History of Franchising

SHARING IS CARING

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Having been in business my entire career, I was always curious about franchising. My initial curiosity was trying to understand why anyone would want to do it. Eventually, I looked at the possibility of buying a franchise, and now I am selling franchises. It has been a journey, and one that I think is worth sharing. Why? Because maybe you are going down a similar path. Maybe your curious if franchising is right for you. Maybe you just want to know more about what it takes to own a business.

To get started with this series, let’s look at the history of franchising.

The concept of franchising goes back to the Middle Ages. Although not looking like what we know franchising to be today, from the very beginning it led to exploration of lands and the discovery of new goods. In Medieval Europe, the crown would franchise land and collect the first ever royalty payments. Franchising helped grow and create economies, give people opportunity, and introduce new things to different parts of the world.

Although franchising has opened doors for many, it has not come without unethical and illegal practices. During the Renaissance, slavery was a common franchise opportunity. In the 1950’s, when franchising was booming, issues arose with “fairness”. The lack of regulation led states, California being the first, to institute franchise sale laws. By the 1970’s, the Federal Trade Commission began to require pre-sale disclosures.

Today, companies that decide to franchise, invest their resources in ensuring they are in compliance with state and federal laws. This includes everything from Trademarking, Franchise Disclosure Documents (FDD), to audited financials. As franchise companies grow, the complexity of running and managing their business increases. So why would a company want to franchise its business, and why would you as an entrepreneur want to become a franchisee? Come back next week to learn more!

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