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The concept intrigued people with entrepreneurial spirit.However, there were serious pitfalls for investors, which almost ended the practice before it became truly popular.
The boom in franchising did not take place until after World War II.
For example, several decades later, General Motors Corporation established a somewhat successful franchising operation in order to raise capital.
Perhaps the father of modern franchising, though, is Louis K. In 1902, Liggett invited a group of druggists to join a "drug cooperative." As he explained to them, they could increase profits by paying less for their purchases, especially if they set up their own manufacturing company. About 40 druggists pooled ,000 of their own money and adopted the name "Rexall". The chain's success set a pattern for other franchisors to follow.
Nevertheless, the rudiments of modern franchising date back to the Middle Ages when landowners made franchise-like agreements with tax collectors, who retained a percentage of the money they collected and turned the rest over.
For example, in 17th century England franchisees were granted the right to sponsor markets and fairs or operate ferries.
Consequently, franchising was not a growth industry in the United States.