DEVELOPMENT OF FRANCHISE INDUSTRY IN THE USA

The US Department of Commerce views the franchise marketing as one of the most creative marketing techniques of the century. In fact, many franchise companies in the USA have grown into multinational corporations, spread the US culture around the world and earned a lot of foreign currency, thereby contributing to the US economy. The sales of the US franchise market has reached up to US$ 552 billion, close to 3% of US gross domestic product. Today, I would like to talk about a few major cases of development in the US franchise industry.

The introduction of the franchise in the US began in 1851. Singer Sewing Machine, a US company, felt the need of training to sell the newly developed sewing machines. The company recruited some people for each region because there was not enough budget to hire regular salespeople. The company took franchise fee from them, and gave them the authority to sell the company’s products. The company thereby developed the world's first retail franchise model where a fixed fee will be paid once one of the products has been sold.

In the 1890s, starting from Coca-Cola, the outline of the dealer franchise model became more and more evident. Coca-Cola's headquarter manufactured and sold the concentrate of Coca-Cola to local developers. And the local developers mixed the concentrate with carbonated water and bottled them. These have grown into so-called bottling and distribution sales. In 1894, Joseph Biedenhan, a businessman in the State of Mississippi, bought a large volume of the concentrate of Coca-Cola in the state of Mississippi and sold it exclusively in the state of Mississippi. Arther Candler, the owner of Coca-Cola, developed a "Bottling System". Under the bottling system, Coca-Cola makes a contract with a Bottler (Bottle Manufacturer) in each region and gives him/her the exclusive rights to Coca-Cola system in the region. This system, where a bottler gets the concentrate of Coca-Cola and sells the bottled liquid, became quite successful.

In the early 1900s, General Motors and Ford Motors drove their attention to the sales franchise business, which allowed the franchisees to sell the cars of their company under the name of their companies without opening direct agencies. With the spread of cars, automobile repair shops and service industry franchises began to emerge. Ben Franklin of Ben Franklin Store, the first retail franchise, owned 2,500 stores at his best time. It is known that Sam Walton, the founder of Wal-Mart, started distribution business as the owner of a Ben Franklin Shop.

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