FRANCHISING
FRANCHISING
CHAPTER 1
History and Overview
Introduction
Franchising has a track record as a way to speed growth through expansion of business. Since the 1950’s, franchising has been the leading edge of business by showing impressive growth rates in overall sales and market shares. Franchising is a concept which began in the 1950's with companies like McDonald's, Burger King,
Dunkin' Donuts, Kentucky Fried Chicken,
Holiday Inn, Midas Mufflers and Dairy
Queen. Due to abuses in the sales process, states began implementing laws regulating the sale of franchises, beginning with
Since that time, 15 other states, including
Michigan, have specific state laws regulating the sale of franchises and the franchise relationship. In 1979, the
Federal Trade Commission ('FTC') passed the Federal Trade Commission Rule requiring that franchise owners provide prospective franchisees with a disclosure document containing specific information about the company's franchise offering.
The purpose of the Rule is basically two-fold:
•To provide the prospective buyer with sufficient information upon which to make an informed investment decision; and
•To ensure, pursuant to the 14 day calendar rule, that the buyer has enough time to evaluate the decision to purchase before signing an agreement or paying any money. William Cherkasky, president of the
Educational Foundation of the
International Franchise Association, considers franchising as the key to business success.
Franchising is often considered a single industry, but actually is not. Do not think that McDonald’s, Burger King, Dunkin
Donuts, and Wendy’s is all there is to franchising. Franchising is found in sixty-five different kinds of industries, from fastfood, to health care, hotels, automobiles, home cleaning, education, leisure time services, home improvement, travel, pet care, funeral services, printing, accounting, ebusiness and so forth. Nearly any brand of legitimate business that you can imagine----if it is
CHAPTER 1
History and Overview
Introduction
Franchising has a track record as a way to speed growth through expansion of business. Since the 1950’s, franchising has been the leading edge of business by showing impressive growth rates in overall sales and market shares. Franchising is a concept which began in the 1950's with companies like McDonald's, Burger King,
Dunkin' Donuts, Kentucky Fried Chicken,
Holiday Inn, Midas Mufflers and Dairy
Queen. Due to abuses in the sales process, states began implementing laws regulating the sale of franchises, beginning with
Since that time, 15 other states, including
Michigan, have specific state laws regulating the sale of franchises and the franchise relationship. In 1979, the
Federal Trade Commission ('FTC') passed the Federal Trade Commission Rule requiring that franchise owners provide prospective franchisees with a disclosure document containing specific information about the company's franchise offering.
The purpose of the Rule is basically two-fold:
•To provide the prospective buyer with sufficient information upon which to make an informed investment decision; and
•To ensure, pursuant to the 14 day calendar rule, that the buyer has enough time to evaluate the decision to purchase before signing an agreement or paying any money. William Cherkasky, president of the
Educational Foundation of the
International Franchise Association, considers franchising as the key to business success.
Franchising is often considered a single industry, but actually is not. Do not think that McDonald’s, Burger King, Dunkin
Donuts, and Wendy’s is all there is to franchising. Franchising is found in sixty-five different kinds of industries, from fastfood, to health care, hotels, automobiles, home cleaning, education, leisure time services, home improvement, travel, pet care, funeral services, printing, accounting, ebusiness and so forth. Nearly any brand of legitimate business that you can imagine----if it is