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Pemberton licensed selected people to bottle and sell the drink, which was an early version of what is now known as Coca-Cola.His was one of the earliest—and most successful—franchising operations in the United States.In return the franchisee pays certain fees and agrees to comply with certain obligations, typically set out in a Franchise Agreement.The word "franchise" is of Anglo-French derivation—from franc, meaning free—and is used both as a noun and as a (transitive) verb.For the franchisor, use of a franchise system is an alternative business growth strategy, compared to expansion through corporate owned outlets or "chain stores".Adopting a franchise system business growth strategy for the sale and distribution of goods and services minimizes the franchisor's capital investment and liability risk.(Even Colonel Sanders did not initially succeed in his Kentucky Fried Chicken franchising efforts.) Still, the Singer venture did not put an end to franchising.Other companies tried franchising in one form or another after the Singer experience.
As the United States shifted from an agricultural to an industrial economy, manufacturers licensed individuals to sell automobiles, trucks, gasoline, beverages, and a variety of other products.
The Singer Company implemented a franchising plan in the 1850s to distribute its sewing machines.
The operation failed, though, because the company did not earn much money even though the machines sold well.
Franchising is not an equal partnership, especially due to the preponderance of the franchisor over the franchisee.
But under specific circumstances like transparency, favourable legal conditions, financial means and proper market research, franchising can be a vehicle of success for both franchisor and franchisee.