The USA is considered the mother country of today’s franchising. This is where the triumph of modern franchising began after the Second World War. Among the inventors of modern business format franchising is McDonald’s, a fast-food chain that used franchising to create a global network of more than 31,000 partners.
The modern business format of franchising goes far beyond the assignment of trademark rights and the disclosure of sales secrets. With a Business Format Franchise, the franchisee acquires the right of use for the business concept and the entire know-how of the franchisor in order to use it to set up his own business within the framework of a franchise agreement.
Business Format Franchising comprises an extensive service package of the franchisor, which enables the duplication of a successful business concept. In addition to the use of brands, products and services, the partners receive a methodology or system for carrying out franchise activities based on the defined business processes. In addition, the franchisor provides training and communication support for the entire duration of their collaboration and monitors the uniformity and quality of operational processes.
Worldwide significance of franchising
In the 1960s, the transfer of the American form of franchising to other countries proved difficult and hindered rapid international expansion. In the 1970s, the modern business format of franchising also made a breakthrough in Europe. New franchise systems sprang up like mushrooms and traditional companies gained new momentum through franchising. During the pioneering phase of European franchising, the focus was on the retail and catering sectors.
Franchising is now present in most countries and industries around the world. Franchising is regarded as “the most successful marketing concept of all time”. (John Naisbitt, Megatrends). The number of companies using franchising is estimated at around 10,000 in Europe alone.