Buy a franchise


Buying a franchise is a great option for those leaving a corporate career with great management skills, a good knowledge of finance, good people skills, and an entrepreneurial spirit who want to hit the ground running! A well-chosen franchise can accelerate the pace at which you achieve cash-positive business. On day one, you can own a trusted brand, with good marketing, and well-honed procedures that take some of the risk out of buying or starting a business, a real consideration at this time in your life. Whether you have just begun to explore the idea of purchasing a franchise or have already determined that this is what you want to do, the information on these pages will help give you clarity and direction.

Am I right for this?

10 yes/no questions to help you determine if this is a good direction for you

Does buying a franchise work within my financial plan?

Do I have the funds for the initial purchase price, inventory, and working capital, or do I have access to a source of funding?

Am I prepared to run the business according to predetermined operating procedures?

Am I and/or is my family ready for the time commitment that purchasing and running a franchise will make on our personal lives?

Am I comfortable with risk?

Am I willing to do the due diligence required to make an informed decision?

Am I good at recruiting, managing, mentoring, and developing people?

Do I enjoy sales, marketing and business development activities?

Does owning a franchise fit with my long-term life plan?

Do I have a clear exit strategy so I can select a franchise that supports it?

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If you answer six or more “yes,” this is probably a good direction to pursue.

Essential traits, skills, and competencies of franchise owners

  • Marketing skills
  • Business management skills
  • Entrepreneurial mindset
  • Family support
  • Ability to follow a system

Popular franchises

  • Dunkin’
  • 7-Eleven
  • Planet Fitness
  • Jan-Pro
  • Taco Bell
  • Orangetheory Fitness
  • Great Clips
  • Mac Tools
  • Cruise Planners
  • Jazzercise
  • McDonald's
  • Mathnasium
  • Jimmy John's Gourmet Sandwiches
  • Papa John's
  • Anytime Fitness

Established brands experiencing growth

  • McDonald’s
  • 7-Eleven
  • Dunkin’
  • The UPS Store
  • Popeyes
  • Sonic Drive-In
  • Great Clips
  • Taco Bell
  • Kumon Math & Reading Centers
  • Sport Clips

Franchises in early-growth/rapid-expansion phase

  • Freddy’s Frozen Custard & Steakburgers
  • Culver’s Butterburgers and Frozen Custard
  • Planet Fitness
  • Club Pilates
  • Nothing Bundt Cakes
  • Pure Barre
  • uBreakiFix
  • Soccer Shots
  • Mathnasium
  • Kona Ice Cream

Low-cost franchises for 2021

  • Cruise Planners
  • SuperGlass Windshield Repair
  • Jan-Pro
  • Jazzercise
  • Dream Vacations

Ways to fund a franchise

  • Franchisor – many of the large franchisors also provide financing
  • ROBS Plan (Roll Over for Business Startup) – allows you to use your IRA, 401k or other qualified retirement plan for financing to start, buy or finance
  • SBA loan
  • Discretionary Funds – this should be within the structure of your financial plan
  • Family – some families pool funds to purchase a franchise, and family members can even provide initial labor


Here are questions and answers that address common issues and concerns for those interested in buying a franchise.


Why should I buy a franchise instead of starting a business from scratch?


You minimize many risks of a start-up: the brand is established, the marketing is developed, the operating procedures are in place. You can put your time and energy into your operation.  Access to funding may also be easier since there are many organizations that fund franchises. There is also typically a robust market in which to later sell you franchise, which makes your “exit strategy” more predictable.


What are some of the main factors I should consider in proceeding with a franchise purchase?

  • Your finances: Determine how much you’re willing to invest to purchase the franchise and for the initial costs of running the business.
  • Your talents and personality: Be honest about your skills and personality. For example, if you prefer to follow a formula, then franchising might be best for you. On the contrary, if you’re an experienced business owner, or like to do things your way, you may want to consider buying an existing business or starting your own.
  • The full cost of ownership: Make sure you understand what comes with a franchise purchase. In addition to the purchase price, there could be initial inventory requirement, start-up fees, state, local, and federal taxes, ongoing royalty fees, marketing fees and others.

How will I know what type of franchise would be best for me?


It depends on what you want from the franchise. If you want a reliable revenue stream and are happy to hire someone to run day-to-day operations, you have a range of choices. If you want to be actively engaged, and part of an industry for which you have a passion, and you have found a franchise that excites you, that could be good indicator that it’s right for you.


What other questions should I ask myself when evaluating whether a particular franchise is right for me?

  • Industry: Can you see yourself aligned with the market segment of the franchise and are you comfortable with the nature of the work that would be required of you personally?
  • Track record of franchise: How long has the franchise been in business?  Does it have a good reputation? Does the franchise provide active support, especially in the initial phase? Have you gotten good feedback into day-to-day operations from franchisees?
  • What you will be required to do: Are you a person who can learn another’s procedures, and willingly follow them, even when you would do it differently?  Can you commit to the time required? Are you good at evaluating employees? How much paperwork will you personally have to do?

How much do franchises cost, and how do I know if I can afford one?


The cost to buy a franchise varies by franchise system and location. The average initial investment for a single unit franchise is between $100,000 and $300,000. But franchises can be as low as $10,000, or higher than $500,000. Typically, you will need a minimum net worth and annual income (not including the franchise’s projected income) that all but guarantees you have sufficient capital to fund and run the business or qualify for financing. Then there are fees once you own the franchise.


What should I review about the finances of the franchise?  Do I need an accountant or financial advisor to help me?

  • For an existing franchise location: If you do not have a strong financial background, review the finances with an accountant or your financial planner. Most financial items to be reviewed are the same as for purchasing an existing business - the financial records for the last three years: the profit and loss, the balance sheet, and the cash flow. Look at revenue growth year-over-year. Have expenses or debt increased as a percent of revenue?  Are accounts payable current? Some red flags include a business that has negative cash flow, significant debt, or has not been able to pay its taxes, royalities, or other franchise fees.
  • For a franchise opening in a new location: You will be reliant on financial information from the franchisor. These pro forma statements are estimates used to project earnings, receivables, inventory or other quantifiables. Speak with other franchisees.  Depending upon the opportunity, a physical building may have to be constructed so you will want to keep in mind all that entails. Dig into market research - does the financial projection seem overly optimistic based on your knowledge of the location, the demographics, and economic trends?

Option Evaluator

Assess this option against the following eight criteria:

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Additional resources

Next steps:

Step 1

Determine if it makes sense for you to buy a franchise based on the “Is this Right for Me” section.

Step 2

Continue to educate yourself about franchises so you can “know what you don’t know.” Gather information from different perspectives.

Step 3

Get a 50,000-foot view of franchises by industry segment so you know what is out there. There may be franchises in types of businesses you were not aware of that may be a great fit for you.

Step 4

Consider working with a franchise consultant especially if you have never purchased a franchise before.

Step 5

If you decide to work with a franchise consultant, initiate a relationship, and work with them on your path to purchasing a franchise. Explore working directly through franchise marketplaces, which will put you in touch with franchisors.

Step 6

If you decide to work through a marketplace:

  • Evaluate the price range that works with your financial plan.
  • Select a few franchises that appeal to you.
  • Connect with the franchises; get a better feel for each one.
  • Connect with franchise owners, and learn about the day-to-day operations, especially the support you will receive.
  • Dive into due diligence including financial statements.
  • Discuss your plans with your trusted network (business peers, accountant, lawyer, business owners you know). Have them ask the tough questions about what you are considering.
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