History of Franchising

Isaac M. Singer, (1811-1875) founder of the Singer Sewing Machine Company, usually receives credit for developing the modem use of business franchising in the United States. The company was primarily a manufacturing company. It used franchises to distribute its machines across the United States and in many other nations. Singer's franchise contracts became the basis for the franchise agreements that are in common use today. Some of the early franchises include Kentucky Fried Chicken in 1930, Dunkin Donuts in 1950, Burger King in 1954, and McDonald's in 1955. Other early franchises from the 1950s and 1960s include Roto-Rooter, H&R Block, Midas Muffler, Dunhill Personnel, 7-Eleven, Baskin-Robbins, Sheraton, and Wendy's.

In 1978, the Federal Trade Commission issued the Franchise Rule, which established minimum disclosure requirements for all franchises sold in the United States. The rule created the UFOC or Uniform Offering Circular, which was updated in 2007 as the FDD or Franchise Disclosure Document. In addition to the federal requirements, 15 states including California, have established their own requirements for franchises to meet before they can sell franchises in these states. Most entrepreneurs believe that franchising has become the most successful marketing concept ever developed.


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