Everything You Need to Know About Franchises in the United States

It is a business model in which a company (the franchisor) grants another person or company (the franchisee) the right to operate under its brand, system and support. In return, the franchisee usually pays an initial fee and ongoing payments such as royalties and marketing fund contributions.

It depends on the brand, industry, location and format. In the U.S., the franchisor must disclose the estimated initial investment in Item 7 of its Franchise Disclosure Document (FDD), including the franchise fee, premises, equipment, inventory and working capital. Ongoing fees are listed in Item 6.

It depends on the franchisor. Some brands do not require industry experience and provide training; others ask for management or industry experience. Review each brand’s requirements before moving forward.

Franchises can be grouped by industry (food, services, health, education, retail and more), by format (brick-and-mortar, mobile, home-based or kiosk) and by development model (single-unit, multi-unit or area development).

In general, many franchisors accept international investors, but each brand sets its own criteria. Living in the U.S. and running the business may require an appropriate immigration status, so it is advisable to consult an immigration attorney.

The full Franchise Disclosure Document (FDD), which has 23 items and must be provided at least 14 days before you sign or pay. Pay attention to litigation history (Item 3), costs (Items 5 to 7), territory (Item 12), financial performance if disclosed (Item 19) and the list of current and former franchisees (Item 20). Review the agreement with legal and accounting advice.

Options may include your own capital, bank loans, partners and, in some cases, franchisor financing. Under SBA policy in effect since 2025, SBA-backed loans require the business to be wholly owned by U.S. citizens or nationals, which may exclude many foreign investors. Always verify current requirements.

It is a nonimmigrant visa for nationals of countries with a treaty of commerce with the U.S. who invest a substantial amount of capital in a real, operating business that they direct. The law sets no fixed minimum; the investment is assessed in proportion to the business. Not every country has a treaty; check the State Department list and consult an immigration attorney.

A franchise provides a brand, a proven system and support in exchange for ongoing payments and following the franchisor’s guidelines. An independent business offers full decision-making freedom but requires building the concept, processes and brand from scratch.

It varies by brand, site search, permits and financing. The process usually includes selection, FDD review, company formation, premises and permits, training and opening. The franchisor must state the typical time to opening in Item 11 of the FDD.