Franchise Concepts
Most all entrepreneurs who have successful businesses want to start franchising with the intention of creating rapid growth to brand their products and services. After all, what better way to saturate the market place than to have other entrepreneurs using their resources to brand your business? This solves the problem of having to open up satellite locations and hire staff who ultimately do not care about the business, compared to a franchise owner who has “skin in the game” to make the business thrive. But have you ever wondered how the concept of franchising started?
Throughout its long history, there have been three constants that have fueled the growth of franchising: The desire to expand, the lack of expansion capital and the need to overcome distance.
Franchising as a business concept, (previously being used as a method for governmental territorial control) was brought to the United States from England and Europe where it was used "commercially" in the tavern and brewery industries. So you could say that the concept of franchising started over beer.
The earliest known restaurant chain in the United States that resembles today’s definition of a franchise was formed in the 1850's and founded by Frederick Henry Harvey when he opened the first of the Harvey House restaurants in a terminal of the Atchison, Topeka & Santa Fe Railroad.
The earliest non-food franchises can be seen in the establishment of Singer Sewing Centers. Singer's idea caught on and over the next several decades business format franchising evolved. Many other companies followed Singer's lead as they began to enhance and duplicate their business models. At first, companies introduced franchising in the manufacturing industries in an effort to reduce financial risk. Later, companies such as McDonalds took franchising to a whole new level by creating some of the largest franchise systems in the world.
Since 1977, franchising has been defying a law of both physics and business cycles. Franchising has been accelerating over the last 30 years, dominating certain industries entirely (such as guest lodging, real estate brokerages, quick-serve restaurants and convenience stores) while propelling itself into the forefront of not only the United States economy, but more and more into the global economy. Today, there are thousands of successful franchise companies that provide products and services to consumers and businesses in the United States and all around the world. According to the U.S. General Accounting Office, in the United States alone, franchise systems account for more than One Trillion Dollars in annual U.S. retail sales. That is more than 50% of all retail sales nationwide. All of these world-renowned franchises started out by having the right strategy and structure in place along with a passion to change the paradigm within their industries. So how about it; is your business model the "Next Big Thing?"
