Believe it or not, the very first example of franchising dates all the way back to the Middle Ages, when local governments granted high church officials (and other important folk) a license to maintain order and collect taxes on their behalf. These important individuals could also hold markets, and perform business related activities, as long as they paid money, for protection among other things, to the lords. This ‘protection’ essentially ensured that no one else could set up a commercial venture in the same territory.
Related: How Does Franchising Work?
Next, we jump to colonial times, when what were known as ‘Franchise Kings’ would authorise individuals to run local markets and hold fairs on their behalf. These franchising rights were bestowed upon local citizens who agreed to take on the risk of moving to a new area and establishing a new colony. Their reward for taking on the risk of creating a new colony was a share of the spoils from their commercial ventures, while the crown would benefit from extra taxes and royalties.
The first example of the modern day franchising model came to light in the 1880s, and was created to boost the sales of the Singer sewing machine. Isaac Singer invented a sewing machine which was far superior to anything available at the time. To improve the distribution of a product American people were desperate to own, Mr Singer found businesspeople who were interested in owning the rights to sell his sewing machines in specific geographic areas. He then charged these individuals an upfront licensing fee for the right to sell the machines. Singer gave the licensees training so they could teach their customers how the sewing machines should be used. He then stepped up the production of his sewing machines on the back of the money coming in from licensees.
Probably the world’s most well known franchise came along in the 1960s, when Ray Kroc, a travelling milkshake salesman with a vision, heard about two brothers from California, Dick and Mac McDonald, who owned a restaurant which produced its food on an assembly line-like system. Mr Kroc saw the potential for similar restaurants to operate right across the country and started to sell the franchises.
Today there are 34,000 McDonald’s restaurants around the world, give or take the odd one, and that assembly line method of producing the food is the reason you’ll eat the same burger in a retail park in Hull, as you will in Leicester Square.