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Franchising - a short history

Written by: Diarmuid Kieran

Article Overview: A short history of the development of the franchising business model.

Franchising - a short history

Franchising as we know it today originated with the Singer Sewing Centre developed by Isaac Singer in 1858. After he had invented the sewing machine, Singer encountered two problems when he took it to the market. The first was that customers had to be taught how to use the new invention before they would buy it. The second was that Singer did not have enough capital to manufacture his machine in large numbers. He then came up with the idea of selling the rights to local business people to sell the sewing machine and train those who bought it. Once he embarked on this route his enterprise expanded rapidly. Fees earned from the licence rights helped to fund his manufacturing costs and, because each franchise was self-financed, Singer was able to tap into the entrepreneurial attributes of his franchisees.

This franchise model was copied in several industries. Coca-Cola was able to expand throughout the United States by shifting the burden of manufacturing, storing and distributing its product to local business people who acquired bottling rights. Car manufacturers who had been spending enormous amounts of capital tooling their assembly lines found they could develop retail distribution networks using capital provided by independent dealers. Oil companies such as Standard Oil and Texaco granted franchises to convenience stores and repair mechanics across the US. In the 1950's Ray Kroc saw the potential in franchising a successful hamburger stand. He has been compared to Henry Ford for bringing the assembly line to the fast food industry. Be they coffee and sandwich bars, fried chicken, pizza or taco diners, many food outlets are now franchised.

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Re: What would you do with $500,000 or less? - Thanks David, I don't have any recent plans to travel to Japan but $35-$40 a night is a steal! I'm really into the history of Japan - any countries history for that matter. I want to experience living the lifestyle of the past (sitting on a mat may be a challenge for me though).
Re: Re Franchise etc - [quote="bmueller47":e0j0nu4t]Can you see a shift of various types of franchises? What I am thinking about is that today it is more difficult to create franchises, that has great appeal. More and more people want to have their business, but no interference of someone else.[/quote:e0j0nu4t] Not sure what you mean exactly but it is certain that more and more people want to have their own business but not more and more people know what they really want to do, or how to do it. And that's what franchising is all about. Franchising is not for an entrepreneur. An entrepreneur will do his own thing. People who buy franchises want a turn key business, with a proven model. Franchising in the US had never been that good. I don't have the exact numbers in mind but I know for sure that franchising is growing more and more as people are getting more and more aware of this business model.
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Re: EC Forums Mentioned in the Financial Post - Hi Omnivore - you're right. That's why we always test and measure. The big ads were put up for non forum members on September 4th. Over the course of September we had 59 new members sign up (the second best month in our history) and we had 1,085 new posts logged (the best in our history) so it appears to not have had a serious impact. If people are serious about their business and want to reach out and get support, they sign up. If they don't then they leave us. We'll continue to monitor as it's only one month in but if it can bring in extra money to make the forums even better for the members then everybody wins!
Nominations for a new Franchising Moderator! - Is there anyone you'd like to nominate as our Franchising Moderator (or volunteers for the position)?


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