When people hear the word franchise, they often think of fast food – McDonald’s, Subway, Dunkin’, or maybe The UPS Store. But the idea of franchising has been around far longer than golden arches or drive-thrus. In fact, depending on how you define “franchise,” the first franchise could date back centuries. At FortmanSpann, we represent franchisees across the country – people who invest in these business systems today. Understanding where franchising came from can help explain how it works (and sometimes, how it doesn’t) in modern times.
What Exactly Is a Franchise?
At its core, a franchise is a business relationship where one party (the franchisor) grants another (the franchisee) the right to operate a business using its trademark, system, and support – in exchange for fees or royalties. That’s the modern, legal definition under the Federal Trade Commission’s Franchise Rule. But if we think of a franchise more broadly – as a system for replicating success through agreements, rules, and brand consistency – then versions of franchising existed long before the FTC or the first hamburger chain.
Medieval Roots: The Original “Franchises”
The word franchise actually comes from the Old French word franchir, meaning “to free.” In medieval Europe, a franchise referred to a right or privilege granted by a ruler to a subject. These could include rights to collect taxes, hold markets, or operate ferries or inns. In England, for example, the Crown granted local lords the right to maintain fairs or toll roads in exchange for loyalty and payments. These weren’t “franchises” in the business sense – but the idea of buying the right to operate under someone else’s authority started here.
The 1800s: Modern Business Franchising Begins
Fast-forward to the Industrial Revolution, and franchising started to resemble the business model we recognize today.
- Singer Sewing Machines (1850s): Often cited as one of the earliest examples of product distribution franchising, Singer sold independent operators the right to sell and service its sewing machines in certain territories.
- Coca-Cola (1899): The soft drink giant granted bottling rights to local entrepreneurs, giving them the ability to produce and sell Coke in defined regions.
- Automobile Dealerships: Early car manufacturers like Ford and General Motors used territorial franchises to expand quickly without owning every retail location.
These arrangements weren’t full-fledged “business format franchises” yet – but they introduced the idea of distributing a brand through licensed, independent owners.
The 20th Century: The Birth of the “Business Format Franchise”
The model most of us think of today – where the franchisee adopts a complete business system, including training, marketing, and operations – emerged in the post-World War II era. Returning veterans and suburban growth created fertile ground for expansion. Companies like Howard Johnson’s, A&W Root Beer, and eventually McDonald’s standardized not just products, but entire systems. Franchisors didn’t just sell a product; they sold a replicable way of doing business. By the 1960s and 70s, the model had exploded – so much so that the federal government stepped in to regulate the relationship. The FTC Franchise Rule, established in 1979, created the modern disclosure framework we still use today (the Franchise Disclosure Document, or FDD).
The Modern Era: Franchising as an Ecosystem
Today, franchising extends far beyond food. You’ll find franchises in:
- Fitness and wellness (e.g., Orangetheory, Planet Fitness)
- Home services (e.g., ServPro, Two Men and a Truck)
- Education (e.g., Kumon, Mathnasium)
- Healthcare, hospitality, and even pet care
And while the business format is highly standardized, the relationship dynamics haven’t changed much: franchisees invest capital and labor, while franchisors control brand standards and systems. The tension between independence and control remains a defining feature.
So, Who Had the “First” Franchise?
That depends on how you define it.
- If you define it as granting rights or privileges – look to medieval Europe.
- If you define it as product distribution – Singer and Coca-Cola lead the pack.
- If you define it as a complete business format – McDonald’s, founded by Ray Kroc in 1955, is the prototype of the modern franchise system.
Each era built on the one before it, refining what it means to operate under someone else’s brand while maintaining independent ownership.
Why This Matters for Franchisees Today
Understanding the evolution of franchising isn’t just trivia – it’s perspective. The roots of franchising show that this business model has always been about balancing opportunity with control. When you buy into a franchise system today, you’re joining a centuries-old tradition of collaboration, negotiation, and sometimes, conflict. At FortmanSpann, we’ve seen both sides – franchisees who thrive and those who discover the balance isn’t what they expected. Our role is to help franchisees protect their investment, understand their rights under the franchise agreement, and hold franchisors accountable when necessary.
Thinking About a Franchise?
Whether you’re considering buying a franchise, reviewing an FDD, or facing a dispute with your franchisor, understanding the history of franchising can help you make smarter decisions about your future in it. FortmanSpann represents franchisees nationwide in disputes, terminations, FDD reviews, and franchise resales. We believe every franchisee deserves fair treatment and transparency.
For further information about the legal services our team provides or to learn more about franchise associations and their benefits, contact FortmanSpann today to speak with an experienced franchise law attorney.
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