Franchise Operations

Who Was the First Franchisor?

The father of modern franchising was probably Isaac Singer, who made practical sewing machines in the 1800s. He had a couple of problems with his machines. First, while people were excited about sewing machines, they couldn’t use them without training, so the machines weren’t exactly jumping off the shelves in stores. Second, he didn’t have much capital, so making lots of machines and opening training centers with retail areas wasn’t practical for him. Finally, but perhaps most important, he had no way to repair and service machines once he sold them.

Singer licensed people to sell his machines in specific territories, and their fees provided an influx of capital that let him get enough machines made to satisfy the demand once his franchisees started selling. The franchisees did training and repair of machines as well, so Singer didn’t need to travel to the outposts of the country to get his wonderful new machine into every home.

Singer might not have been the first person to use a kind of franchise, but he was the first to use a franchise contract, so he is considered the first modern franchisor — but not by everyone. There is controversy about how independent the Singer franchisees were. They were recruited by the Singer company in local areas, and some who would debunk the idea of Singer as the first franchisor claim that local people believed the stores were locally owned, but the franchisees were actually employees of Singer.

It seems like that a little uncertainty and fluidity could be part of working out franchise arrangements.

Martha Matilda Harper is another candidate for the first franchisor. A maid from Canada, Harper opened a hair salon, stocked with her special hair preparations. Over time, she licensed and trained working women into salons just like hers in 500 towns in the U.S. Harper didn’t keep the women as employees, but instead gave each one ownership over her own shop in an early version of the franchise system. Harper had special features at her salons that set them apart: reclining shampoo chairs, child care in the salon, and a focus on health and wellness. All the satellite salons had the same characteristics and all followed “the Harper Method.”

Madame C.J. Walker, also a hair dresser and creator of hair products, had “agents,” independent businesswomen who bought the products wholesale and sold them door-to-door. This is not the same as our modern franchise system, but it was more than a distributorship. At a time when African American women in the U.S. might expect to work as servants for $50 a month, a C.J. Walker Agent could earn $1,000 in the same time period — without much in the way of education or investment.

Part of this was the training the Agents received. They learned how to use the products, how to make sales, and how to present themselves as businesswomen. Madame C. J. Walker herself was the first American woman to earn $1,000,000 on her own, and she saw the training and support of her Agents as a central part of her business and her legacy.

The final candidate for the first franchisor would be Ray Kroc. While franchises like the businesses described above continued through the 1800s and early 1900s, Kroc came up with the first business that we might recognize as a modern franchise system. He sold mixers, and he sold more than one to a small California burger restaurant owned by the McDonald brothers. In 1954, he visited their shop to see why they went through mixers so fast and was impressed by the smooth efficiency of their system. Kroc came up with “the McDonald System” along with the brothers in 1955, sold it to franchisees, and in 1958 the 100 millionth hamburger was sold.

Whichever First Franchisor you choose, there’s no question that franchising has been the road to success for many people. Today, the franchise system dominates the business world in the U.S.

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