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Rise of a Success Model: The History of Franchising

It is considered one of the most promising models for setting up a company of its own and is sometimes also referred to as the royal road of independence: Franchising has taken markets around the world by storm and has also led Engel & Völkers to success as an international real estate agent. The basics are quite simple: a central franchisor shares its successful business model with economically independent partners, for which they contribute to their sales or pay a franchise fee. This way, both sides benefit from the cooperation, often resulting in high profit margins and rapid growth. Franchising looks back on a century-long history, over which it developed into its successful concept today...

The history of franchising begins over 500 years before our real estate franchise system

If we do the research into the beginnings of modern franchising, the path leads to the France of the Middle Ages. Here is where the etymological terminology of franchising can be found: Originally, the French word "franchise" meant the liberation of subjects from duties and taxes from their respective feudal lords. Further down the road the term was also extended to the right to organize markets in the country of the given landowners - a first parallel to modern Franchising is to be recognized here : A feudal lord occurring in the broadest sense as a Franchise permits the trade using an advantage granted by him, namely the privilege of land use, to other economic actors, the "Franchisees".

To describe these or similar privileges, the term franchise was used until the 19th century before the permission for commercial use of third-party rights was associated with it in 1850.

America as the motherland of modern franchising

With colonization and industrialization, the idea of ​​franchising increasingly gained popularity beyond the borders of France. The concept of the Singer Sewing Machine Company from the USA is oftentimes referred to as the oldest franchise system in the world. In 1860, the sewing machine dealer sold the rights to sell his products using the company's name to independent dealers, creating a decentralized distribution network similar to that of many later franchise systems. Until about half of the 20th century, this so-called product distribution franchise, which has been adapted and expanded by more and more companies, gained increasing importance, especially in the USA. Beverage manufacturers, car manufacturers and representatives of other sectors developed license-based distribution systems that ensured a uniform brand identity despite independent sales partners. After the Second World War, this franchise model gradually became the business format of franchising: Instead of just licensing the trademark rights, a franchise network was created that was as uniform as possible, with a homogenous corporate identity, an identical offer and an extensive list of franchisor services such as training or central marketing. Some well-known fast food chains, fashion manufacturers and travel companies are based on the idea of ​​business format franchising, which has meanwhile become established in Europe as well. 1.6 million jobs have been created by franchisors and franchisees so far.

The development of Engel & Völkers as a real estate franchise system

Our history as a successful real estate brokerage company began in 1977 with the founding of Engel & Cie in Hamburg. Ten years later, the name changed to Engel & Völkers GmbH, since the focus has also been placed on the marketing of high-quality residential real estate. The restructuring towards the franchise model, where we are granting our brand license to independent real estate agents worldwide, took place in 1998 - since then, our network has seen exponential growth on all continents. Our 100th real estate shop was opened in 2005, and in 2006 the number of Engel & Völkers locations had already doubled. The Engel & Völkers real estate franchise now has more than 800 branches worldwide and, in addition to the sale and rental of villas, houses and apartments, has also opened up Commercial, Yachting, Aviation and Capital. Currently, Engel & Völkers employs more than 11,000 people worldwide and achieved another sales record of € 728 million in 2018. The focus will be on the digital aspects of the real estate brokerage business and investment in other business areas in the future - be part of our success story and accompany Engel & Völkers as an independent licensing partner.

Find out where you could soon open your own real estate shop by clicking this link. Our expansion team is pleased about your interest and is always available to answer your questions!

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