Buying an existing franchise

A franchise resale means the current owner sells to you, instead of the brand selling you a brand-new site. Under the federal franchise sales rule, a resale carried out by an existing franchisee without the franchisor taking part falls outside what the Rule counts as a franchise sale.

The franchisor is the business behind the brand, and it signs an agreement with each owner. Even in a resale, the brand's paperwork controls whether and how a site can move to a new owner. That paperwork is the Franchise Disclosure Document, usually shortened to FDD. Every brand has to produce this lengthy document, and it's divided into numbered parts known as Items.

Within the FDD, Item 17 covers renewal, termination, transfer and dispute resolution. It comes as a table, and among its entries are rows covering the franchisor's approval of a transfer. Looking at those rows first shows you what the brand wants in place before it accepts you as the incoming owner.

You'll also find a row covering the franchisor's right of first refusal in Item 17. That right lets the brand step in and buy the business itself before you can. Where that row applies, the deal you worked out could end up going to the brand rather than to you.

Item 20 sets out how many outlets a brand operates, including a separate table covering transfers of franchised outlets. This table tells you how frequently owners have sold their sites on, which is handy to know when you're the person buying next.

Item 20's main table also reveals whether the brand is expanding or contracting. The Minnesota registry holds two real cases where outlet numbers dropped year after year between 2023 and 2025.

At the end of 2025, neither brand ran any company-owned outlets, so each location counted here is in a franchise owner's hands. A shrinking number won't explain why sites closed, but it's a fair question to put to both the seller and the brand. Our guide to Item 20 goes into more depth.

An FDD won't price an existing site for you, but it offers two handy benchmarks against the asking price. Item 7 lays out the cost of building a new location from nothing, while Item 19, where a brand chooses to publish it, states what locations bring in.

When a seller wants more than the Item 7 new-location range, you'd expect a solid explanation, like sales that top the brand's own Item 19 number. The Item 6 royalty keeps coming out of whatever sales you inherit, so it shapes what the site is actually worth to you. The guides to Item 7 and Item 19 walk through each number in greater detail.

Plenty of buyers fund the purchase with a loan guaranteed by the Small Business Administration. When you're buying an existing business, SBA rules call for a 10% equity injection. That's the part of the project you put in yourself, while the loan covers everything else.

At that rate, your $50,000 in cash pairs with a $500,000 purchase alongside a $450,000 loan. Put in $100,000, and the purchase can climb to $1,000,000 alongside a $900,000 loan. Our guides to the SBA franchise loan and to franchise financing explain how these loans work.

When you're choosing between sites from different brands, placing their FDD numbers side by side helps. All the figures on this site are drawn from each brand's most recent FDD filed with the Minnesota Department of Commerce registry. Use our franchise cost comparison tool to set two or three brands side by side, or browse the full table.