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Kings, sewing machines and pancakes | Pamdemonium
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Kings, sewing machines and pancakes

May 23, 2010

Quick association test: Medieval fairs, New World exploration, German beer, Singer sewing machines.

That is a pretty random assortment, even for Random Fact, but these activities and commodities share an economic lineage. They are all early developments in the business of franchising.

In the Middle Ages, kings and lords gave churches and important personages licenses to hold markets and collect taxes. When Queen Isabella of Spain granted Christopher Columbus permission to go forth, explore and find new trading partners, she invented a franchising system.

A few centuries later, German ale makers allowed certain taverns to sell their brews, in effect, granting franchises. In the United States, the modern concept of franchising started in 1851 when Albert Singer commissioned agents to demonstrate and sell his sewing machines. He is considered the first person to prepare franchise contracts that were precursors of our modern franchise agreements.

This is more than a history lesson, for franchising is a huge – and often overlooked – part of the U.S. economy today. Random Fact uncovered 2009 estimates that franchised business accounted for nearly 50 percent of all U.S. retail sales, employed more than 8 million people and generate $1 trillion in annual sales. Some 3,000 franchises are available in 80 categories; and home health care is the fastest-growing franchise industry.

Some household names launched it all: Rexall Drug stores (1902), Western Auto (1909), Howard Johnson (1925), Dunkin Donuts (1950), McDonalds (1955) and International House of Pancakes (1959).

Heavy on food, yes, but the diversity in franchising today is truly astonishing. We’ll save that for another day.

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{ 3 comments }

Thomas Scott May 24, 2010 at 8:33 am

It started much earlier than that and is actually a Chinese import – the first franchise company is thought to originate in China during the Warring States period and Qin Dynasty of roughly 200 B.C. Some speculate that franchising possibly started even earlier when rickshaw drivers were granted specific routes.
Franchising is a fascinating sector of American business and has been growing by leaps and bounds mostly because it provides opportunity for more people to start their own business with lower risk than independent business starts and franchise businesses usually out perform corporate owned stores.

Amber V May 25, 2010 at 8:05 am

It was so nice meeting you on Saturday! You are a wealth of knowledge and having a few minutes to chat with you was just delightful. Also, love the econ history – economics was my field of study in college :)

admin May 28, 2010 at 11:12 am

Thanks Amber. The pix are great. I am spreading them around now, sent one to non-profit I am working with that needs a bio, put another on FB. Your website is awesome–the photos of the young lady who looks like Pink make me want to dress up and get married aagain!

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