1. Ally Bandemer
Mrs. Tillery
November 15, 2011
3rd Period
History of Franchise
Franchise has been a frequently practices way of business since the beginning of
the 1800s, and perhaps even earlier than that. It is difficult to approximate the exact date
franchise became an authentic way of business because people have been practices its
tactics before it was officially accepted. Since the beginning, there has been many
different forms of franchise. However, the road to modern franchise has been difficult
and controversial.
The word “franchise” is from “Old French „franc‟ free; a special right or privilege
granted by the government to an individual, group, or business entity” (dictionary.com).
Franchise has come to define how many businesses operate. A corporate business is
typically one that has many chains of businesses throughout the country, or sometimes
throughout the world. Many times it can be difficult for one person to oversee so many
businesses. In this case, franchisees are hired. A franchisee is a person who is granted a
privilege to share in owning a certain piece of the business. The business owner must be
able to trust the franchise to help keep the business profitable and pleasurable to
customers. In this way, the franchise benefits greatly because his or her only concern is to
carry on what other people have metaphorically constructed. An early form of franchise
began as individuals who owned breweries and wanted their ales to be well known.
“During the 1840‟s several German ale brewers granted rights to particular taverns to

2. market their ale. This is the beginning of the type of franchising that became familiar to
most of us in the twentieth century” (Daszkowski The History of Franchise). In earlier
time periods, travel was difficult and many people would not be able to stop by specialty
breweries very often. Consequently, brewers sold their ale to other taverns or markets,
therefore spreading the product and attracting new customers. Moreover, the markets and
taverns needed to make money as well; the same ale was sold at different prices,
according to the tavern owner. These techniques that the brewers used are common
techniques that are executed by many franchise businesses today. However, at this time,
franchise was not an official business type, and was not thought of as a revolution.
Peddlers were also common around this time period, and a few are still around
today. Peddlers are people who set up their market on the street and sell a business‟s
product to virtually anyone. “You are a peddler if you go uninvited if you go house to
house, place to place, or street to street to sell goods” (What is a peddler). Peddlers have
contributed to franchising because a person other than the original maker sells a
specialized product. In addition, that product is spread to consumers who found difficulty
purchasing it due to distance or lack of free time. This type of franchising is not as
common today due to the accessibility of travel, nevertheless it served as a convenience
for many Americans in the late 1800s.
Howard Johnson was a man who was among the first businessmen to begin
accepting franchise as a beneficial marketing technique. “In the early 1930‟s, in the midst
of depression, he established a chain of 25 Howard Johnson roadside stands” (A Brief
History); however, he did not allow his entire business to become franchise. Albert
Singer is the first recognizable person to start a business solely on the concept of

3. franchising. Singer paved the way for many people with his sewing machine company.
Singer thought about franchise as a way to better sell his product; “he was looking for an
efficient method of marketing his sewing machines across the United States, he bagan to
grant other the right to sell his sewing machines” (Davis The History of Franchising).
Soon after Singer started his company, oil companies and car companies began
franchising because they could surmise from his success that franchising their own
business was worth the risk. Even after car and gas companies began franchising, the fad
turned into a new way of life for Americans.
Without a doubt, there was a major problem with business owners allowing so
much responsibility into someone else‟s hands. In nature, the more humans have, the
more they want. When inexperienced people were trusted with so much responsibility,
they took it for granted and ignored the fact that franchising is a partner-based business,
“you‟re in business for yourself, not by yourself” (Franchising). In addition, some
companies were poorly managed or under-funded. When so many businesses began
dying out due to simple mistakes, the government knew immediately that a change must
occur; otherwise there could be potential risk to America‟s economy. In reaction to this,
Congress made a law for corporations and franchisees to sign a Franchise Disclosure
Document (FDD), “The purpose of the FDD is to protect the public by providing
information about the franchise company” (Basics – The Franchise Disclosure
Document). This document is a mere representation of the corporation‟s authority and the
franchisee‟s knowledge of that authority. The FDD altogether is meant to reduce the
amount of faults and failures that occur while the franchisee is in charge.

4. While these companies were beginning to test out franchising in America, many
citizens were frightened and skeptical about the way it would change America‟s economy
and the pre-set routine of buying and selling products. According to John Milton Fogg, in
his excerpt from People‟s Franchise, “all of those negative things were being said and
done about franchising. And yes, there was even a move in Congress to outlaw
franchising.” More specifically, Fogg says that people saw franchising as a way of
plummeting the American economy. Many people thought there was no way such a
concept like this could be successful in America‟s government. In contrast to their
thoughts, there has been much more success than failure in franchising over the past sixty
years.
Generally, fast food industries and small companies have been involved in
franchising in order to become successful. More specifically, “McDonald‟s has always
been a franchising company and has relied on its franchisees, our Owner/Operators, to
play a major role in the System‟s success” (McDonald‟s Restaurants Franchise). Many
can see that American have misunderstood the benefits of franchising because
McDonald‟s is clearly a successful business. Even more so, other fast food restaurants
have made a great success as being franchises as well, such as Subway, “at the end of
[2010], Subway had 33,749 restaurants worldwide, compared to McDonald‟s 32,737”
(Jargon Subway Runs Past McDonald‟s Chain). As previously stated, more and more
businesses began turning to franchise because of the success rate. “In the late 50s and
60s, the giants appeared. Holiday Inns, Dunkin Donuts, McDonald‟s, Burger King, H. &
R. Block, 7-Eleven, Backin-Robins, Wendy‟s, Kentucky Fried Chicken – they all geared
up and franchised out” (A Brief History). Once business owners began seeing the

5. potential output for franchises, entrepreneurs found franchising as a way of making
businesses better. The franchise also has the opportunity to make more money if he or she
is involved in a famous business, “franchising is a great way to make money, especially
when you are the owner of a franchise that is well known” (The Pros of Franchising).
To conclude, the history of franchise and its tactics have been long debated ad
thought upon by many common citizens, political scientists and, naturally, business
people. In the end, franchise is a huge risk but offers huge potential rewards.

6. Works Cited
“Basics - the Franchise Disclosure Document.” Franchise.com. N.p., n.d. Web. 17 Nov. 2011.
<http://www.franchise.com/franchise-news/Basics_UFOC_info.cfm?newpage=true>.
Daszkowski, Don. “Franchising.” About.com. N.p., n.d. Web. 17 Nov. 2011.
<http://franchises.about.com/od/franchisebasics/a/history.htm>.
Davis, Denise T. “The History of Franchising.” Ezinearticles.com. N.p., n.d. Web. 17 Nov. 2011.
<http:/http://ezinearticles.com/?The-History-of-Franchising&id=2018994>.
Fogg, John Milton. “The People‟s Franchise.” N.d. PDF file.
“Franchise.” Dictionary.com. Ask, n.d. Web. 17 Nov. 2011. <http://dictionary.reference.com/
browse/franchise>.
Franchiserout.co. N.p., n.d. Web. 17 Nov. 2011. <http://www.franchiseroute.co.uk/franchise-
articles/article-3.html>.
“Franchising.” Wdfi.org. N.p., n.d. Web. 17 Nov. 2011. <http:/http://www.wdfi.org/fi/securities/
franchise/history.htm>.
Grossman, Norman. “Franchising - in Business for Yourself Not by Yourself.”
Bmmagazine.com. Business matters, n.d. Web. 17 Nov. 2011.
<http://www.bmmagazine.co.uk/franchising-oportunities.98>.
Jargon, Julie.Wsj.com. Wall Street Journal, n.d. Web. 17 Nov. 2011. <http://online.wsj.com/
article/SB10001424052748703386704576186432177464052.html?mod=e2tw>.
“Peddlers, solicitors, and transient merchants.” Cityofprescott.net. City of Prescott
Finance Dept., n.d. Web. 17 Nov. 2011. <http://docs.google.com/
viewer?a=v&q=cache:rTu6XBqoLLYJ:www.cityofprescott.net/_d/
peddler.pdf+what+is+a+peddler&hl=en&gl=us&pid=bl&srcid=ADGEESixB-

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VYiC3t0k4MdoU7ZWc8b&sig=AHIEtbQCvr_fu7BWV0hxlTa7_b0hJrwliw>.