Franchising from the very beginning: where did it all start?

Before we dive into what franchising is and how it works, it’s worth going back in time to see where this business model came from and how it has revolutionised the global economy. Today we usually associate franchises with brands like McDonald’s or Starbucks, but the roots go much deeper – back to the 19th century in the United States.

At first, franchising was used by manufacturers of sewing machines and later by car makers who wanted to build networks of authorised dealers. The real boom came in the 20th century, which shows that this is a model that keeps evolving and adapting to modern needs.

What is franchising – definition and key elements

In its simplest form, franchising is a system for selling goods, services or technologies based on close cooperation between two legally and financially independent parties: the franchisor and the franchisee.

The franchisor owns the brand, the business concept and the know-how, while the franchisee buys the right to run a business under this brand in exchange for specific fees.

The key elements that explain what franchising is and how it works are:

• Brand licence: The franchisee may use the franchisor’s name, logo and trademarks.
  
• Know-how: The franchisor passes on all the knowledge, procedures and trade secrets that led to success.
  
• Support: The head office provides training, marketing, supply and day-to-day operational support.
  
• Financial contribution: The franchisee pays an initial fee and ongoing fees (for example a percentage of revenue).
  

Franchising eliminates many of the problems linked to starting a business from scratch and gives you confidence that you enter the market with a product or service that has already been tested and proven.

What franchising means – pros and cons

When you choose a franchise, you should be aware of both its advantages and its potential downsides.

Pros:

• Lower risk: You operate under an established brand and follow a proven business model.
  
• Support: You receive comprehensive training and help with management.
  
• Scalability: Franchise systems often make it easy to open additional locations.
  

Cons:

• No full autonomy: You must follow the standards set by the franchisor.
  
• Costs: On top of the initial investment, you need to pay ongoing fees.
  
• Brand dependence: The success or failure of your business is strongly tied to the reputation of the whole network.
  

Rentabox24 – what franchising looks like in a modern version

In the context of how franchising has evolved, Rentabox24 is a great example of an innovative approach. Traditional food or retail franchises usually require high operational involvement and a lot of work. Rentabox24, on the other hand, is transforming the self-storage sector by offering a passive investment model.

• Answer to the question “what is franchising in the Rentabox24 version?” It is an investment in an automated business that does not require day-to-day supervision and at the same time gives full access to knowledge and operational support.
  
• How does Rentabox24 work? The model is based on generating income from renting storage modules while keeping the franchisee’s involvement to a minimum, thanks to an innovative management system that runs remotely and almost fully unattended. This makes Rentabox24 a unique answer to what franchising means in the 21st century.
  

FAQs: what is franchising?

• What are some historical examples of successful franchises? At first, franchising was used by sewing-machine manufacturers and later by the automotive industry (for example General Motors). Global success came with fast-food chains such as McDonald’s, which showed how franchising works on a mass-market scale.
  
• What is the difference between “hard” and “soft” franchising? Hard franchises are based on very strict standards and little freedom (like McDonald’s). Soft franchises allow more flexibility, especially in marketing or local adaptations. Thanks to its automation, Rentabox24 is a largely passive franchise that provides support while keeping operational effort low – that is its unique feature.
  
• How does franchising work in the service sector? Service franchises are based on granting a licence to provide services under an existing brand. This can be an education or cleaning franchise, as well as self-storage concepts that – just like Rentabox24 – offer a complete system for process and customer management.
  

Why is franchising so relevant in the 21st century? In the 21st century, franchising means more automation and a focus on passive models that let you generate income without dedicating all your time to the business. Concepts like Rentabox24, which combine investment in real assets with smart technologies, represent the future of this business model.