Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees). This type of license grants a franchisee access to a franchisor's proprietary business knowledge, processes, and trademarks, thus allowing the franchisee to sell a product or service under the franchisor's business name. In exchange for acquiring a franchise, the franchisee pays the franchisor an initial start-up fee, management and/or annual licensing fees.

The franchise business model has an interesting history in the United States. The concept dates to the mid-19th century, when two companies - the McCormick Harvesting Machine Company (we were an agrarian economy in those days) and the I.M. Singer Company - developed organizational, marketing and distribution systems recognized as the forerunners to franchising. These then novel business structures allowed McCormick...