HISTORY OF
FRANCHISING
C. Franchising
From
1901 to 1950
- In the early
1900’s, Henry Ford
franchised dealers
for his Model T. The
oil companies
followed suit,
franchising gas
stations.
- In 1902, Rexall
Drugstores began
franchising.
The "Rex" in the
name was derived
from the name of
Ellen M. Regis, who
developed "Rexall
remedies."
— In 1920, the “Ben Franklin”
store systems appeared with
general merchandise stores.
- Founded in 1877 as Butler
Brothers, and in 1927 as Ben
Franklin.
- Ben Franklin Crafts stores are
part of the most prominent family
of independently owned retail
stores in the nation which carry an
array of household items,
sundries, food and snacks, health
and beauty aids, and much more.
— In 1925, Howard Johnson offered his
three flavors of “superior” ice cream
from his Wollaston, Massachusetts
drugstore.
- An admitted ice cream fanatic,
Johnson spent a great deal of time
developing new ice cream flavors to
feature at his soda fountain, and before
long he had begun to make and sell
other easy-to-prepare food items like
sandwiches, hot dogs and fried clams.
- Three years later, the first Howard
Johnson restaurant was born. By 1954,
Johnson had 400 restaurants.
D. Franchising
from 1951-
1969
- Franchising in the
U.S. exploded in the
1950s. That year,
less than 100
companies had
employed
franchising in their
marketing
operations.
- In 1955, Tastee
Freeze established its
1500th unit.
- In the 1950’s and
1960’s, the
development of
business format
franchising escalated.
- By the late 1960’s,
McDonald’s, Holiday
Inn, and KFC were
all approaching or
had surpassed the
one-thousand unit
mark.
— Between 1964
and 1969, fueled by
an ever expanding
economy, an
estimated 100,000
new franchise
businesses
commenced.
E. Franchising
from 1970 to
1985
- In 1970, California
became the first
state to regulate
the sale of
franchises when it
enacted the
California Franchise
Investment Law
(CFIL).
- Between 1973 and
1976, due to the Arab
oil embargo, national
shortages of gasoline
precipitated the
closure of nearly
32,000 franchised
gasoline service
stations.
- Between 1976 and
1980, more than
19,000 new franchises
were established;
however, the increase
did not offset the loss
of gasoline franchises
during the decade.
- In 1978, the
Federal Trade
Commission (FTC)
adopted the FTC
Rule involving pre-
sale disclosures,
which became
effective in 1979.
- By 1980, there
were more than
356,000 franchised
businesses, 18,000
less than the peak
level achieved in
1973.
- Product/trade
name franchise
sales reached $231
billion. Sales by
business format
franchises tripled
from $16 billion in
1971 to $48 billion
in 1979.
