Introduction
Franchising may have been around since the beginnings of humanity. Albert Singer gets the credit for establishing the first “commercialized” franchise, but historians believe similar activities could have existed well before his birth.
Historical documents contain traces of references of franchise-like behavior. Actions included sales of wares amongst towns by peddlers, general store license grants by military outposts, and livestock sales in which exclusive territorial rights were granted to what would be modern day franchisees.
Traces of a beginning
“Franchising” may have perpetuated the rule of figureheads of control, extending their reach over the lands. A lesser power would act as the “franchisee” watching over the lands while collecting their own taxes from the people and paying a portion to the higher power acting as the franchisor.
In America
The general concept of “franchising” came to America from Europe (specifically England) where breweries would financially support taverns that exclusively bought their alcohol from the breweries. The breweries would not exact control over the taverns, but financial support would be contingent on the sole allegiance of acquiring liquor from the brewery.
Franchising gets on track
Modern day “franchising” started to take form once the ability of transportation progressed. Frederick Henry Harvey and Atchison, Topeka & Santa Fe Railroad struck a deal. The owners of the railroad wanted to provide passengers with a food service at terminals. By 1887, Harvey had established restaurants every 100 miles along the 12,000-mile railroad. The railroad provided Harvey with free transportation of supplies. Harvey was a stringent businessman and believed in quality. He frequently visited his restaurants in a similar fashion as franchisors do today.
The chain gang
By the early 1900s, food franchise “chains” started coming into fruition. Billy Ingram and Walter Anderson began their White Castle restaurant venture in Kansas. Carvel started in 1934; Kentucky Fried Chicken began in 1930; Dairy Queen commenced in 1940, and so on.
Conclusion
Several key events in American history propelled the franchise system. The Industrial Revolution and the automotive industry sparked the impetus for more goods to be produced and transported to various locations. Congress passed the Trademark Act of 1946, granting franchisees safety in using their trademarks and service marks aiding their sales of a nationally established franchise system.
Today, franchises are available in many industries and totaling more than 3,000. Franchises are available from cleaning services, to automotive, to health venues. Franchising has existed for quite some time and does not seem to be slowing down.
