History Of Franchising: Franchising In The Modern Age

Franchising.com:

Franchising really began to blossom in the post-war 1950s and 1960s. Franchisors of convenience goods and services seemed to be popping up on every corner. McDonald’s, Kentucky Fried Chicken, laundry services, dry cleaners, hotels, and rental car franchises flooded the marketplace.

One of the early franchise behemoths, McDonald’s, opened 1,000 units in just 10 years. Midas Muffler reached 400 locations, Holiday Inn grew to 1,000 locations, and Budget Rental Car topped 500, all during the same period.

But growing pains were becoming evident, and by the end of the 1960s trouble was brewing. Many franchisors had begun focusing more on the sale of franchises than on supporting and operating successful franchise systems. Others made misrepresentations in how they recruited prospective franchisees. There were other problems as well.

These misrepresentations led some states, like California, to enact laws governing the disclosure of information to potential franchisees. These states required the franchisor to deliver to a potential franchisee a disclosure document providing information on the opportunity. But it took until the summer of 1979 for the Federal Trade Commission to issue the Franchise Rule, which established minimum disclosure requirements throughout the country. Continue reading.

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