A One Minute History of Franchising
In the beginning, there was trade name franchising. Early in the century, this innovation revolutionized the distribution of branded products like soft drinks and automobiles. This was the first wave, and many of the companies who pioneered these structures are still using them, nearly a century later.
     Although the second wave (business format franchising) had its roots even earlier, it only began its roll in the 1930s through the efforts of innovators like Howard Johnson's. Coming of age in the 1960's, this method has now been applied to thousands of businesses in more-or-less "cookie cutter" fashion, with fast food brands being probably the best-known examples. Since its excesses were curbed by regulations in the 1970s, it has become a mature business form.

The Third Wave: Tapping the Untapped Power of Franchising
The story of franchising's third wave is currently being written by companies who are employing a whole range of franchising tools and concepts in innovative ways.Why now?
      Historically, the distribution systems of many companies have often the most under-analyzed, under-innovated components of their businesses. Top management's attention has been focused on other areas. However, this is starting to change. For a surprising number of companies, third wave franchising techniques can mine tired distribution systems for new nuggets of opportunity and efficiency -- even for companies who have never given franchising a second thought, or who have tried traditional franchising approaches and found them wanting.
      A few benefits. Third wave techniques can generate major growth without major overhead; they can help companies employ capital more efficiently; they can propagate brands more cost-effectively; they can allow large companies to act more decisively and entrepreneurially without radical cultural surgery. And, of course, they can be a source of new revenues and profits.
      For some examples of specific third wave techniques, see our Third Wave at Work page.
     For some myth-debunking on franchising see the article Some Plain Talk About Franchising in our Publications section.

Waves are a useful metaphor for describing the evolution of franchising. The third wave is now rolling in.