Short (?) History of Franchising
The franchise model has been called the greatest business model ever invented. It’s allowed people all over the world who’ve wanted to own their own businesses do just that. To those unfamiliar with these matters, the term franchising is a haunting footage of the United States and of a golden capital M.
But it hasn’t always been that way….
We will have to go back in time, before 1954, before 1800 up to the Middle ages and move from the Unites Stated to the Center of Europe, in the feudal France. It is a long story (almost 700 years) and if you are interested in the how and when check the Franchising Historical Timeline on the left.
Franchising as we know it today was born simultaneously around 1929 on the two Atlantic Ocean Coasts: in France with the Roubaix woolen mill and in the United States with General Motors. Just to give you a hint on how world wide franchising is you should know that:
- in 1960, the industry established the International Franchise Association (IFA) to accredit reputable, ethical franchisors
- in 1977 the British Franchise Association was founded to raise industry standards and forge relationships with key partners
- in 1978 Legislators in the US made it mandatory for franchisors to offer a document called the Uniform Franchise Offering Circular
Three Modern Franchise Leaders
ISAAC SINGER - with his partners were able to find an easier way for consumers to buy their product. The Singer Sewing Machine installment plan made it possible for Singer to ramp up production of his sewing machines; he just needed an efficient distribution system. He developed one, and his licensing system was a precursor to franchising as we know it today.
HENRY FORD – He played a part in the actual design of the franchise model. Once he was able to get mass production down to a science, he knew (like Singer) that he had to hone in on the distribution side of the business, too. He did so by creating a franchise (dealer) network all across the country.
RAY KROC – His contributions to franchising have to do with uniformity and cleanliness. A McDonald’s franchise located in South Carolina will have basically the same menu items and will probably be as clean as a McDonald’s franchise located in Oregon. In addition, the restaurants he built near freeway exit ramps were quickly followed by other businesses, like hotels and motels. It was a domino effect.
But in the end… what is Franchising?
In order to explore the meaning of the word franchise you can choose to look up in the several different dictionary definitions of “franchise” (that one was easy) or…. you can go back to the roots.
The word franchise derives from the French word that means prīvĭlēgĭum (privus+lex), a special law concerning an individual or a few, i.e. an advantage grant to an individual or a few, an advantage gained to the exclusion of other.
Today, the term franchising means substantially the licensed privilege to do business.