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Franchising

A Brief History

They say it began in the 1850's when I. M. Singer & Co. inadvertently created the first embryonic franchise network in an effort to distribute and sell its sewing machines to a then-skeptical public.

As the United States became more industrialized in the late 19th century, national brands and nationally known vendors came into being and reworked the American economic landscape. Supply followed demand: as economies of scale and consumer demand for uniform products merged, more and more national chains appeared.

Despite its early roots, franchising did not truly come of age until the late 1950's and the decade of the 60's. Before that, with one major exception, only automobile manufacturers, soft drink bottlers, and gasoline companies used franchising on a regular basis as the prime vehicle for marketing and distributing their goods. The exception was Howard Johnson. In the early 1930's, in the midst of the Depression, he established a chain of 25 Howard Johnson roadside stands.

In the 50's and 60's, however, the giants appeared. Holiday Inns, Roto-Rooter, Dunkin Donuts, McDonalds, Burger King, H. & R. Block, Lee Myles, Midas, 7-Eleven, Dunhill Personnel, Baskin-Robbins, Wendy's, Kentucky Fried Chicken, Pearle Vision Center, Sheraton -- they all geared up and franchised out.

Beginning with those chains and continuing today with franchise networks, two hallmarks may be identified: a trademark and a uniform product or service. Most people still assume that the McDonald's Corporation actually owns all McDonald's restaurants. In reality, though, most McDonald's restaurants are owned by independent franchisees. Yet, the Big Mac tastes the same in Maine as it does in California; the restaurants look the same in Arkansas as they do in Toledo; and the name outside is always the same around the globe. The public demands uniformity and, through franchising, gets it.