A Brief History Of Franchising
Have you ever wondered how franchising for businesses got started? The first examples actually date back to the 1850’s and today some of the world’s largest companies are actually franchises.
The three largest franchise companies in the world Yum! Brands, McDonald’s, and Subway between them operate nearly 100,000 locations.Franchising today is big business and there are many companies that have gotten in on the act. But how did the modern franchise company come about? Well it all seems to have started with Isaac Singer the man better known for his Singer Sewing Machines. He had just finished improving on an existing sewing machine of the time and was trying to work out a way to distribute them. Although his efforts at the time would prove to be unsuccessful other people were willing to continue his efforts for their own businesses.
Other famous examples of early franchises include Coca Cola which has obviously worked out very well. They would sell the franchise rights to people looking to open their own distributorships for the Coca Cola product. Also the telegraph system actually used a franchise model. Most of the telegraph stations were owned and operated by railroad companies but the telegraph itself was controlled by Western Union. Early automobile manufacturers also used a franchise model by entering into deals with automobile dealerships that would carry their cars on the dealership lots.
The real turning point in the success of the franchise model came right around the 1930’s. It was during this period that two men Howard Deering Johnson and Reginald Sprague would team up to form the first modern restaurant franchise. An early example is A&W Root Beer which used quick service as its theme. This was of course before the modern drive thru. They thought of the idea that for a fee they could let independent operators use the same name, food, supplies, logo, and building design to operate their business.
Soon Howard Johnson’s would turn to franchising for their motels. This would be a fortuitous move as the U.S. Interstate Highway System was just starting to be constructed. That would lead to fast food restaurants and motels popping up everywhere a highway did. And each of them would be eager to serve tired and hungry motorists.
Today the franchising model is used in over 70 different industries across the globe. In the United States alone franchise businesses are responsible for over 1 trillion dollars in sales annually. They are used to create a huge number of new jobs each year as more franchise stores open up in cities across America and elsewhere. With ever increasing influence and economic power in the business world today the idea of franchising for business has come a long way since Isaac Singer first tried it to help himself and sell a better sewing machine.