Buying a franchise business offers an exciting path to entrepreneurship without having to build a brand or create systems from scratch. Instead, you get built-in support and name recognition that can improve your chances of success right from the beginning. What does it take to buy a franchise in 2026? Here’s everything you need to know, from reviewing each step of the purchasing process to exploring financing options.
What Buying a Franchise Involves
What does it mean to buy a franchise business? The franchisor (or parent company) gives you the rights of their established brand, as well as developed systems and support, in exchange for a set franchise fee.
All of the terms and conditions are outlined in a contract that includes the obligations of both parties. Typically, the fees include startup costs as well as ongoing royalties and fees. The franchisor may also exercise certain controls and restrictions in accordance with the contract, making it important to understand what a franchise agreement is before signing.
Steps to Buying a Franchise
Here is how to buy a franchise from the idea stage to ownership.
Research franchise opportunities
There are countless franchise business models to choose from. As a potential buyer, look at industries based on your own interests and skills as well as demand in your local area. You should also compare individual franchise brands to make sure you choose one with strong systems and profit margins you’re comfortable with.
Some of the largest franchise industries include:
- New car dealers
- Malls
- Hotels
- Limited-service restaurants
- Automotive oil change shops
- Diet and weight loss centers
- Soft drink manufacturers
- Electronics retailers
- Specialty food stores
- Exam prep and tutoring
Review the Franchise Disclosure Document (FDD)
Before buying into a franchise, be sure to carefully read the franchise disclosure document (FDD). Franchisors are legally required to provide this document at least 14 days before signing any contract or making any payment. The FDD must include:
- Franchisor and business background
- Litigation history
- Bankruptcies
- Fees
- Supplier, territory, and customer restrictions
- Advertising and training details
- Renewal, termination, transfer, and dispute resolution
- Financial performance and statements
- Franchisee and franchise system information
- Contracts
Evaluate costs
You’ll need to look at both upfront and ongoing fees to calculate the true price tag.
| Upfront Franchise Costs | Ongoing Franchise Costs |
|---|---|
| Franchise fee | Royalty fees |
| Property rental or purchase | Marketing fees |
| Equipment and supplies | Employee payroll |
| Inventory | Working capital |
How Much Does it Cost to Buy a Franchise?
How much it takes to buy a franchise varies widely depending on brand, industry, and location. The following examples give you a general idea of what to expect when researching specific franchise costs.
Initial franchise fee and total investment
Your initial franchise fee could range anywhere from $20,000 to $50,000 or even more. You’ll also need to cover the costs of upfront investments, such as securing a building, purchasing equipment or inventory, and hiring staff. Those details can vary depending on the type of franchise you purchase. A fast food restaurant or a gym, for instance, will have a lot of upfront equipment costs that a mobile service business may not.
Examples of franchise cost ranges
Now let’s take a look at some of the most popular franchises in the U.S. to get a sense of their startup costs. In addition to these cash requirements, you may also encounter restrictions on how your business may be funded (such as having to use your own cash vs. gifts or loans).
How much does it cost to buy a McDonald’s franchise?
- $750,000 recommended investment minimum
- Additional $100,000 recommended for working capital
- $75,000 for relocation
How much to buy a Chick-fil-A franchise?
- $10,000 upfront fee
- No history of bankruptcy
How much to buy a Jersey Mike’s franchise?
- $10,000 development fee
- $20,000 initial franchise fee
Advantages of buying a franchise
- Established products and marketing
- Strong support system
- Financing may be more accessible
Disadvantages of buying a franchise
- Could be restrictive
- Usually need to pay an ongoing royalty fee to franchisor
- Renewal power is held by the franchisor
Financing Options for Buying a Franchise
It can be expensive to purchase a franchise considering there are both operating costs as well as franchise fees that must be paid before opening your doors for business. Most people don’t have all of the cash required. So how do you buy a franchise with no money? Here are two options.
SBA loans and traditional lenders
A term loan from either an SBA loan or traditional loan can provide you with a large portion of the funds needed to buy a franchise. SBA loans have loan limits up to $5 million, plus anywhere between seven and 25 years to repay the loan (depending on what the funds are used for). A traditional bank or credit union loan can also help get you the financing you need.
Franchisor financing and alternative routes
Some franchisors offer in-house financing, which means you borrow money from the company itself and repay the loan over time. These programs may have less stringent requirements to help you qualify even if you’re new to running a business.
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Assessing if Buying a Franchise is Right For You
How do you buy a franchise and feel confident in your decision? Consider the following factors before you move forward in your plans.
Personal readiness and goals
You’ll need a fair degree of financial stability in order to be ready to buy a franchise. On top of that, it’s a great opportunity for someone who wants to be a business owner but doesn’t want to start a brand from scratch. If you have an entrepreneurial streak but want a built-in support network along with name recognition, you could be ready.
Red flags and due diligence checklist
How do you buy a franchise without regretting it? Follow this checklist:
- Make sure fees are in line with the competition
- Consider how established the franchisor is
- Look for recent litigation and bankruptcies
- Check for high turnover rate
Buying a franchise can be a lucrative way to open a business and expedite the path to profitability. Perform your due diligence when researching options and make sure you’re financially prepared before stepping into the next chapter of your professional life.
This content is provided for informational purposes only and does not constitute legal, tax, financial, or professional advice. Laws and regulations vary by state and individual circumstances and may change over time. Readers should consult a qualified attorney, tax professional, or other licensed professional regarding their specific situation. Nothing herein creates an attorney-client relationship.
