In 1881, cotton gin builder Daniel Haynes lived in Sealy, Texas, located west of Houston. He began making cotton-filled mattresses for his friends and neighbors. In 1889, he patented an invention that compressed cotton for use in his mattresses. Eventually the mattresses became so popular he was able to sell the patents to manufacturers in other markets. The term "Mattress from Sealy" was coined to describe what was produced.
During 1906, after much success as an advertising executive, Earl Edwards purchased the patents and gained manufacturing knowledge from Haynes. Edwards took the name "Sealy" for his new company and expanded it to a national market.
Due to lack of funding for manufacturing, Sealy expanded using a licensing-expansion similar to that of Coca-Cola. By 1920, Sealy had 28 licensed plants and was the first mattress company to expand using a licensing program.
During the Great Depression the mattress industry was hit hard. Sealy lost most of its licensees and narrowly escaped bankruptcy itself. The company consolidated with the surviving licensees and created what is now known as Sealy, Incorporated.
Sealy operated as a franchisor out of its Chicago headquarters. Its licensees were, under the terms of their licensing agreement, only supposed to sell in a designated trading area that did not conflict with those of other franchisees. The largest licensee, Cleveland-based Ohio Mattress Company (founded by the Wuliger family and still operated by Ernest M. Wuliger), defied these restrictions and sold into markets reserved for other franchisees. The conflict resulted in Ohio Mattress filing an antitrust suit against Sealy in 1971. The issue was decided fifteen years later with a near-total victory for Ohio Mattress. Unable to come up with the $77m award, Sealy Incorporated and all but one of the other franchisees were forced to sell to Ohio Mattress, and the company became the world's largest bedding manufacturer by sales.