The Franchise King®

Imagine a World With No Protected Franchise Territories

 

Vancouver Riot

(This post may contain affiliate links. Please read my disclosure policy).

 

When Henry Ford’s assembly line started cranking out automobiles in 1914, an efficient distribution system had to be put in place to move all of this new metal. Henry Ford, (and to some extent, General Motors) introduced franchises/dealerships to courageous entrepreneurs in cities and towns all over America.

In the early days, there were no up-front franchise fees;  the first automobile franchise owners were able to lower their up-front capital costs. It took some of the risk away.

 

 

Pioneers

 

 

Van Ness Avenue Auto Row Car Dealerships, San Francisco

Van Ness Auto Row in the 1920’s



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The excitement created by Henry Ford’s automobiles, and the mass-production of them must have been incredible. Trips that used to take an entire day, could all of a sudden be done in hours. The Model T changed everything. Soon, other manufactures like General Motors appeared on the scene with their own automobiles.

Our country’s first automobile dealers…the franchisees, must have been a fearless bunch. As promising as this new mode of transportation was, there were no guarantees that they would sell. Just like in any business, a buyer had to show up, and a seller had to have the product. A transaction had to take place. Cash had to change hands. Being one of the first franchisees must have been scary.

The earliest franchisees had a franchise contract that was only a couple of pages long. It was written in fairly uncomplicated terms. The franchisee had a defined territory in which he could sell automobiles.

 

 

Except For One Little Thing

 

I wrote that the franchisee’s territory was defined. But, it was not exclusive. Riots could have ensued!

Manufacturer could grant other franchises in this, “defined territory.” Not only could other franchises be granted, the manufactures could sell automobiles anywhere they wanted to, because they also had the right to open up sales outlets that were not franchises; they were, “company stores.”

So, while the earliest franchisees didn’t have to pay an up-front franchise fee, they had to have a lot of faith. The faith that I’m talking about isn’t the religious type. They had to have enough faith in the product.

 

A product that absolutely, positively, changed our lives forever.

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joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

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There are many people in the franchise business who claim to to be experts in the field. Unfortunately many of them lack both knowledge and integrity. Joel, however, is without question one of the most qualified and principled people I know, in or out of his industry."
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