The Complete Guide to Buying a Franchise

Buying a franchise can be a life-changing event as well as one of the largest investments you will ever make. Just like with any other large investment, you need to perform extensive due diligence.

We have created this Franchise Buyer's Guide to help you understand the franchise buying process and everything you need to know about investing in, learning about and running a franchise business.

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How to Buy a Franchise, Step by Step

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1|Prepare Yourself

Investing in a franchise is not a decision to take lightly. There are many considerations that factor into this life-changing step.
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2|Franchise Types

There is a franchise for just about every type of investor. Learn which is best for you. Learn about single-unit, multi-unit, area developer, and master franchises.
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3|Franchise Consultants

Franchise consultants offer a free service to help you determine if franchising is right for you and identify a brand that best suits your interests, lifestyle and financial goals.
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4|Choose a Franchise

There are literally thousands of franchises available today. We offer advice and strategies for finding one that suits your lifestyle, budget and interests.
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5|Top Franchises

Check out IFPG's Top 100 Franchises and Top 10 franchises in each category. These franchises are ranked based on IFPG internal data.
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6|Franchise Fees

There are several different costs involved in buying a franchise including the franchise fee, royalty fees and more. Learn everything you need to know about these fees.
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7|Franchise Agreements

The Franchise Disclosure Document (FDD) and Franchise Agreements can be very confusing to understand. Learn exactly what you need to know about these important legal documents.
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8|Franchisee Validation

Franchise validation is a crucial step in the franchise discovery process. Learn how to prepare for it and make the most of it.
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9|Franchise Discovery Day

A franchisor’s discovery day is an important, face-to-face opportunity to learn about a franchise brand. Learn how to prepare for this exciting event.
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Things to Consider Before Buying a Franchise

Investing in a franchise can be an exciting, life-changing step. It’s an opportunity to become your own boss, gain financial independence and find work that you are truly passionate about. But, before you dive in, be sure to do your due diligence. 

What to Consider Before Buying a Franchise

Make Sure Your Family is On Board

Owning a franchise—or a business of any kind—is truly a family affair. Considering that some franchisees put their entire life’s savings into the business, you can see why family members should be part of the decision-making process. Not only could a franchise investment impact the family financially, but it can also impact the family dynamic. Franchise business owners often put in long hours in the first year. A long, honest discussion about the pros and cons of this decision is essential for potential family bliss. Items to discuss: can we afford to do this? How much can we afford to lose? Will some family members be involved in the operation of the business? If so, what are our individual roles and responsibilities? These are critical questions to consider. 

Count Your Cash

Owning a franchise can be an expensive proposition. Having liquid cash on hand is essential for the first year or so before the business becomes profitable. There are many fees that franchisees are responsible for: initial fees, royalty fees, leases, payroll, and whatever else the franchisor outlines in the Franchise Disclosure Document (FDD). It is important to understand all the financial obligations before you sign the franchise agreement.

Reach Out to Other Franchisees 

A great way to know if a particular franchise is for you is to ask other franchisees what it’s like. They have been there and can answer questions you may have. You can ask: Is being a franchise owner what you thought it would be? Are there any unforeseen circumstances you’ve run into since owning a franchise and how did you overcome them? What are some of the positive aspects of owning the business? With first-hand knowledge, they can give you a behind-the-scenes look at franchise ownership.

Do Some Soul Searching 

It is important to look within yourself and ask if you’re investing in a franchise for the right reasons. Do you truly want to be a business owner? Are you willing to ride through the tough times? Will you get out of bed every day excited to run your business? Are you comfortable leading a team and employing others? These are just some of the questions to ask yourself. 

Test the Product 

If you really want to know what a franchise is like, there’s no better way than to visit the location or test out the product. It’s easy with brick-and-mortar brands. Go in, try the workout or sample the food. With service-based franchises, you can call for services. Have your carpet cleaned or your house painted. Take note of the customer experience. Would you be proud of owning that business? If not, maybe you should look elsewhere. 

Understand What You’re Getting Into 

Being a franchisee isn’t for the faint of heart. You’re responsible for all the financials for the business and the fees charged by the franchisor. You hire the staff, order the inventory, deal with the complaints or praises of the public, and much more. It is a lot to handle and can be overwhelming. Are you up for the challenge?

Talk to a Franchise Consultant

A franchise consultant can help you decide if franchise ownership is for you. If it is, they can help you identify a franchise that best suits your interests, skillset and investment level and guide you through the entire process until you sign the franchise agreement.  

Come Up with an Exit Strategy

All good things come to an end, even franchises. What is your endgame? Will you leave your business to your children or try to sell it? Believe it or not, the best time to come up with an exit strategy is before you open for business.  

Consult With Franchise Experts 

Seek guidance from professionals such as franchise attorneys, funding experts and accountants. It cannot be overstated how important it is for you to fully understand what is in the agreement between you and the franchisor. 

Do Your Due Diligence

Always remember to do your own research before going into any business venture. Look around your area and see if the business you are considering is in-demand and doesn’t have a lot of competition for you going in. Look online for industry events and tradeshows. Read franchise books and magazines. Find out the latest franchise news. Investing in a franchise is a big decision but can be a great one if you are prepared and armed with information.

IFPG's Top 100 Franchises

SpeedPro Logo
Aamco Logo
Budget Blinds
CertaPro Painters
College Hunks
Fast Signs
Great Clips
Huntington Learning Center
Liberty Tax
Maaco
Molly Maid
Signarama
Urban Air Adventure Park

Franchise Myths and Realities

There are many misconceptions that people have about franchises. Franchises are just fast-food restaurants, right? Nope. You’ll have no freedom as a franchise owner? Not true. Here are some franchise facts that’ll dispel the myths you may have heard.  

Myth: Franchises are all about fast-food

Reality: You can find a franchise in virtually any industry. From healthcare to tech, beauty to lawn care, there is a franchise for just about every interest and investment level. 

Myth: Franchises guarantee success

Reality: While franchises come with a proven working system, it is up to the franchisee to follow it, hire the right staff, and put in the effort to make the business work.  

Myth: The business will take care of itself

Reality: While the franchisor provides a roadmap for success, the franchisee has to follow it, be present, and put in their own blood, sweat and tears to make it work.   

Myth: I'll have no freedom as a franchise owner

Reality: Yes, franchisees have to follow a franchisor’s proven system, but they do have the freedom to hire and fire employees, use the business to help the community and network and market the business locally. As long as the franchisee follows the franchisor’s guidelines, there is wiggle room for some creativity. Of course, with a franchise, true freedom comes financial independence and flexible work hours.

Myth: Franchises are for million-dollar investors

Reality: There are franchises for just about every investment level. Some low-cost franchises can be run from home and have very little overhead.

Myth: Only well-known franchise brands succeed

Reality: Every brand starts somewhere. While well-known brands offer the benefit of a built-in fan base, there are many emerging franchise brands out there that might just be the next big thing.  

Myth: You have to have the experience to be a franchise owner

Reality: While it can be helpful to have experience in the business area you want to get into, it’s more important to have general business acumen and excitement for the brand. In most cases, the franchisor can teach you everything that you need to know to run the business. 

Myth: There’s no chance of losing money.

Reality: The gap between having a successful business plan and making money from it is pretty large. The destiny of the business is completely determined by the operation of the business. Look at Subway if you think a proven business model guarantees success. The sub franchise has closed numerous units all over the country in recent years.

Prepare Yourself

How to Become a Franchise Owner

What Makes a Good Franchise Owner?

Why Do Some Companies Franchise Their Businesses?

How Do You Get Money to Buy a Franchise?

Should Spouses Own and Operate a Franchise Together?

Is the Location of a Franchise Important?

Red Flags to Watch out for in a Franchise Opportunity

Different Types of Franchise Ownership

Different Types of Franchise Ownership

Franchisor vs. Franchisee: What’s The Difference?

How to Achieve the Ideal Franchisor - Franchisee Relationship

The Benefits of a Home-Based Franchise

Working With a Franchise Consultant or Broker

The Benefits of a Franchise Broker

Characteristics of a Great Franchise Consultant

Do You Need a Franchise Consultant?

Tips for Finding the Right Franchise

Franchise Advantages and Disadvantages

Factors to Consider When Choosing a Franchise

Franchise Opportunities Beyond Fast-Food

The Fundamentals of Franchise Fees

The Costs of Owning a Franchise

What is the Initial Franchise Fee, and How Does it Work?

What are Franchise Royalty Fees?

What is an E-2 Visa?

Franchise Agreement Essentials and More

What is a Franchise Agreement?

What is a Franchise Disclosure Document?

What are Franchise Registration States?

Making the Most of Franchise Validation

Questions to Ask During the Franchisee Validation Process

How to Make Franchise Validation Calls

What to Know About Discovery Days

What is a Franchise Discovery Day?

The Do's and Don'ts of Discovery Day

How to Make the Most of a Franchise Discovery Day

Questions to Ask at a Franchisor’s Discovery Day