Franchise Agreements And Transfer Opportunities

Introduction

Franchising as a concept originated in 1851 when Isaac Singer invented the sewing machine; he did not have the capital to produce or customers - due to a lack of knowledge on how to use the machine. Thus, he formed agreements with sellers to solve these problems. Singer gave territorial franchises to sellers and formed the capital to produce the machine with the fee collected from those sellers. The sellers began teaching customers the principles of the machine, and accordingly Singer was able to reach more customers. Franchising later became a widespread practice in the 1960's. Franchising allows the franchisor to break into new markets and the franchisor's trademark becomes introduced to a greater market providing the finances for further production, sales and marketing. It is also advantageous for the franchisee as the franchisee buys into a system which is already tried and worked, and therefore eliminates the risks of starting a new business.