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Understand a franchise before you buy one.

The brand is the start. Check the costs, the contract and what other owners say before you sign.

Read these parts of the FDD first.

A franchise disclosure document (FDD) has 23 items. These cover the money, the rules and the people.

  • Items 5 to 7: what it may cost

    The initial fee, ongoing fees like royalties and advertising, and the estimated opening investment. A range isn’t a quote.

  • Items 8, 11 and 12: what you can decide

    Required suppliers, the training and support the franchisor describes, and your territory rights.

  • Item 19: claims about earnings

    Not every FDD has one. If it does, check what’s measured, which outlets are included and the period it covers.

  • Item 20: other owners

    Openings, closures and transfers, plus lists of current and former franchisees. Call some of them.

  • Items 17 and 22: the way out

    Renewal, ending the agreement, selling it on, and the contracts you’d sign. Have an attorney read them.

Talk to people who’ve done it.

A franchisor explains the offer. Owners explain what it’s really like. Your advisors help you weigh it.

Find the right kind of help

  • Ask franchisees

    “What did opening really cost, and what would you do differently?”

  • Ask your accountant

    “What happens to my cash if sales take longer to build?”

  • Ask your attorney

    “What am I committing to if my plans change?”

A few things worth knowing.

What is a franchise disclosure document (FDD)?

It’s the document a franchisor must give you before you buy. Its 23 items cover fees, costs, rules, any earnings claims, other owners and the contracts. Under the FTC Franchise Rule, you must get it at least 14 days before you sign or pay anything to the franchisor.

Does an FDD tell me how much I’ll earn?

Not always. A franchisor doesn’t have to share earnings claims. If it does, they’re in Item 19. Check what’s measured, which outlets are included and the period. Past results don’t promise yours.

How much does it cost to open a franchise?

Look at Items 5, 6 and 7 for the initial fee, ongoing fees like royalties and advertising, and the estimated opening investment. A range isn’t a fixed quote, so plan for extra cash and your own living costs while sales build.

Plan working capital

Is buying an existing franchise different from opening a new one?

Yes. For an existing franchise, start with the business’s own sales, costs, lease and team. Then check the franchisor’s transfer approval, fees and any required upgrades. Ask an attorney which disclosure rules apply.

Find a business to own

Does SMB rank franchises or recommend brands?

No. SMB doesn’t rank brands, confirm territories or predict your earnings. Before you sign, have an attorney and an accountant look at the deal.

Read SMB’s standards

Bring your franchise questions.

Tell SMB which franchise you’re looking at. It helps you list what to check and what to ask before you sign.