The Meaning of the Word “Franchise”
The act of franchising predates the word as we recognize it today.
If we look to the “Online Etymology Dictionary,” we can trace the origin of Franchise (Noun) – c.1300 franchise, “a special right or privilege (by grant of a sovereign or government);” also “national sovereignty; nobility of character, generosity; the king’s authority; the collective rights claimed by a people or town or religious institution,” also used of the state of Adam and Eve before the Fall, from Old French franchise “freedom, exemption; right, privilege”
Franchise (verb) late 14c., “to make free,” from Old French franchiss-, past participle stem of franchir “to free” (12c.), from franc “free” (see frank (adj.)). Franchising is from the 1570s; the commercial licensing sense is from 1966. Related: Franchisee; franchiser; franchisor.
The origins of franchising as a business practice can be traced back to 200 B.C.
The origins of Franchising as a business practice can be traced back to 200 B.C, in a Chinese retail shop owned by Lo Kass. Let’s look at a brief history timeline to see the history of Franchising.
In Franchising: The How-to Book by Lloyd Tarbutton, the author suggests the first chain store concept was started by Lo Kass in 200 B.C. China. According to Tarbutton, Kass even operated several retail units within the country, selling various goods.
The Middle Ages
In the Middle Ages, manorial courts largely ruled the law. In this system, lords exercised jurisdiction over tenants, making franchise-like agreements with tax collectors. The tax collectors retained a portion of their collections in return for physically collecting tax dollars. These collections were made in the name of the Lords who governed the land. In a sense, this can be seen as the beginning of the franchisee/franchisor relationship.
The Colonial Period
During the Colonial period, landowners authorized individuals to run markets and perform business activities, such as run local ferries for a certain fee. European monarchs would allow individuals to expand colonies and operate those lands under the protection of the Crown in exchange for taxes and royalties.
The 19th Century
In the mid-1800s the first American franchise was established by Albert Singer, producing the Singer sewing machine, still a popular brand today. Singer was highly regarded for his licensing arrangements. The franchisor set up specific geographical locations for business owners and charged an upfront licensing fee for the right to sell his sewing machines.
The 20th Century
In the 1950s and ’60s, franchising as a marketing strategy started to take off. This is especially prevalent in fast food chains. With the expansion of interstate highways, fast food chains, such as McDonald’s and Kentucky Fried Chicken, began expanding into two of the most successful Franchises today.