How Franchising Started

Franchising has become a multi-million business nowadays. However, not enough information is known about this. Franchising has been around more than two thousand years ago. The concept of chain first came out of China circa 200 BC when rickshaw drawers were given routes, which is an early type of a protected territory.
However, in a business sense, the first company to come up with franchising was Singer, the company who makes sewing machines. This took place in the 1800s when the company was short of cash and couldnt afford to pay salesmen. They put up a network of dealers who would franchise the machine. The traders could purchase sewing machines and sell it in their localities by paying an initial fee for rights to territory

This was the original instance of a product franchise where the prime function of the dealer is to distribute and sell a product line. One more type of franchise which is more popular today is the business format, wherein the dress code & uniformity of how to operate the business is specific. It is the franchiser who provides the techniques of the trade, in the case of fast food, how to prepare the food, how to cook it, how to serve it, and even how to talk to the customers. But the patties or raw materials are supplied by the franchiser so that the taste of the food remains constant. Some other provisions from the franchiser are intellectual property assets such as the logo, brand names, and corporate fonts. Sometimes the business format is similar to a product franchise but its focus is on the control & development of strategies on marketing.
In 1898, Ford Motor Company & General Motors also didnt have the capital to fund retail showrooms. So they came up with a network of dealers who will purchase, sell, & fix their autos. Henry Fords assembly line made the expensive automobile an affordable product for everyone. After three years, Thomas & Whitehead, lacking the capital to put up a bottling factory, gave out product franchises to assembly line bottling plants. The first prototype of bottling franchise was made making Coca Cola a household name.
Franchising groups put on the market the idea of a potent formula they have improved, add to that uniform standards of operations, stir in a catchy name, and blend that with support that is ongoing or when the need arises, and voila! You have the recipe for a business format franchise.