Monday, August 16, 2010

Franchise and Franchising History

Before there was any serious governmental regulation of franchises, a number of hucksters involved themselves in the field. Many of them initiated get-rich-quick schemes which cost investors countless dollars. As a result, franchises and franchising became a bad word to some people. However, public and private sector watchdogs helped to restore trust and confidence in the relationship, launching franchising on its way to a prominent place in the American economy. In 1960, some franchisors formed the International Franchise Association (IFA) to police the franchising industry and eliminate the con artists. Individual states began passing laws to regulate franchise activities.

By 1979, the Federal Trade Commission (FTC) initiated a franchise trade rule requiring disclosure of pertinent information to prospective franchise owners. Franchising became a respectable word again, and the practice flourished with the efforts of early franchisors like Ray Kroc (McDonald’s) and Dave Thomas (Wendy’s). Today, franchises are active and successful in a wide range of business categories. They exist in lawn, garden, and agricultural supplies and services, maid and personal services, security services, tools and hardware, weight control, and many types of food products, including baked goods, donuts and pastry, popcorn, ice cream, yogurt, and fast foods.

The popularity of franchising as a way of doing business is undoubtedly due to the way it increases an entrepreneur’s chances of success while providing a way for an established company to expand its business. That said, compliance with current franchise law and regulations is key to maintaining trust and confidence in the relationship between franchisor and franchisee. Contacting franchise attorneys who can establish and maintain franchise networks would be right for your business.

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