Franchise 101: How to Buy a Franchise
In 2024, franchising generated over $893B in total economic output. That’s no small potatoes. But despite the scale, many potential franchisees looking to get started say the process feels overwhelming. Too many brands, too many buzzwords, and way too much mystery around the capital.
Our guide cuts through all of that and teaches you all you need to know about how to buy a franchise.
We’re going to lay out the whole franchise buying process in plain terms, from early research to opening day, so you can make confident decisions without second-guessing every step.
Here’s what you’ll learn:
- How to find franchises that actually fit your goals, budget, and day-to-day life.
- The financing routes most people actually take (spoiler: cash up front is rare).
- What real due diligence looks like, not just kicking the tires.
- How to read a franchise agreement without needing a law degree.
- What to expect in your first 90 days after signing.
How to Buy a Franchise
| Investment Component | Typical Range | Financing Options | Timeline |
|---|---|---|---|
| Franchise Fee | $25,000 – $75,000 | SBA loans, franchisor programs | Due at signing |
| Build-Out & Equipment | $50,000 – $500,000 | Equipment financing, contractor loans | 2–4 months |
| Working Capital | $25,000 – $100,000 | Lines of credit, personal loans | Day one readiness |
| Marketing Fund | $10,000 – $50,000 | Often rolled into launch support | First 90 days |
| Total Investment | $110,000 – $725,000 | Plenty of financing paths | 3–6 months |
Step 1: Know What You’re Looking For
Start by getting real about what you want and what you’re working with. The best franchise in the world won’t help if it doesn’t match your budget or schedule.
Set Your Financial Guardrails:
- Total amount you can put in (cash financing).
- Your income goal.
- Payback period you’re comfortable with (usually 3–5 years).
- How much risk you’re willing to take.
Think Lifestyle Fit:
- Want to be hands-on or manage from the sidelines?
- Open to relocating or staying local?
- Got industry preferences?
- Need to balance with family or other obligations?
Quick Tip: Score potential franchises 1–10 across these areas. This will prevent things from getting difficult later on.
Step 2: Do the Right Kind of Research
There are over 4,000 franchise brands. That’s a lot of noise. The trick is to use real data, not just slick sales decks.
Start With:
- Market demand in your area.
- Territory maps (so you’re not boxed in).
Red Flags to Watch For:
- Unsupported growth.
- “Act now” pressure tactics.
- Overpromising on income.
- High turnover of existing owners.
- Thin training or support.
- Hidden or ambiguous financial performance data.
- A brand or service nobody in your area wants.
Step 3: Financing Is Both Common and Critical
You don’t need to walk in with six figures in your checking account. Most folks finance using one of the options below:
SBA Loans:
- Up to 90% of startup costs.
- 10–25 year terms.
- Better rates than personal loans.
- Faster if the brand is SBA pre-approved.
Other Financing Routes:
- ROBS (roll your 401(k) into the business).
- Equipment loans to cover physical assets.
- In-house franchisor financing.
- Revenue-based loans if you already have a business.
Timeline Note: Most of this takes 45–60 days. So don’t wait until you’re ready to sign. Start early.
Step 4: The Legal Stuff (Don’t Skip It)
Franchise agreements are long-term contracts. You’ll be living with the terms for a decade or more. Know what you’re signing.
Key Things to Lock In:
- Your territory (and who else can operate nearby).
- What happens at renewal?
- Fees if you want to sell.
- Performance expectations (and what happens if you miss them).
Your Team Should Include:
- A franchise attorney (worth every penny).
- An accountant to help forecast your P&L.
- Someone who’s been through this before (a mentor or advisor).
From Plan to Opening Day, Get the Help You Deserve
Buying a franchise isn’t about finding “the best brand” or chasing trends. It’s about finding the right fit; financially, operationally, and personally.
The folks who make it work aren’t lucky. They know how to buy a franchise because they’re prepared. They know their numbers, ask the right questions, build a team around them that fills in the gaps, and have the right people in their corner.
At Franchise.com, we’ve helped thousands of aspiring owners cut through the noise and get serious about business ownership. Whether you're just exploring or ready to take the next step, our tools, guides, and expert-backed insights are built to walk you through the entire process; no fluff, just facts and experience you can rely on.
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