Franchise History
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The first chain store concept was being established in 200 B.C. in China when a local businessman named Lo Kass began operating several retail units in China. However franchising possibly started even earlier when rickshaw drivers were granted specific routes.
There is evidence that Franchising began in England in the Middle Ages in England and Europe, where the Monarch granted licenses to his Barons, Knights and Lords of Manor to exploit the land under their control. In exchange for these land grants, the noblemen were required to protect the territory for the monarchs by establishing an army and were free to set tolls and establish and collect taxes, a portion of which was paid to the monarch. As an agrarian society, the control over the land represented an enormous power and was the foundation for the feudal system.
Even Robin Hood, may have simply been the tale of a franchise relationship that went bad, with King Richard as the franchisor, Prince John as the master franchisee and the Locksley family as the franchisee. Unfortunately the British Franchise Association wasn’t around to regulate matters.
In England and Europe franchising was used "commercially" in the tavern and brewery industries. Pub owners, in exchange for financial assistance from the breweries, agreed to sole purchase agreements with the breweries. The breweries did not exercise any controls over the operation of the local tavern except for the sole purchase arrangement.
Franchising, as a business concept, was transplanted into the United States In 1851, Isaac Singer became the first American product name franchisor when he began to sell to travelling independent salesmen the rights to sell his sewing machines to end users.
The earliest known restaurant chain in the United States was founded in the 1850's by Frederick Henry Harvey, an Englishman who opened his first restaurant in 1852. This initial restaurant failed during the Civil War. In 1876, Frederick Harvey opened the first of the Harvey House restaurants in a terminal of the Atchison, Topeka & Santa Fe Railroad. The railroad wanted to open depot restaurants for its passengers and provided Frederick Henry with locations and free transportation of restaurant supplies. By 1887, there was a Harvey House restaurant every hundred miles along the 12,000-mile-long Atchison, Topeka, & Santa Fe line. Frederick Harvey believed strongly in quality control and established regular field visits to his restaurants similar to those used today by franchisors.
Kentucky Fried Chicken, established in 1930; Dairy Queen, established in 1940; Dunkin Donuts, established in 1950; Burger King, established in 1954; McDonald's, established in 1955.
So to today,
In the 21st Century Franchising is one of the best, and most successful ways to get into business for yourself.
NatWest Bank in partnership with the British Franchise Association, have, for the last 24 years carried out an annual survey of franchising in the UK.
The latest findings show:
• The UK Franchise Industry has an annual turnover of nearly £13 Billion pounds (12.8)
• It employs over 400,000
• 95% of all franchises in the UK are successful and make profit.
• Only 0.9% of Franchises suffer financial failure.
• Previous surveys have also shown that after 5 years 85% of Franchises are still trading, this compares with just 11% of other business start ups.
Why should you consider a franchise, why not do it yourself?
Well, notwithstanding the statistics this can be summed up in an acronym, SYSTEM
Save
Yourself
Some
Time
Effort &
Money