History of Franchising

The word “franchise” traces back to the Medieval Age when the word “franchise” meant a sort of warranty or privilege that the powerful laymen lords and the clergy allowed to pre-existing or new established communities like the cities precisely “franked”.

The franchise included the right to form part of a city, exact duties of payment of taxes, support the Lord or the warden in the exercise of justice and the right to make citizens exempt from personal services or social and labor charges.

It is clear how the franchise was understood as a relationship of “quid pro quo” between those who gave favors and services in exchange for labor and taxes.

Closer to our own time is the meaning of “franchise” from the previous century, in France where Jean Prouvoust, the holder of textile industries in Roubaix instructed his young employee to create the first chain of Roubaix wool mills nationwide, under the name of “Laines du Pingouin”.

On the eve of World War II, in 1939, the Pingouin franchise network had about 350 franchisees. Today, there are more than 1,200 retailers.

 


In the 30s the concept of franchise took shape and spread, thanks to multinational General Motors, which to avoid an antitrust problem, conceived the first contract with legal effects in that sense, to associate automobile dealers and retailers more freely with the parent company.

In Italy the official start of the Italian franchise dates to on the 18th of September 1970, when the company Gamma d.i. inaugurated the first affiliate network in Fiorenzuola, which nowadays has 55 stores directly managed by franchisees.

The term actually as it is in continuous semantic and conceptual evolution; to date franchising indicates a legal agreement, via a contract, between a contractor (the “franchisor”) which provides its brand, image and visibility, and the “franchisee” who pays a fee, called a Royalty for the rights and guarantees received.

 

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