The History of Modern Franchising

Three constants have driven the expansion of franchises: the will to expand, limitations in human and financial resources and the necessity to cover large distances. While franchising may be viewed as a recent invention, it has its roots in the early church expansion and the central control of governments before the Middle Ages. Commercial franchising’s original purpose was to enable workers and journeymen to start their own business with the support of franchisors. If you want to Franchise My Business, contact Ashtons who specialise in Franchise My Business.

In England and Europe the Crown granted the right to the Church to run its land to individuals who were powerful. The noblemen, church officials, and other powerful individuals were given land in exchange for establishing an army to defend the area. They were also allowed to collect tolls, taxes and set them. A portion was then paid to the crown. Local farmers paid royalties to the nobles for the rights to the land, either in exchange for a share of their crops or animals. The system of government control was in place in England from 1562 until it was outlawed.

Early exploration and trade was conducted largely through franchises. The Dutch East India Company was established in 1602 as a franchisee of the Dutch Republic, to explore and conduct trade. In 1641, the Dutch East India Company expanded its operation by hiring Captain Henry Hudson as an explorer of the New World to locate a Northeast passage.

A second example of this is the 1607 charter granted by King James to the London Company. Captain Christopher Newport brought the first permanent British settlement to the New World, Jamestown. Captain John Smith succeeded him.

Commercial co-partnership/franchising relationships existed in England and Europe in the brewery industry. As a condition of receiving financial aid, the tavern owner agreed to buy all their ale and beer from sponsoring breweries. Breweries had no control over local taverns except the purchase agreement. This downstream distribution method is called trademark, traditional or product franchising.