Some have called franchising the greatest business model even invented. Whether or not you agree, you must admit that franchising history traces its roots far into the past.
The concept, although not necessarily viewed as a business, was born early and has since flourished. A franchising history is an interesting study, and this brief panorama will provide the interesting highlights.
The combined word as we understand it dates from the late 18th century. The Middle Ages is where the idea of franchising originally surfaced. Local governments, typically medieval fiefdoms, granted high church officials and other wealthy landowners a license to maintain order and assess taxes on the surrounding population. These early franchisees paid a fee to the governments in exchange for protection, mainly from angry citizens who were forced to pay high tax rates.
European monarchs even granted franchise-type licenses to citizens who agreed to establish colonies. However, the tavern owners had to use the Spaten trade name. The tavern owners were essentially franchisees, because they had to pay for the right to use the trade name, which still exists today. The first franchise in America is widely debated, but two individuals stand out from the rest as the likely frontrunners, although one view even traced American franchising history back to Benjamin Franklin , and the beginning of his printing partnerships in Sewing machines began to appear in the middle s, but they were still slow, cumbersome tools.
Isaac Singer , founder of I. Clothing factories were miserable places to work, where sewing was done by hand in terrible conditions. Housewives did a lot of sewing, too, for their families. With an easy payment plan in place, Singer now entered the business world of franchising.
He found people who wanted to sell Singer sewing machines, then trained and licensed them to sell in certain geographical areas. Another American franchise pioneer was Martha Matilda Harper. Many believe that the franchise system she created birthed many of the elements we now expect in a modern franchise relationship. As a result of these practices, investing in a franchise was considered a speculative investment.
Modern franchise laws developed and the regulations governing franchising, both federal and state, were promoted. Franchising became a highly regulated area of law requiring franchisors to provide a disclosure document originally the Uniform Offering Circular and now the Franchise Disclosure Document to prospective franchisees. Start by reaching out to our experienced team of franchise lawyers for a free consultation.
Life Cycle of a Franchise. Sewing, Hair, and Books. Oh My! Fast Forward to Fast Food Franchising grew more fashionable in the mids in the US when a new type of franchise popped up in the form of retail and fast food chains. Free Consultation. The creation—and ultimately, the mass-production—of automobiles changed everything in America. There was finally a way for people to get from location to location quickly… or at least faster than with a horse and buggy.
The entrepreneurs who were producing automobiles must have known that they had a life-changing product in their hands. As more and more consumers were becoming interested in automobiles, and interested in purchasing them, Henry Ford, who had just pioneered mass production by way of the assembly line, needed to find a good way to distribute the product.
Believe it or not, for a time automobiles were sold through mail-order catalogs! Some were even sold by salesmen who traveled around the USA trying to find buyers.
In , William Metzger built and opened the first independent automobile dealership in Detroit, Michigan. The second businessman to get involved was H. He opened the first automobile dealership in Pennsylvania. He sold Winton automobiles. Those men were actually the first auto franchise owners.
Henry Ford and the other businessmen who were producing automobiles now had a distribution system. They had an automobile franchise network. And soon, automobile franchises were appearing everywhere. Lots of automobiles were sold by automobile franchises.
More roads became paved. Americans were able to travel longer distances in a shorter amount of time. But, these new machines, these automobiles, needed gasoline to run. The oil companies started opening gasoline service stations to keep all of the automobiles fueled.
Some of them became franchises. Some of them, like Chevron, still are. Another form of energy was needed for this growing legion of automobile drivers—food. As the years went by, restaurants independent ones at first started popping up all over the place… especially near all of the freshly-paved roads. Eventually, food franchises starting opening. Raymond Albert Kroc is my personal franchise hero. Born in , Ray Kroc was a sales guy with an incredible vision.
He started out selling milkshake-mixing equipment. He believed in the product the Multi-Mixer so much, he mortgaged his home to become a distributor of this machine which could make five milkshakes at the same time. Kroc traveled all over the country selling Multi-Mixers to people in the food industry. He decided to take a drive out to California to see how they did it. What he observed there was an assembly line-like system. The McDonald brothers appeared to have this procedure of theirs down to a science, and Kroc was impressed.
He envisioned restaurants like theirs opening and operating all over the country. Ray saw something big in the making and tried to convince the brothers that they should start thinking bigger also.
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