When did franchising start?
When anyone studies the history of franchising, most people are not aware that the business model of franchising actually started over 1,500 years ago in the Middle Ages.
How long has franchising been around?
What they do not know is that franchising has been around much longer than they realize. Actually franchising has been around for over 1,000 years in one from or another.
Why did oil companies start opening gas stations?
As more people purchased automobiles and roads were being developed, oil companies began opening gas stations all along the new roads. Many of these were franchises. As the highway system continued to grow, restaurants also popped up everywhere along these new roads. It didn’t take long before many of these restaurants started franchising.
Who invented the sewing machine?
Mr. Isaac Merrit Singer who is the founder and inventor of the Singer sewing machine, was the father of modern day franchises . Mr. Singer would find people in geographical areas and grant them licenses to sell the sewing machine. These licensees paid for the right to sell the sewing machines. As part of their agreement with Mr. Singer, they even had to teach people how to use the sewing machine.
Who was the first McDonald's franchise?
Ray Kroc, the man who would eventually become the originator of the modern franchise, opened the first McDonald’s franchise in 1955 in Des Plaines, Illinois and founded McDonald’s System, Inc. This later became the McDonald’s Corporation. Kroc bought out the McDonald brothers for $2.7 million in 1961 and took the company to over 500 restaurants in just 8 years. Today there are over 34,000 McDonald’s restaurants. The McDonald’s franchise system has paved the way for the modern franchises we see today.
Is franchising a good business model?
The history of franchising is an amazing and exciting story. We believe that franchising will continue to be the best business model for many years to come.
Detailed-In-Steps Procedure To Start A Franchise In The USA
It is easier to start a franchise in the USA when compared to starting an independent business. There are several steps that you need to follow before opening a franchise. These steps include research, having a business plan, and even legal formalities.
The cost of setting up a Franchise in the USA
The initial investment and the cost of buying a franchise are hefty. And you may require to spend all your savings, all at once. So here is a detailed description of the expenses and the cost needed to open a franchise in the USA.
How important it is to Follow the Procedure to Buy a Franchise
Buying a franchise is not an easy process. Before you jump into the details, it is essential to understand the basics of franchise ownership. Like any other business, there are pros and cons to buying a franchise, and these should be identified right upfront. If you miss out on this step of due diligence, it will be too late for you!
The History of Franchising
The Middle Ages
- When anyone studies the history of franchising, most people are not aware that the business model of franchising actually started over 1,500 years ago in the Middle Ages. It was during this period that local government officials would grant rights to high church officials and other people of importance to asses taxes. They also granted them rights ...
The Colonial Period
- During the colonial period local lords would give permission to people of importance to set up markets, run the local ferries, and even hold and manage fairs. They even allowed them to hunt on their land. Kings would use the same concept and grant rights to “franchisees” to pursue various business activities. These “franchisees” would then pay a royalty to the King for protection.
The 1840s
- A German brewing company called “SPATEN” granted rights to local tavern owners to sell their beer and use their brand name. The tavern owners paid the company to use their brand name in their establishment. This is really what franchising is about is it not? Franchisees in today’s modern franchises basically do the same thing which is pay to affiliate themselves with and use …
The 1880s
- Mr. Isaac Merrit Singer who is the founder and inventor of the Singer sewing machine, was the father of modern day franchises. Mr. Singer would find people in geographical areas and grant them licenses to sell the sewing machine. These licensees paid for the right to sell the sewing machines. As part of their agreement with Mr. Singer, they even had to teach people how to use …
The Turn of The Century
- At the turn of the century, automobiles were beginning to sell. Automobile manufacturers needed a way to distribute their cars. One of the methods they used to distribute automobiles to more people was through auto dealerships. In 1896 William Metzger opened the first automobile dealership in Detroit Michigan. As car sales grew, so did the number of automobile dealerships. …
Early 1900s
- As more people purchased automobiles and roads were being developed, oil companies began opening gas stations all along the new roads. Many of these were franchises. As the highway system continued to grow, restaurants also popped up everywhere along these new roads. It didn’t take long before many of these restaurants started franchising.
The 1960s
- Ray Kroc, the man who would eventually become the originator of the modern franchise, opened the first McDonald’s franchise in 1955 in Des Plaines, Illinois and founded McDonald’s System, Inc. This later became the McDonald’s Corporation. Kroc bought out the McDonald brothers for $2.7 million in 1961 and took the company to over 500 restaurants in just 8 years. Today there a…
1970s to 1990s
- Franchising boomed in the late 1950’s through the end of the 1960’s. Through the 1970’s franchising had issues because franchisors lost focus on supporting their franchisees. Plus, there were also misrepresentations by some franchisors. After a period of cooling and oversaturation, the franchise model began to make a comeback in the late 1980’s and early 1990’s.
2000 and Beyond
- The franchising business model continues to change and adapt to demand. The concept of multi-unit franchising and multi-brand franchising has changed the way franchisees operate their businesses. The history of franchising is an amazing and exciting story. We believe that franchising will continue to be the best business model for many years to come.