History of Franchising: Franchising in the 1800's
Company Added
Company Removed
Apply to Request List

History of Franchising: Franchising in the 1800's

History of Franchising: Franchising in the 1800's

German beer makers are often cited as the originators of franchising. Dating back to 1800s Europe, many beer makers granted pubs and taverns the rights to sell and use their name. In fact, the word "franchise" is a French derivative meaning privilege or freedom.

Of course the argument can be made that franchising has been around as long as humans and commerce itself, but the fundamental idea is relatively simple. An entrepreneur can, through franchising, sell part of a business, its methods, and its name, to others who can then increase distribution, volume, awareness, and multiply financial results--for all parties.

Franchising has been propelled by the desire to expand, the lack of expansion capital, and the need to overcome distance.

Isaac Merritt Singer, founder of I. M. Singer & Company, was never one to miss out on a capitalistic opportunity. In the 1850s, Singer needed something to help him with his fledgling business and took note of the German distribution model. At the time, his company lacked sufficient capital to manufacture its sewing machines--and also needed a way to teach people how to use them.

His solution was to charge licensing (or franchise) fees to business people who would own the rights to certain geographical areas. The franchisees would also be responsible for teaching consumers how to use his machines. Using the licensing fees to fund manufacturing, he was then able to afford to build his machines and ship them directly to his newly formed distribution network. He had created a network of dealers.

Many say Singer's contract was what really sparked the creation of franchises in the coming years, as it would allow business owners to keep some level of control over how their franchisees operated. Not surprisingly, Singer's idea was quickly noticed.

Over the next several decades, other businesses began to copy and manipulate his business model. Coca-Cola introduced franchising into its manufacturing and bottling areas to reduce financial risk and gain market share. And by bottling its soda closer to population centers the company could reduce distribution costs.

The list of companies incorporating the franchise model grew as automobile manufacturers created a network of licensed dealerships to sell and service their vehicles. Oil companies latched onto the business concept to create gas and service stations to keep those cars moving.

Back:
1.2: Benefits of the Franchise Model
 
Index
Next:
2.2: Franchising in the Modern Age
Urban Air Adventure Park
SPONSORED CONTENT
Urban Air Adventure Park
SPONSORED CONTENT
Urban Air Adventure Park
SPONSORED CONTENT

Comments:

comments powered by Disqus
CRISP & GREEN®
ADVERTISE SPONSORED CONTENT

Franchise Guides »

Featured Choices:

Popular Choices:

Featured Opportunities

Smoothie Factory
Are you interested in a health conscious franchise opportunity in a growing smoothie industry that does over $2 billion in annual sales in the United...
First Choice Business Brokers, Inc.
Become a First Choice Business Broker franchise and start performing business valuations and match a seller of a business to a qualified buyer.
Arby's
Fast Crafted® Restaurant Brand Specializing in Freshly-Sliced, Deli-Inspired Meats & Sandwiches 
Kona Ice
Low investment, fastest growing with over 1,200 franchises in 11 years, #1 in franchisee satisfaction for the last seven years...enough said!
PuroClean
Known as the "Paramedics of Property Damage®," PuroClean provides water damage remediation, flood water removal, fire and smoke damage...
UBreakiFix
ADVERTISE SPONSORED CONTENT

Subscribe


Subscribe to Our Newsletters