Franchising resurfaced in the eighteenth and nineteenth centuries when the long-term right to a monopoly in some form of trade or commerce would be granted either by a legislative body or by royalty to a franchisee. As consideration for the granting of this right, the franchisee would make an initial cash payment and would also have certain continuing obligations to the franchiser.

The next major step in the history of franchising came with the ‘tied house' agreements between breweries and landlords which developed during the eighteenth century and which still exist today.

Franchising first emerged in the United States when the automobile manufacturers realized that franchised rather than company owned dealerships made excellent economic sense.

By granting exclusive territories to franchisees the automobile manufacturers were able to assure dealers that they would be protected from competition from other dealers selling the same model. This meant that the manufacturers were able to attract a high standard of franchisee. Furthermore, by limiting the number of outlets within a given territory the manufacturers could ensure a large sales volume for each franchisee.

The franchised form of car dealership was fully established by 1910 and is still predominant today. It is estimated that 95 per cent of new passenger car sales in the United States are made through franchised outlets.

The second major industry to employ the franchise method of distribution was the soft drinks bottling industry. Developing around the turn of the twentieth century, the franchisee would be granted the right to use the packaging and brand name of the franchiser, from whom he would buy the concentrated syrup from which the final product could be made.

The third major industry to employ the franchise method of distribution was the petrol industry. The majority of petrol stations were initially owned by the oil companies themselves.

The three types of franchises outlined above, i.e. the car dealerships, soft drinks bottlers and petrol station, have become known as traditional or ‘First Generation' franchises. Traditional franchises account for a large proportion of the total revenues generated through franchised outlets.

There are several ‘environmental' factors which have been partly responsible for the rapid growth rate experienced by the franchising industry in recent years. The first, and possibly the most important factor is the increasing role played by tertiary (i.e., Service) activities. Many service industries are relatively personnel intensive and they often rely on a distribution network consisting of a large number of outlets dispersed over a relatively large geographical area. The franchising technique is particularly suitable for this type of operation. The social and economic environment has become increasingly conducive to the emergence of a great variety of franchises.

The second important factor which has encouraged the growth of franchising is the increased value that society currently places on self employment. Entrepreneurialism is viewed in a very favorable light, and a high level of self esteem and social acknowledgement can be gained through self employment. As a result, an increasing number of people are experiencing the desire to escape the bureaucratic environment of the large organization and to ‘go it alone' by starting their own small business.

Many studies have shown that there is indeed a widespread desire amongst ordinary workers to run their own business. Unfortunately, most of these would-be-entrepreneurs lack either the necessary skills or the confidence to set up a totally independent business. However, the franchising system overcomes many of the problems commonly associated with starting a business, and thereby provides a much easier route to self employment and the social esteem that goes with it. Emphasize the social and psychological benefits of ‘being your own boss' just as much as the potential financial rewards.

The growth of franchising has also been helped by the increase in recent years in the availability of finance on more attractive terms than are usually offered to independent small business. 

The next major advance in the field of franchising came with the growth in prominence of Business Format (or ‘Second Generation') franchises in the US during the 1950s and in the UK during the 1960s. Business format franchising is now the most important growth area within the franchising industry.

	There is a transition of economies from manufacturing based to service based
	The preference of consumers is for convenience and consistent quality
	There is an increasing demand for specialty items
	These trends have contributed to the strengthening of the franchising system.

Under most business format franchises, regardless of whether they are job, business, or investment franchises, the franchisee is provided with a Total Package including initial training in all aspects of running the business, trade marks, logos, a standard design for the layout and appearance of premises, standard furnishing and colour schemes, marketing plans, operating systems, and continuous ongoing advice and assistance once the outlet is in operation. The franchiser guides the franchisee exactly how the business is to be run, including hours of opening, pricing policy, quality of service, sources of supply, hiring and training practices etc.

In most cases the franchisee need not have had any prior experience in that particular field of business because he will be fully trained by the franchiser. All he has to do is to follow the rules laid down by the franchiser and demonstrate the necessary personal commitment and effort.

Franchising offers the franchisee many advantages in comparison with setting up a totally independent business - some of the most important benefits include the following.

	The franchisee starts in business with the use of an established trade name and corporate image, a proven product or service, and the benefit of the goodwill that has been built up by the franchiser. He therefore starts from a much more favorable position than someone who is setting up a totally independent business without any existing goodwill etc. A franchisee will find entry into the market much easier that he would if he were to ‘go it alone'.
	The franchisee does not usually require any previous experience of self employment or of the particular industry in which he will be operating, since he will receive full training and continuing managerial assistance from the franchiser. The franchise system is therefore an ideal route into self employment for an individual who has little or no relevant experience, as opposed to starting a totally independent enterprise which will usually require some experience or knowledge in the proposed field of business.
	The franchiser will provide assistance in locating a suitable site for the franchisee, selection of equipment, appropriate stock levels etc.
	Start up costs are often lower for a franchise that for a similar independent business. The initial expenses relating to the launch of the franchisee's outlet are also usually deployed more effectively since the franchiser has the benefit of significant experience in setting up and launching new outlets.
	The franchisee's operating costs may also be lower as a result of bulk central purchasing by the franchiser, economies of scale in advertising and promotion, staff training programs organized by the franchiser, etc.
	The franchisee will benefit from both regional and national advertising which is undertaken by the franchiser on a scale which would be completely beyond the resources of the independent businessman.
	The franchisee will usually have many opportunities to discuss particular problems, different operating methods etc. with his fellow franchisees in the network on both a formal and an informal basis. He is therefore able to share his problems and learn from the experience of other franchisees.
	Many people have a desire to run their own small business rather than be an employee, but either lack an initial idea of exactly what they would like to do, or do not know how to go about setting up their own business. Franchising provides an ideal opportunity for these people, especially since such a large range of businesses are now available as franchises.

One of the major disadvantages of the franchise system is that although the franchisee is a legally independent businessman, the franchiser will exert a fairly high degree of control over the franchisee and his operation. This control is however essential in ensuring uniformity and standardization in all outlets in order to maintain the goodwill enjoyed by all participants in the franchise.

The franchisee has a contractual obligation to continue to operate his outlet and the circumstances under which he can terminate the agreement may be fairly restrictive. Furthermore, under the terms of the franchise contract, he may not necessarily be allowed to sell his business to whomsoever he likes - the franchiser will normally reserve the right to vet potential purchasers in order to ensure that they are acceptable to him as franchisees.

The relative importance of each of these advantages and disadvantages will vary between different franchise operations and between different franchisees. In addition to these more common considerations each individual franchise opportunity will have its own specific problem and benefits. Clearly it is important for any potential franchisee to bear this in mind when considering a specific franchise operation.

The solutions to many of these problems lie mainly with the franchiser who should be aware from the outset of the causes of franchisee discontent so that he can take whatever steps are necessary either to prevent this situation arising in the first place, or to implement a system capable of dealing with the problem if and when it occurs.

Automotive Products and Services, Business Aids and Services, Accounting/Tax Services; Advertising/Direct Mail. Business Aids and Services, Business Brokers, Check Cashing. Financial Service Centres, Insurance, Packaging, Shipping and Mail Services, Publications, Shopping Services, Telecommunication Services.

Construction & Home Improvement, Materials Service and Remodelling, Water Conditioning, Home Appliance Sales, Rental and Repair, Home Furnishing. Retail and Services, Home Inspection/Radon Detection, Security System. Lawn, Garden, and Agricultural Supplies and Services.

Convenience Stores, Employment Services, Health and Beauty Aids, Cosmetics, Hair Salons and Services, Dental Centres, Health Aids and Services, Optical Aids and Services, Vitamin and Mineral Stores, Weight Control, Laundry and Dry Cleaning, Lodging, Hotels & Motels, Camp Ground Maintenance and Cleaning Services, Maid and Personal Services, Janitorial Services, Maintenance, Chemicals and Related Products.

Miscellaneous Services Children's Services Dating Services, Printing/Copying and Signs, Printing/Photocopying; Photography and Supplies; Signs.

Real Estate Services, Recreation, Entertainment and Travel, Equipment and Supplies, Exercise, Sports, and Entertainment Services, Travel Agencies, Transportation Services.

Rental Services Auto and Truck 

Rental Services Equipment and Retail, Rental Equipment and Supplies, Formal Wear Rental, Uniform Rental Systems, Video/Audio Sales and Rental.

Restaurants (All Types).