The franchise model has been called the greatest business model ever devised. It’s created opportunities and allowed people who’ve wanted to own businesses do just that. But, how did it begin? How did franchising start?
After World War I, the advance of the automobiles inspired another dining innovation: drive-in restaurants.
A&W Root Beer and Drive-In Restaurants – 1923
In 1919, Roy Allen purchased the formula for his root beer recipe from a pharmacist and opened his first stand in Lodi, California. Two years later Allen began franchising his root beer, then partnered with root beer maker Frank Wright, combining their talents to begin producing A&W Root Beer in 1922.
In 1923, Allen and Wright opened the first A&W drive-in restaurant, creating roadside restaurants. Ultimately Allen bought out Frank Wright in 1924 and began to franchise A&W Restaurants. A&W Restaurants was the first to offer car-side service served by women servers or “carhops” on roller skates.
White Castle – 1921
Arguably, the first fast food restaurants originated in the United States with White Castle in 1921. Billy Ingram and Walter Anderson created and opened their first White Castle drive-thru in 1921 in Wichita, Kansas. It offered an innovative hamburger cooked on onions, White Castle originated many standards of the quick-service, advertising, discount marketing, and take-out packaging to keep food warm.
Howard Johnson – 1935
Howard Johnson began in 1925 when he acquired a failing pharmacy in Quincy, Massachusetts and converted it into a small restaurant that sold three flavors of ice cream together with a small menu of cooked items. In 1935, in the midst of the Depression, Howard Johnson opened his first highway restaurant. He then began franchising to rapidly grow a chain of restaurants.
Howard Johnson pioneered franchising as a method of rapid growth of restaurants. The franchise terms made Johnson a 50% owner of each restaurant. The franchisee, in turn, provided half the capital investment and managed day-to-day operations. Johnson controlled the menu and operation systems. Each purchased from Johnson the ice cream that made up the famous 28 flavors, as well as some other food ingredients.
Howard Johnson provided its’ first franchise to Reginald Sprague in 1935, and over the years expanded its menu to include 28 flavors of ice cream, each restaurant had a distinctive roadside presence with orange roofs and pylon signs bearing its name and logo, the company secured the first turnpike contract on the Pennsylvania Turnpike.
Howard Johnson Restaurants skyrocketed in popularity, paving the way for restaurant chains and the subsequent franchises that would define the unprecedented rise of the American fast-food. By the end of 1939, there were 107 Howard Johnson restaurants.
Howard Johnson’s was, for decades, one of the most well-recognized American businesses in the country. The franchise expanded from a single ice cream store located in Quincy, Mass., in 1927 to an empire of restaurants and hotels. By the 1970s, there were more than 1,000 Howard Johnson’s restaurants in the United States. Currently, there are only two restaurants in the entire country: one in Bangor, Me., and one in Lake Placid, N.Y. One of the factors contributing to the decline of the chain was the decline of the motel industry nationwide.
By Steve Longo and Jim Notaris