Barbara Reyes-Bituin, MBA,

Franchises in Medieval Europe & Feudal Times (900

– 1400)

The crown in England and other parts of Europe would

franchise government land to noblemen and church officials. In
exchange for the land, the landowners would raise armies,
collect taxes and establish toll roads. Governed under
 European Common law, these were the first franchise royalty
payments. In addition, these nobles and church officials would
occasionally offer the land to farmers in exchange for a portion
of their crops.
Franchises in The Renaissance (Late 1400’s – 1600’s)

– In 1492, when Europe first discovered the continents now known as

Asia and Africa, governments and corporations financed the
exploration of the New World with franchise opportunities. These early
franchises were related to land ownership, the spice trade, travel
routes, and slavery.

– In 1641, Henry Hudson was employed by the Dutch India Company

to explore the American continents. His discovery of the Northeast
passage gave the franchise exclusive access to this lucrative trade
route. However, by 1799 the company went bankrupt and was taken
over by the Dutch government.
How Franchising Helped Develop America

Did you know that franchising helped make America the country it is
today? From the colonial era into the industrial revolution, franchises have
been at the forefront of the nation’s development. Of all the markets to the
franchise after the industrial revolution, food service scaled into one of the
largest, most impactful industries.
Franchises and The Industrial Revolution (1850’s – 1900’s)

The industrial revolution created a new supply-and-demand model in America.

Once large-scale production became possible, franchise opportunities were available
in machine manufacturing, mass-produced goods, and chemicals.
The first time a commercial franchise business model was used in America was in
1851. The Singer Sewing Machine Company, founded by Isaac Merritt Singer, offered
localized company control to owners/operators in exchange for a share in the profits.
Singer’s company also provided manufacturing equipment and support services to
his franchisee’s factories.
In 1898, General Motors sold its first auto manufacturing franchise in Detroit
Michigan.
With the soft drink industry born from mass manufacturing, the first Coca-Cola
bottling plant was franchised in 1901.
WWII And The Big Franchising Boom (1940’s – 1950’s)

With explosive consumer demand and a soaring economy, the United

States of America experienced a franchise boom after World War II.
New franchise markets emerged, including:

– automotive aftermarket cosmetics and services (Midas Muffler)

– convenience stores (7-Eleven Inc.)
– professional accounting (H&R Block)
– commercial optometry and glasses fabrication (Pearle Vision)
Restaurants Change The Franchising Game

After pairing inventive soft-serve ice cream and a family atmosphere,

 Dairy Queen offered franchise opportunities in 1940. In 1941, Dairy
Queen had just 10 locations. In just over ten years, the company
expanded to 2,600 franchise locations. Today, Dairy Queen is ranked #6 in
the Entrepreneur 2017 Franchise 500 Ranking. After franchising for 73
years, there are over 6,000 Dairy Queen locations in the United States,
Canada, China, Egypt, and over 20 other countries.
Restaurants Change The Franchising Game

 In 1952, Richard and Maurice McDonald franchised their second

restaurant location. In 1954, Ray Kroc began licensing the rights to
McDonald’s locations outside their home territory. He gave the founding
McDonald brothers ½ of 1% of the gross sales from all franchises.  By
1958, McDonald’s sold their 100 millionth hamburger. On April 21st, 1965,
McDonald’s made their initial public offering (IPO) at $30 a share. On
average, today’s McDonald’s stock trades at over 600% that initial
valuation.
 
Franchising Today in 2018

What does the world of Franchising look like in 2018?

The food service industry is still one of the most successful and profitable
businesses for a franchisee. There are more innovative companies than
ever before, and the franchise market continues to grow. Even top brand
names have affordable franchise opportunities. Franchises are now
available in almost every industry including healthcare.
 
Food is Still a Leading Franchise Model
In Entrepreneur’s 38th annual Franchise 500 ranking, four of the top five
franchises are involved in food service: 7-Eleven Inc, McDonald’s, Dunkin Donuts,
and Jimmy John’s Gourmet Sandwiches.

In Forbes Top 20 Franchises for the Buck, almost half of the franchises are in
the food and beverage industry.

According to 2017 projections by the Franchise Education and Research

Foundation (FERF), retail food service franchise locations will grow by 1.2% and
profits will increase by over $30 million.
 
Franchises are Growing

In Entrepreneur’s 2017 Franchise 500 ranking, 22% of the

responding companies started franchising their business in the past 5
years.

According to the Franchise Business Index, the American franchise

market will grow 0.6% larger than last year, with a 2.7% month-by-
month rate of growth. This estimate is derived from employment data,
output projections, and forecasted growth of franchise establishments.
The Philippine franchise business

In the latest data from the Philippines Franchising Association (PFA), the
country’s franchising industry is expected to have an increase of a whopping
25% to $31 billion this year attributed to the strong economic growth of the
Philippines.

Dubbed the franchising hub in Asia, there are various benefits associated
with owning a franchise. It is no wonder Filipino young professionals are so
drawn to its concepts.
“Ang bangus na bagong bihis!”
Franchise Fee
200,000
Investment
Php 450k - 550k
Min. Size (6 Sqm)
Formats
Cart - 450k / Counter type 550k

Franchise Fee
Promo rate: Php 90k
Regular Rate: Php 300k
(franchise now and save Php 210k)
Investment
Php 680k - 3.090M
Min. Size (4 Sqm)
Franchise Fee
Php 180,000
Investment
Php 399k - 680k
Min. Size (3 Sqm)
Formats
Mini Food Court (399k), Kiosk (680k)

Franchise Fee
500,000
Investment
Php 2M - 2.5M
Min. Size (30Sqm)
Formats
In line
 In the Philippines, the total
investment to start the Jollibee
Restaurant is around Php 35
million to Php 55 million.
Activity 1.0

1. Create a timeline of the history of franchising.

2. In no less than 10 sentences, give your idea of a franchise
business.

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aBrbara Reyes-Bituin, MBA, MPA