If you’ve ever thought about starting a franchise for yourself, you may have wondered how it all began so, in this article, we’re going to take you through the history of franchising and how it started way back in the middle ages.
Franchising in the Middle Ages
Most business historians date the beginning of franchising as a concept to the Middle Ages. While you wouldn’t have come across a handy McDonalds or Starbucks in the middle ages, franchising was absolutely a thing during these times.
The first examples in the history of franchising as a way of doing business were through activities such as markets, taxes and protection rackets which were all franchised out to people who would pay a commission to feudal lords who initiated the practice of selling to others the rights to collect taxes and operate markets on their behalf.
In the 1840s, an enterprising beer company in Germany – SPATEN – decided that it would allow taverns in the area to sell its beer – but there was a catch.
Tavern owners wishing to supply their customers with SPATEN beer would have to pay a fee to the brewery and would also have to promise to use the brand name. They must have been doing something right as SPATEN beer is still incredibly popular.
The Singer Company
The 1850s saw the beginning of franchising as we know it, courtesy of the Singer Company. Isaac Merrit Singer, who made improvements to an existing model of a sewing machine in the 1850s, began one of the first franchising efforts in the United States.
The Singer company revolutionised the world of sewing by producing a machine that could knock out 900 stitches per minute, a game-changer for factories where sewing had, traditionally, been done by hand. This helped to dramatically reduce the amount of time it took to create shirts, trousers, dresses and other sartorial items.
Realising that it was on to a good thing, Singer allowed its machines to be bought and paid for in instalments, and then Singer took this one step further. Realising that selling the machines nationwide by themselves was impractical, the company decided to rent out the rights to sell its machine in exchange for a licensing fee.
Needless to say, this became a hugely successful endeavour for the company and, Singer is now widely known as the world’s first-ever franchise business.
Martha Matilda Harper
While Singer tends to claim the crown as the first commercial franchise, some say that the accolade actually belongs to Canadian Martha Mathilda Harper.
Having worked as a domestic assistant, Martha saved up to start her own hairdressing salon, which featured her own organic shampoo said to help to repair damaged hair. Customers flocked to Martha’s salon, and, soon, she decided to select 100 women who she would train and, ultimately, set up as franchisees for her business.
Harper’s salon, the Harper Method Hair Parlour, and many of her innovations underlie the modern concept of the hair salon. At the time of her death in 1950, Martha’s business empire featured over 500 hair salons.
As our world began to motor toward the turn of the century, the automobile industry started its meteoric rise; in particular, the Henry Ford Company.
Having found a way to mass-produce his vehicles, Ford realised that he also needed an efficient way to distribute them. Realising that using travelling salesmen wasn’t cutting it, Ford eventually came up with the idea of a car dealership. This idea took off so quickly that he began to franchise out his dealerships in order to sell his cars throughout the country more effectively and made his stamp in the history of franchising.
When we think about the history of franchising, many of us automatically think about McDonald’s, and for good reason. In 2021, there are around 39,198 McDonalds restaurants operating worldwide and, it’s hard to imagine a world without those golden arches.
In the 1960s, our favourite burger restaurant was a simple stand run by brothers Dick and Mac McDonald- and it may have stayed that way had it not been for an enterprising young man named Raymond Albert Kroc.
Seeing the potential in the brothers’ efficient burger production line, Kroc became the McDonald brothers’ agent and set about making it his business to bring McDonald’s to the masses. These days, the company enjoys a global revenue of $21.08 billion.
These days, franchise businesses are a huge part of our lives, whether it’s the coffee that we grab on our way to work or the salon that we visit every couple of months for a trim. While we tend to think of franchise businesses as those associated with retail outlets, these days, franchising covers a huge spectrum, including care homes, website building services, cleaning services and much more. In many cases, it’s really easy and affordable to grab your own slice of the action and break out of the 9 to 5 rut.
Although many of us think about franchising as a modern business model, this history of franchising article shows it’s actually been around for at least a couple of centuries. What does this tell us? Mainly that this is a popular and incredibly enduring business model and one which is showing no signs of letting up.