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?
The creation—and ultimately, the mass-production—of automobiles changed everything in America. It created a way for people to get from location to location quickly.
This new automobile industry in the 1900s created the opportunity and the need for these early restaurant chains to grow.
As more and more consumers were becoming interested in automobiles, and interested in purchasing them, Henry Ford, who pioneered mass production by way of the assembly line, needed to find a good way to sell and distribute the cars mass production could create.
His idea for a distribution method was the automobile dealership.
In 1896, William Metzger built and opened the first independent automobile dealership in Detroit, Michigan. He sold an electric automobile called a Waverly.
The second automobile dealership was opened by H.O. Kohller. He opened the first automobile dealership in Pennsylvania. He sold Winton automobiles.
Those men were actually the first auto franchise owners. Henry Ford changed this because he mass produced automobiles. And his distribution system method was to network automobile dealership franchises. Once he was able to mass produce automobiles, he knew that he had implemented a means of distribution of the automobiles created. He did so by creating franchise auto dealerships all across the country.
Soon after that, automobile franchises were appearing everywhere. General Motors issued its first franchise to William E. Metzer of Detroit in 1898. Henry Ford followed suit by franchising dealers to sell his Model T in the early 1900s.
Ford Motorcars began to be sold through franchised dealerships in 1903. By selecting franchisees and providing them with exclusive territories, car franchisors were able to bring their products to market quickly, and to all locations.
These new automobiles needed gasoline to run. Oil companies quickly followed suit after auto dealerships, establishing franchised gas stations across the United States to serve the rapidly growing number of autos. Some of them became franchises. Some of them, like Chevron, still are.
Hertz began rental car franchising in 1925; Avis in 1946.
Soon after the growing legion of automobile drivers, food for travelers became necessary. As the years went by, restaurants (independent ones at first) started popping up all over the place… especially near all of the freshly-paved roads. Eventually, food franchises started opening.
By Steve Longo and Jim Notaris