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A brief history |
Origins |
The word 'franchise' comes from an ancient French term "francis" meaning privilege or freedom and can be traced back to the 13th century. In the Middle Ages a franchise was a privilege or a right granted by the sovereign lord which allowed a person to conduct a range of commercial activities, from running a market to building a road. Over the centuries franchising has evolved as world economies have evolved.
Franchising originated as a distribution method in the United States in the mid 19th century by Isaac Singer, founder of the Singer Sewing Machine Company, as a method of distribution where independent salesmen paid fees to acquire exclusive territorial rights.
The first franchise in Australia under the 'royal privilege' system is believed to have been granted by Governor Macquarie in 1809. It was issued to import 45,000 gallons of rum over 3 years in return for building the Sydney Hospital (still referred to as the 'rum hospital'). Today, the government still collects fees levied by the state government for the right to sell alcohol, tobacco and petroleum.
Franchising Today
Modern franchising originated in the USA in the 1950's with the emergence of fast food chains (McDonald's, Pizza Hut and Kentucky Fried Chicken) but was not developed in Australia until nearly two decades later in the early 1970's. Ray Kroc (McDonald's) is generally credited as the founder of 'business format franchising' which has become the most popular and successful form of franchising in the last 50 years.
A variety of economic, demographic and social factors influenced the growth of both the service sector and franchising between 1976 and 1986.
- The ageing of the baby boom generation.
- The surge of women entering the workforce.
- The growing number of active retirees.
- The emergence of two-income families.
All of these helped create huge demand for services ranging from day care and house cleaning to fast food and drive-through auto maintenance. Businesses also created new demand for services, seeking to cut operating costs by contracting for everything from janitorial services to personnel and accounting services.
Changing attitudes regarding convenience and product quality, emerging technologies, mass advertising and other factors further encouraged development of a wide variety of service-orientated business opportunities.
Prompted by these influences, the pace of franchising activities has accelerated since the mid 1980's.
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