In the 1850s Isaac Singer sold the rights to local business people to teach customers how to use the Sewing Machine. In exchange for the right to sell the product, the business people paid Singer license fees which helped him build his Manufacturing facilities. This was the beginning of Franchising! McDonalds in the 1950s spearheaded the growth of service industries to help the millions of servicemen returning from the war. Many of these veterans wanted to run their own business, but didn’t have the knowledge or capital to develop a business concept from scratch.
As Franchising grew many people lost their money due to unscrupulous Franchise Companies who sold franchises and then took their money and ran! Both the government and the industry stepped in to clean up the industry to save the concept of franchising. The International Franchise Association (IFA) was founded in 1960 and has since worked to enhance the professionalism of the industry. The IFA is now the world’s largest clearinghouse and voice of franchising. In 1979, the U.S. Congress gave the Federal Trade Commission (FTC) the authority to regulate the Industry. The FTC developed the rules behind the Uniform Franchise Offering Circular (UFOC) which must be given to all people interested in buying a franchise before the Company can accept any money. The information in these documents provides the potential buyer with background information about the Company and lists 23 items that cover just about everything you’ll need to know about the Franchise. This document contributes greatly to distinguishing a good Franchise from one you should run from! In July 2008, the UFOC was slightly changed and is now called a Franchise Disclosure Document (FDD).