The History of Franchising

Where does the concept of franchising come from?

Franchising is a business model in which a company (the franchisor) grants the right to use its brand, products, and business systems to another company (the franchisee) in exchange for an initial fee and ongoing royalties. Franchising has a long history dating back to the Middle Ages, but it really took off in the 20th century as a way for businesses to expand rapidly and for entrepreneurs to start their own businesses with the support of a well-known brand.

The concept of franchising can be traced back to the medieval guilds of Europe, which were associations of craftsmen who regulated the production and trade of goods within a particular town or city. These guilds often required apprentices to pay a fee in order to learn a trade, and they also imposed strict rules on the way in which products were made and sold. This model of franchising, in which a master craftsman grants the right to use his knowledge and skills to another person in exchange for a fee, can be seen as a precursor to modern franchising.

The modern concept of franchising as we know it today, however, did not emerge until the 20th century. The first true franchise business is credited to Isaac Singer, who in the 1850s began selling sewing machines on a commission basis. Singer would send agents out to sell his sewing machines, and in return for their efforts, the agents would receive a percentage of the sales. This business model, which is known as a commission franchise, is still used today in some industries.

In the early 20th century, the first true franchise businesses began to emerge. One of the earliest examples was A&W Root Beer, which began selling franchises in the 1920s. Other early franchise businesses included Howard Johnson’s, which began selling franchises for its restaurants in the 1930s, and McDonald’s, which began franchising its restaurants in the 1950s.

Franchising has continued to grow and evolve over the years, and today it is a popular business model that is used in many different industries, including fast food, retail, automotive, and service industries. Franchising is a popular choice for entrepreneurs who want to start their own business, as it allows them to use a proven business model and benefit from the support and resources of a larger organization. It is also a popular choice for established companies looking to expand their reach and presence in new markets.

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Mr. McLean is CEO & Managing Director at X Franchise Group. He is also the Managing Director at Xavier Capital, a leading Mid-Market M&A and Private Equity Firm. Previously, between the years 2001-2012, Mr. McLean was CEO of FranSys, INTL, one of the largest franchise development firms in North America. He possesses over two decades of franchise consulting experience, working with over 400 franchisors and participating in the development of over 700 franchises, both domestically and internationally. Mr. McLean was also the Founder of Franchising.Org, a premier online franchise opportunity marketing platform, which was acquired in 2010, by the International Franchise Association (IFA). Mr. McLean has advised and participated in transactions totaling +US$650 million in the Franchise, Private Wealth, Venture, Private Equity and M&A universe; he has been principal, advisor and investor in numerous ventures.

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