History of Franchising – Dawn of a New Era

The first person to introduce a franchise agreement similar to the ones we have today was Isaac Singer, founder of the Singer Company. His agreements were unique and laid the foundation for the contracts we see today. His sewing machines were big sellers, but what he needed was local people in each territory to service / repair machines and supply spare parts for them. It was too costly and cumbersome to provide this service from headquarters. He franchised it out and this method of doing business proved to be so successful that soon the local franchisees were given the ability to also sell new machines.

Motor Industry

The next big businesses to use this model were in the motor industry. Companies like General Motors sold franchises, so that they could expand their dealer network quickly and with less cost. Each franchisee was granted an exclusive territory so they knew that if they ran their business well, they would reap the rewards.

As other motor car manufacturers realized how fast General Motors dealership network was growing, they also started looking at franchising very closely and soon they launched their own franchises.

Fast Food

As other industries saw how successful this was in establishing a large network and selling more products, they started joining in. Fast Food reached the world quickly when McDonalds launched its franchise empire. Their fast food outlets were so successful that one can now buy a “Big Mac” in every corner of the globe!

Other companies like Kentucky Fried Chicken and Wimpy were also very quick to utilize the franchise model to reach new markets and gain more customers for their unique, profitable and inexpensive fast food products. Some of the early entrants made millions very quickly through operating multiple territories with these companies.

British Franchise Association

Now franchising is a recognized form of doing business worldwide. Each country has their own rules and regulations governing this method of doing business. In the UK it is the British Franchise Association (bfa) that provides new franchisors with a set of guidelines, rules and methods of conduct that they must follow before they can achieve BFA approved status.

International Franchise Association

In the USA, the International Franchise Association (IFA) helps regulate the industry and works closely with the Federal Trade Commission (FTC). You can find out more about franchise laws in the USA by visiting the Federal Trade Commission’s website. One of their aims is to protect America’s consumers from fraudulent business schemes and they have issued guidelines for interested parties.

Summary

From such small beginnings, franchising is now huge in the UK & USA! There are close to 150 thousand franchised establishments in the USA whilst in the UK there are thousands of established franchises and the numbers are expanding rapidly. The government is eager to help as it realises how much this contributes to the growth of the economy.

There are so many different types of franchises available that there is a business model to suit every entrepreneurs needs. Ranging from internet websites, retail outlets and work from home opportunities, there is one almost every field of business. If you are searching to start a new business, find a franchise that you will enjoy running and that suits your lifestyle.

Naz Daud is the founder of CityLocal. This Franchise Opportunity is for people who would like to work from home and be their own boss.

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