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Beginner’s guideGuides to understand franchising in the United States, step by step
If you are just getting started, here are the fundamentals in the order the questions usually come up.
What is a franchise?
A franchise is an agreement in which a company (the franchisor) allows another person or company (the franchisee) to run a business under its brand, operating system and support. In exchange, the franchisee pays an initial fee and usually ongoing payments such as royalties and marketing fund contributions.
The main advantage is starting with a proven model; the trade-off is following the system’s rules and sharing part of your revenue.
How much money do you need?
It depends on the brand, industry and format. Beyond the franchise fee, consider the location, equipment, inventory, permits and working capital for the first months. Each franchisor discloses its estimated initial investment in Item 7 of the FDD.
- Decide how much liquid capital you can commit without compromising your stability.
- Set aside a cushion for surprises and for the period before the business turns a profit.
- If you are considering an investor visa, the investment must also meet immigration criteria.
What type of franchise are you looking for?
Before looking at brands, define your profile: do you want to run the business yourself or oversee a manager? Do you prefer a storefront or a mobile service model? Which industries do you know or enjoy?
- Industry: food, services, health and wellness, education, care, home, retail.
- Format: storefront, kiosk, mobile, home-based or multi-unit.
- Role: owner-operator or semi-absentee investor.
How to evaluate an opportunity
- Franchisor track record: years in business, number of units and growth.
- Unit turnover: closures, transfers and terminations in recent years (Item 20 of the FDD).
- Financial performance: if the brand publishes figures in Item 19, review them with an accountant.
- Talk to current and former franchisees: one of the most valuable sources.
- Real support: training, marketing, technology and help with the opening.
- Territory: exclusivity, size and potential of the area.
Which documents should you review?
In the United States, the franchisor must give you the Franchise Disclosure Document (FDD) at least 14 calendar days before you sign a contract or make a payment. The FDD has 23 sections (Items) and comes with the franchise agreement.
- Items 5, 6 and 7: initial fee, other fees and estimated initial investment.
- Item 19: financial performance representations, if the brand provides them.
- Item 20: units opened, closed and transferred, with franchisee contacts.
- Item 21: the franchisor’s audited financial statements.
It is advisable to review the FDD and the agreement with a franchise attorney.
What are the next steps?
Learn
Understand how franchising works and its vocabulary.
Set your budget
Decide how much capital you are willing to invest.
Explore
Research industries and brands that fit your profile.
Compare
Analyze features, costs, requirements and support.
Research
Review the FDD and talk to franchisees.
Plan
Define your financial, business and, when applicable, immigration strategy.
Official sources: FTC – A Consumer’s Guide to Buying a Franchise · SBA – 7(a) Loans
Sources consulted
Last updated: October 2026. Each brand’s terms change: always confirm the information in the current FDD.
Ready to review your case with a broker?
Book a session with a certified franchise broker and see which options fit your profile, budget and goals.