The word “franchise” comes from the Anglo-French word meaning ‘liberty.” The French term “francis” means granting rights or power to a peasant or serf. The English term ‘enfranchise” is defined as empowering those who have no rights.
Throughout history franchising has promoted economic liberation and opportunity. The most famous franchises to have emerged over the past 35 years are arguably McDonald’s and KFC which are still going strong today and worldwide.
The modern leading form of franchising is known as business format franchising. It became popular after the Second World War when people returning home from the war required many products and services. As a result, these baby boomers became the leaders of the economy, and are expected to be for quite some time.
Franchising became more popular in the 1960’s and 1970’s. However, several poorly managed companies under franchise went bankrupt, leaving many franchisees in dire situations. There were even fraudulent companies who just took peoples’ money for nothing. This led to the formation of the International Franchise Association (IFA) in order to regulate the franchising industry.
The IFA continuously works in conjunction with the US Congress and Federal Trade Commission (FTC) on improving the industry’s relations with franchisees. In 1978, the FTC created the Uniform Offering Circular (UFOC) requiring franchise companies to provide detailed information to potential franchisees. This document was updated in 2007 and renamed the Franchise Disclosure Document (FDD).
Franchising continues to be a highly regulated industry in an effort to promote the healthy growth of the economy. In the contemporary society, franchising is a profitable form of business and has many benefits over starting a company from scratch. In particular it is incredibly advantageous for global expansion and due to the recession an increased number of entrepreneurs have taken on a franchise successfully.