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The ambition to expand, the constraints of human and financial resources, and the necessity to overcome large distances have all spurred the expansion of franchising. While many people think of franchising as a recent idea, its roots stretch back to the early church and early central government authority before the Middle Ages. Historically, commercial franchising was intended to let employees or journeymen start their own firms.
In England and Europe, the Crown held land and provided management privileges to influential persons, including the church. They were allowed to impose tolls and collect taxes, with a share going to the Crown, in return for these land concessions. The aristocrats divided the land among the local farmers, who paid a royalty for the right to utilise it for their crops or hunting grounds. The Council of Trent in 1562 abolished this kind of political authority in England.
Early exploration and trade were heavily franchised. A franchisee of the Dutch Republic, the Dutch East India Company (1602) was formed to explore and trade between the Cape of Good Hope and Magellan Straits. In 1641, the firm hired Captain Henry Hudson to explore the New World and establish a northeast route. The Dutch were able to claim the Hudson Valley up to Albany via this agreement.
Another example is the King of England handing the London Company a charter for Virginia in 1607. John Smith succeeded Christopher Newport in establishing Jamestown, the first permanent British outpost in North America. After the Powhatan Indian Confederacy massacred 347 settlers in 1622, the king revoked the London Company’s charter, blaming mismanagement.
Brewery co-partnership/franchise arrangements occurred in England and Europe. With the help of the sponsors, bar owners agreed to buy all of their beer and ale from them. Except for the solitary purchase agreement, the brewers had little influence over the local tavern’s day-to-day business. Traditional product or brand franchising is today’s term for this kind of distribution.
Various Franchise Associations were founded to address some of the practices in franchising that were at the basis of these difficulties. The franchise business now has about 1300 franchisors, 10,000 franchisees, and 600 professionals and suppliers.
The tale of contemporary franchising is a fascinating one. The future of franchising promises to bring more exciting chapters to the ever-growing potential franchising.