Give a brief history of Franchising?
Answers
ye lo padhte raho history
. THE HISTORY OF FRANCHISING
A. Kings, Courts and Lord – Franchising Pre-1800
— During the Middle Ages, local governments granted high church officials and other personages a license to maintain civil order and to assess taxes. Medieval courts or lords granted others the right to operate ferries, hold markets, and perform professional business activities. The licensee paid a royalty to the powers that be in exchange for, among other things, “protection.” This was equivalent to a monopoly on commercial ventures. The practice was perpetuated throughout the Middle Ages, and eventually became part of European common law.
— During the Colonial Period, European monarchs bestowed franchises on daring entrepreneurs who agreed to establish colonies and gain the protection of the “Crown” in exchange for taxes or royalties.
B. Drinks, Cars and Sewing Machines — Franchising From 1800 to 1900
— In 19th Century England and Germany, pub proprietors with financial difficulties became exclusive distributors of beer purchased from specific brewers. The breweries did not exercise any day-to-day control over the pubs.
— The first franchise in Australia under “royal privilege” was granted by Governor Macquarie in 1809. The franchisee was granted the right to import 45,000 gallons of rum over three years in exchange for building the Sydney Hospital (the so-called “rum hospital”). — In the United States during the mid-1800’s, trademark/product franchising developed when the Singer sewing machine company formed a franchise in 1851. Due to the lack of necessary capital and the incipient stage of the sewing industry, Singer had difficulty in marketing sewing machines, and turned to franchising. Singer commissioned agents to sell and repair its line of machines. However, once the machines were accepted by the public, Singer changed its marketing strategy and commenced selling the machines through its company-owned outlets in the 1860’s.
— In the 1880’s, U.S. cities granted monopoly “franchises” to utility companies for water, sewage, gas, and later electricity. — In 1898, William E. Metzger of Detroit, Michigan became the first official dealer/franchisee of General Motors Corporation (GM). Under GM’s system, dealers purchased the land and built the buildings for the dealership. In return, the dealers were allowed to buy GM’s vehicles at a discount. — In 1899, Coca Cola sold its first franchise.
C. A Period of Steady Growth – Franchising From 1901 to 1950
— In the early 1900’s, Henry Ford franchised dealers for his Model T. The oil companies followed suit, franchising gas stations. — In 1902, Rexall Drugstores began franchising. — In 1909, Western Auto established dealership programs. — In 1920, the “Ben Franklin” store systems appeared with general merchandise stores. — In 1925, A&W established “walk up” root beer stands, and Howard Johnson offered his three flavors of “superior” ice cream from his Wollaston, Massachusetts drugstore. Howard Johnson’s franchised ice cream business expanded to a group of East Coast restaurants, and in 1940, appeared on a state turnpike. — Between 1938 and 1955, the following companies commenced franchise activities: Arthur Murray Dance Studios, Baskin-Robbins ice cream stores, Duraclean carpet cleaning services, McDonald’s, Howard Johnson Motor Lodge, and Harlan Sanders’s Kentucky Fried Chicken. — In 1948, Dairy Queen established its 2500th unit.
D. Build Along the Highway – Growth In Franchising from 1951-1969
— Franchising in the U.S. exploded in the 1950s. In 1950, less than 100 companies had employed franchising in their marketing operations. By 1960, more than 900 companies had franchise operations involving an estimated 200,000 franchised outlets. — In 1955, Tastee Freeze established its 1500th unit. — In the 1950’s and 1960’s, the development of business format franchising escalated, due in large part to the expansion of the service economy and President Eisenhower’s decision to build the Interstate Highway System (with its concomitant increase in automobile travel). Holiday Inn, Roto-Rooter, Dunkin Donuts, McDonald’s, Burger King, H&R Block, Lee Myles, Midas, 7-Eleven, Dunhill Personnel, Wendy’s, Pearle Vision Center, Dairy Queen, Orange Julius, Tastee Freeze, and Sheraton all began to franchise. — By the late 1960’s, McDonald’s, Holiday Inn, and KFC were all approaching or had surpassed the one-thousand unit mark. — Between 1964 and 1969, fueled by an ever expanding economy, an estimated 100,000 new franchise businesses commenced.
Explanation:
The first examples of franchising as a way of doing business are found in mid-nineteenth century Germany, where brewers set up contracts with tavern owners to sell their beer exclusively in the taverns. In the United States, the earliest example of the use of franchising was not found in breweries and taverns.