How to buy a franchise, step by step

Look at your own money first, since it caps which brands are even on the table. The FTC asks if you'll need financing, where it would come from and what your credit score looks like. It also asks how much you could stand to lose. That answer counts just as much as the first one.

If you plan to borrow through the SBA, the SBA rules call for a brand-new business to have an equity injection worth no less than a tenth of the whole project cost. That injection is simply the cash you put in yourself, like a down payment on a home. Because of that rule, more cash on hand means a bigger project. Put in $50,000 of your own, for example, and the largest project you can support is $500,000, with a loan covering the other $450,000. The franchise financing tool works this out for your own cash.

Your lender makes the final call on whether you qualify, and these cash and project amounts only show the ceiling a given sum of cash can carry. For more detail, see franchise financing and the SBA franchise loan.

You'll find each brand's costs in its FDD, the Franchise Disclosure Document. That's the official booklet a franchisor has to give you before you buy. Item 7 estimates what it will cost you in total to open, and Item 5 lists the upfront fee.

On top of that there's a royalty, the slice of your sales that goes to the franchisor for as long as your agreement runs. The FTC points out that royalties come due even in months when you're losing money. Here are 2 actual brands, based on 2026 FDD figures.

Home Instead estimates it costs between $92,640 and $350,550 to open, with a $54,000 upfront fee. After that it takes 5% of your sales as a royalty and another 2% for marketing. It publishes earnings figures in Item 19, where the headline figure is average yearly sales of $2,750,876 for 611 US franchised businesses open all of 2025, and Item 20 counts 626 outlets. Read the full Item 19 with an accountant before relying on that number.

Mathnasium estimates it costs $127,316 to $165,846 to open and charges a $49,000 upfront fee. Its royalty is 10% of monthly gross receipts plus a flat $650 each month, while the marketing fund runs $250 a month plus 2% of gross receipts. It also publishes earnings figures in Item 19, and Item 20 counts 1,043 outlets.

Those initial fees sit close together, but what you pay over time is very different. Mathnasium adds a fixed monthly charge to its percentage, so something is owed even when business is slow. You can line brands up side by side with the cost comparison tool, and there's more on how the fee stacks up against the royalty.

The FDD contains 23 required items, and you're entitled to time with them. Federal rules say it must be in your hands at least 14 calendar days before you sign or pay anything.

A few items are worth extra attention. Item 15 tells you whether you must be the one running it day to day, which matters if you were hoping to hold on to your current job. Item 20 names every current franchisee and gives each outlet's address and phone number. Item 19 gives earnings figures when a brand decides to publish them. For deeper reading, open the franchise disclosure document first, then check the pages for Item 7, Item 19 and Item 20.

Yes. The FTC says speaking with franchisees may be the most dependable way to verify what a franchisor claims. The FDD lists current owners plus those who left during the most recent fiscal year, so you can hear both sides.

The FTC recommends owners with a little more than 1 year in business. They can share their actual total investment and whether they're breaking even. Ask if they opened on a sensible timeline. Also ask how the franchisor's training, opening support and advertising went in practice.

If the franchisor invites you to a meeting, often called a discovery day, use it to ask about training, opening help and advertising, then compare the answers with what current owners told you.

No matter what happens that day, the 14-day rule still holds. You don't need to sign or pay anything until at least 14 calendar days after you receive the FDD.

Ahead of committing, the FTC suggests you talk with an accountant and a lawyer. The accountant can check the cost figures against your own finances, and a lawyer can review the contract alongside you. For more detail, see getting help from a franchise lawyer or a franchise consultant. Should you prefer to step into a business that's already up and running, see buying an existing franchise.