Buying a Franchise- What Every Entrepreneur Needs to Know.
© By Howard Schwartz
The concept of franchising is a couple of centuries old. The
franchising business and world economies have developed
simultaneously. The term `franchise' comes from old French where
it meant freedom, or privilege. Franchising goes back to the
feudal times when the feudal lords granted permission to their
slaves and common men to hold fairs, markets, ferries, and even
allowed hunting on their lands.
In the middle ages, kings used the concept of franchising when
they gave contracts, or franchises for most of the commercial
activities like developing roads, wells, and brewing ale.
As the concept of franchising developed further, it was seen as
the right to monopoly that a person got to perform any kind of a
commercial activity. As time passed, several franchises became a
part of the European Common Law.
Singer Sewing Machine Company is considered to be the father
figure of franchising as most of the concepts of franchising
developed by them, form a part of modern day franchising
contracts.
The way in which Singer made its sales and provided services is
considered to be modern retailing that is a part of franchising.
In the 1850s, Singer brought together teams of salesmen and
dealers who were given the rights to distribute sewing machines
in different regions. They made written contracts for
franchising, which are the basis of modern-day franchise
agreements.
At this point in time franchising was seen as the right granted
by the manufacturer to sell and distribute products and service
to the franchisee. Big oil refineries, automobile manufacturers,
and many others also started following the concept of signing
written agreements for franchisee distribution.
Proper business format franchising came into being, in the United
States and other countries of the world, after World War II. This
was the time when soldiers returned from the war to be back with
their families and the baby boom took place because of which
different and newer products and services became essential.
This was when the concept of franchising developed the most. It
made its presence felt in the U.S. economy. This was also the
time when most of the hotels and motels developed. With the
increase in the number of franchises, the 60s and 70s saw a time
when every second person was into the franchising business.
The decades of 60s and 70s also brought about a number of frauds
in the franchising business. There were people who duped many
others by taking money from them in return for a franchisee that
did not exist and escaped with the money. On the other hand there
were also many franchise businesses that went bankrupt. This was
when the need for strict regulations for franchising business was
given a thought.
In the year 1978, the Federal Trade Commission ordered that all
the franchisers/manufacturers were supposed to submit the Uniform
Offering Circular or UFOC before receiving money from the
prospective franchisers. The UFOC provides the details of the
franchise company, gives their history, audited financial
statements, information of the officers, and the contract, or the
franchise agreement.
At present, the franchising is seen as the most lucrative
business option for many people who aspire to own a business.
Learn more about owning your own franchise business:
http://www.franchise-business.biz
Howard Schwartz is a partner in several business strategy groups,
including HJ Ventures International, Inc. Howard has worked with
hundreds of entrepreneurs worldwide with a focus on writing
business plans for companies interested in raising capital from
Venture Funds and Angel Investors. Howard's business plans have
secured several million dollars in funding. For more information
visit:
http://www.franchise-business.biz
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