The mid - 1800's saw the first real Business Format Franchise when franchising as an actual business strategy was introduced in North America in the 1850’s with Singer Sewing Machines.  At that time, North America was mostly a vast wilderness dotted with isolated towns and villages.  Singer sewing machines were heavy, cast iron contraptions that were expensive to buy and difficult to transport.  Although there was a demand for the machines throughout the farming communities of North America, the difficulty lay in getting them out to the people who wanted them and servicing the machines as needed.  Someone at Singer devised the notion of granting an “exclusive” license to only one storeowner in a given town or village in return for a nominal royalty for the use of the trade name. Hence, that store would be the only business that could sell and service Singer Sewing Machines in its area.

Once the storeowner hung a sign over his store proclaiming, “Singer Sewing Machines Sold and Serviced Here,” the women in the community visited his store for the latest Singer Sewing Machine models, accessories and service. While they were in his store, they would purchase their flour, sugar, planting seed, cloth and other farming supplies at the same time. Hence, the local storeowner was doing more business than his competitors because he was able to take advantage of the customer demand or goodwill associated with the Singer Sewing Machine “Brand” or trademark. 

Raymond Albert Kroc (“Kroc”), born in Chicago, Illinois, became a volunteer ambulance driver in World War I, a dance-band musician, a salesman, a representative for Lily-Tulip paper cups and plates, and, later in his career, a promoter of a milk shake mixing machine. Never completing high school, Kroc espoused a conservative, anti-regulatory philosophy, and fought for a modification of the minimum wage law to allow entrepreneurs to employ teenage and student workers.

In 1954, Kroc visited the McDonald brothers' small San Bernardino, California, hamburger stand, because he was curious why the brothers needed so many of Kroc’s milk shake mixers. What Kroc found was a specialized labor system that produced quality sandwiches at an affordable price. Kroc obtained the exclusive license to market the McDonald name and methods, and founded McDonald's Corporation. Kroc also opened a drive-in location in Des Plaines, Illinois, to demonstrate the business format's profitability.

Along with his associate, Harry Sonnenborn, Kroc purchased the land to build franchise locations, and then rented the real estate to franchisees on long-term leases. This action increased access to capital funds. In 1957, there were 37 McDonald’s locations, by 1959 there were 100 locations, and by 1961, there were 228 locations. McDonald’s meteoric rise continued. In 1977, Kroc assumed the title of Senior Chairman. By 1980, there were 5,000 McDonald’s locations, and by 1987, there were 10,000. At that point, McDonald's estimated that it had sold 65 billion hamburgers to the eagerly consuming public. It has been estimated that McDonald’s purchases 7.5% of the total potato crop production in the United States.

B. KFC The story of Harlan Sanders is equally intriguing. In the Great Depression era of the 1930's, Sanders operated a gas station in Corbin, Kentucky, feeding weary travelers a unique fried chicken that earned Sanders accolades from the governor of Kentucky. From gas station owner to restaurateur, Sanders’ business flourished until 1955, when the new interstate road system left him impecunious, as his chicken restaurant was not sufficiently close to the interstate. In 1956, Sanders took to the road and convinced restaurateurs in Kentucky, Ohio, and Indiana to pay him a five cent royalty for using his proprietary recipe.

By 1960, there were 200 KFC franchised outlets, by 1963, 600 outlets, and by the end of the decade, approximately 1,000. Sanders managed the burgeoning company from his home in Shelbyville, Kentucky, with a relatively modest staff. KFC continued to grow, reaching the 6,000 mark in the 1980's, and eventually 10,000 outlets.