The idea of franchising is a couple of centuries old. The franchising business and world economies have developed simultaneously. The term ‘franchise’ comes from old French where it meant freedom, or privilege. Franchising goes back to the olden days when the feudal lords granted consent to their slaves and common men to hold fairs, markets, ferries, as well as permitted hunting on their lands.
From the middle ages, kings used the idea of franchising when they gave contracts, or businesses for the majority of the business activities like developing roads, wells, and brewing ale.
As the notion of franchising developed further, it was viewed as the right to monopoly that a person must carry out any sort of a commercial activity. As time passed, many franchises became part of the European Common Law.
Singer Sewing Machine Company is regarded as the father figure of franchising as most of the concepts of franchising developed by them, form a part of modern day franchising contracts.
The manner in which Singer created its own sales and supplied services is thought of as modern retailing that’s a portion of franchising. From the 1850s, Singer brought together teams of salesmen and traders who were given the rights to distribute sewing machines in various regions. They made written contracts for franchising, which are the cornerstone of modern-day franchise arrangements.
At this point in time franchising was viewed as the right allowed by the manufacturer to market and distribute products and support to the franchisee. Significant oil refineries, auto manufacturers, and lots of others started following the idea of signing written arrangements for franchisee distribution.
Proper Small Business format franchising came into being, in America and other nations of the world, following World War II. This was the time when soldiers returned from the war to return with their families and the baby boom took place due to which distinct and newer products and services became essential.
This was once the notion of franchising developed the most. It made its presence felt at the U.S. market. This was also the time when the majority of the hotels and motels developed. With the rise in the amount of franchises, the 60s and 70s saw a time when every second person was to the franchising business.
The decades of 60s and 70s also caused a number of frauds in the franchising industry. There were individuals who duped others by taking money from them in return for a franchisee which didn’t exist and escaped with the money. On the other hand there were also many franchise businesses that went bankrupt. This was when the demand for stringent regulations for franchising company was given a thought.
In the year 1978, the Federal Trade Commission ordered that the franchisers/manufacturers were supposed to submit the Uniform Offering Circular or UFOC before receiving money from the potential franchisers. The UFOC provides the details of the franchise company, provides their history, audited financial statements, information of their officers, and the contract, or the franchise agreement.
At the moment, the franchising is viewed as the most lucrative business alternative for lots of folks who aspire to own a small business.