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First National Exhibitors' Circuit, Incorporated
exhibitors — motion pictures
Purchasing Organization — Motion Picture Exhibitors1 Cooperation for Group Buying. A group of motion picture exhibitors, organized to secure the economies of group buying and to protect themselves against large competitors, was faced with the problem of maintaining its identity. Each member of the organization was granted a franchise which enabled him to exhibit films and to distribute sub-franchises to other exhibitors. A leading competitor was endeavoring to purchase the theaters of the franchise holders and thus gain control of the organization. The latter undertook to maintain its identity by means of a voting trust agreement.
(1919)
In 191 7 a group of between 20 and 30 motion picture theater operators who wished to obtain for their screens motion pictures of better quality than they had been able to get in the past and to secure the benefits of group buying, formed First National Exhibitors' Circuit, Incorporated, an organization to buy and distribute motion pictures. Prior to the formation of First National Exhibitors' Circuit, Incorporated, three attempts had been made to organize exhibitors into a cooperative buying combination or company. All these had failed. First National Exhibitors' Circuit, Incorporated, bought pictures direct from producers and turned them over to its members. The members had franchises from it for exhibition of the pictures in their own theaters and for resale to other exhibitors.
In 19 19 the corporation found that certain producing companies which had been opposed to its formation were making a decided effort to buy the theaters of some of the members and thus to obtain their rights in the corporation and eventually to control it. The corporation, desiring to retain its own identity, was confronted with the problem of preventing outsiders from buying the franchises of its members. Experience also had led the executives to believe that it was desirable for the corporation to secure greater centralization of control over the methods of distribution and to have more direct relations with the exhibitors to whom its members were selling pictures than it had had in the past.
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