Franchising is the practice of using another firm's successful business model.
The term 'franchising' derived from ancient French, is defined as holding a particular privilege or right.
Peddlers in early American history, selling items from town to town, were also considered a form of franchising. Licenses were provided to general stores at military outposts as well.
Some of the well-known modern day franchises include Kentucky Fried Chicken in 1930, Dunkin Donuts in 1950, Burger King in 1954, and McDonald's in 1955.
Businesses for which franchising works best have the following characteristics:
- Businesses with a good track record of profitability.
- Businesses which are easily duplicated.
- As practiced in retailing, franchising offers franchisees the advantage of starting up quickly based on a proven trademark, and the tooling and infrastructure as opposed to developing them.