Franchising

The system of franchising began in the United States during the mid-nineteenth century, when get-rich-quick schemes abounded. The concept started with manufacturers who wanted to expand retail operations without spending their own capital and franchisees who wanted to start their own business without risking everything on a new idea.

The American beverage industry began to franchise during the early twentieth century. The Coca-Cola Company began franchising bottlers in 1899. By 1921, there were more than 2,000 bottlers throughout the nation. A&W Root Beer franchised its first outlet in 1924. It sold territorial franchises, in which franchisees were given a vast territory, such as a major city, a state, or a group of states. They then could sell franchises to others in a pyramid scheme. While A&W root beer quickly achieved national prominence, the system of territorial franchises had serious problems other than the image problem described above. One A&W franchisee was J. Willard Marriott, who bought the franchise for Washington, D.C., in 1927. He went on to create one of America’s largest hotel chains, Marriott Corporation, which later created the franchise fast food chain Roy Rogers.