Singer sold sewing machines by licensing the right to sell them.
In the 1850s, the Isaac M. Singer Company faced a problem that most manufacturers of the era did not. Its sewing machines were expensive, mechanically complex, and required in-person demonstration before customers would buy them. The company could not afford to open enough of its own stores to cover the country.1
Singer’s solution was to grant independent businessmen the right to sell its machines in specific territories. Each licensee paid for the privilege, bought machines from Singer at wholesale, and kept the retail profit. The company expanded without spending its own capital on storefronts.2
The word franchise had existed in English since the thirteenth century, borrowed from Old French, where it meant freedom or privilege. In medieval law, a franchise was a right granted by a sovereign, often the right to hold a market or collect tolls. Singer repurposed the concept for commercial distribution.3
By the early twentieth century, automobile manufacturers and oil companies adopted similar models. General Motors and Standard Oil licensed independent dealers to sell their products under controlled brand standards.4
The modern franchise system took shape after World War II, when returning veterans with access to government-backed loans sought business ownership. Ray Kroc acquired franchising rights to the McDonald brothers’ restaurant system in 1954 and built it into a national chain, standardizing every detail from cooking times to building layouts.5
By 2024, franchise businesses in the United States generated an estimated $858.5 billion in economic output, according to the International Franchise Association.6
The franchise model offered a paradox that persists. Franchisees are legally classified as independent business owners, yet they operate under rules set entirely by the franchisor, from menu items to employee uniforms to store hours. The U.S. Federal Trade Commission requires franchisors to provide a Franchise Disclosure Document before any sale, running to hundreds of pages of obligations.7