse, a $78 1950s-style Elvis wallet, and $78 Sun Records CD cases. The Elvis deal reflects Frank's vision for his company: to become a classic American brand, on a par with Disney and Ralph Lauren. "It's important to align with a classic brand because of the credibility that collaborator brings to the table," says Heuser.

So instead of creating its own knockoff shoes, the company partnered with Dr. Scholl's and Vans and now has a deal with the creator of the sneaker, ProKeds. Frank recently signed a deal to license the John Deere logo to make T-shirts and swim trunks. Deere, the classic $14 billion farm and garden equipment company, has proven a mainstay not only for tractor drivers but also for the hipsters who made up Frank's original audience.

But Frank's measured growth and slacker aesthetic don't imply that he plans to stay small. Part of the reason Frank has been loath to overexpose Julius is that he sees the character playing an integral role in his empire: The company recently met with Warner Bros. to discuss adapting the Julius cartoons displayed on PaulFrank.com as an animated series or film. (The discussions have been tabled--for now.) In time, Frank says, he'd like to use his characters in cereal and animal crackers. "I want to design everything," he beams, "from windows to paint colors to Popsicles."

It's an ambitious vision for what was just a few years ago a niche T-shirt company, and to pull it off, Frank must continue to resist the siren song of quick-buck mass-marketism. Indeed, there are plenty of companies that began with similar promise. Heuser, for instance, served as PR director at Mossimo, a once-hot sportswear company that fizzled in the late 1990s.

Mossimo has made a comeback; clothing bearing its name is now on sale at Target. But Frank and his partners aren't inspired by that example. "We don't want Paul Frank to make a comeback," Heuser says. "We just don't want it to ever go away."