What to know before buying a franchise business?

January, 13 2020

Are you considering buying a franchise business? This is not just buy a business idea, but a specific way of doing business. Before venturing into the world of entrepreneurship, you should follow some steps.

The franchise business model offers the ability to grow under a common brand and share in the benefits and the know-how.

There are definitely advantages but also disadvantages, so pay attention to this article if you want to success.

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“According to the International Franchise Association, almost 4% of all small businesses in the U.S. are franchises. It’s an industry that generates more than $ 2.1 trillion and employs 18 million Americans"

International Franchise Association

buying franchise business


What to know before buying a franchise business?

1. Is it a good idea to buy a franchise?
2. What are the disadvantages of a franchise?
3. How much do franchise owners make a year?
4. Least expensive franchise to own.


Is it a good idea to buy a franchise?

Starting a franchise is quite different from starting your own business. With a franchise business, you will have a support team from the beginning, the risk factor is considerably less and franchise businesses have higher rates of success.

You are building a business based on a proven model but make sure you understand what is involved. Here you will find important things to do and be aware of before buying a franchise business:

  • Do your own research

No business transaction should happen without investigate everything you can about the the franchise. Also, read  the disclosure statement carefully. This is a document which includes great information about the brand, its franchises, and its revenues.

  • Talk With others Franchisees

It will help you to have an honest conversation with people who have been in your position. You should ask them some relevant questions, for example how much support they receive from the franchisee or if they would invest on it again.

If you talk to other franchisees you will not repeat their mistakes and you will learn from them, know what were the challenges, if they failed, what were the factors that caused that to happen or how long did it take to start to make a profit.

buying cheap franchise

  • How much you need to invest

In addition, you need to know the total investment to get your franchise and also how you are going to finance the business, in the case you can not afford the price from the beginning. 

Getting a franchise can involve marketing costs and also you need to know that even if you are getting a well-known franchises like McDonalds, customers have to discover your new location. This total inversion should include the purchase costs and the opening inventory as well.

  • How is the franchisor?

You need to do your research and know everything you can about for how long has this company been in business. If a franchisor is new does not mean it is not a great opportunity, but the more you know, the more you will success.

It is very usual that franchisors create operations manuals and training programs for their franchise owners that cover marketing, operations, accounting, technology and other areas that are specific to the particular business model. Make sure they offer you this kind of documents.

One of the hardest things is asking for help when things are going wrong. But if you know that the support will be there and that the franchisor is willing to help, the process will be a little easier.

know how franchise business

What are the disadvantages of a franchise?

It's important to know both the pros and the cons of buying a franchise.

Of course, each business is different, but all franchisees share a lot of benefits including:

  • Marketing resources, not typically available to small, independent business owners.

  • The benefit of recognized and proven service marks, information, patents or designs.

  • A lower risk of failure and/or loss of investments than if you were to start your own business from scratch.

  • Operational support from the franchisor, both before and after launching your business venture, in areas such as financing, accounting, employee training and operational procedures.

In the other hand, here you can find the cons of buying a franchise:

  • If you are the kind of person who likes to do things by your own, you need to know that, as a franchisee, you will have rules regarding what you sell, how you sell it or what your location looks like.

  • Starting a business will always come with risks such as competition or economy that you can not control.

  • Hardworking is a must. If you are a hard working person, the business is more likely to success.

  • You should pay royalties to the franchisor on a weekly, monthly or yearly basis.


How much do franchise owners make a year?

If you love what you do, that is the only way to succeed. But it will depend in the franchise. There are big franchise as McDonalds where you need to invest a lot but you will be sure that you will make a huge profit.

Of course, if you are working and you are happy, it means a higher productivity, so more incomes.

Nevertheless, according to The Franchise Investigator website, the median annual income of a franchise owner was between $75,000 and $125,000. The website claims that 30 percent of franchise owners earn more than $150,000 per year.


Least expensive franchise to own:

To open a Taco Bell or McDonald’s franchise, for example, you have to have at least $750,000 in liquid assets. Fortunately, there are other cheap franchise choices that cost a lot less to start and still offer you the chance to be your own boss for example Tasty Poke, CruiseOne, Kumon or Jeff.



tasty poke bar



logo jeff

kumon franquicia


From 20,000$

From 9,800$

From 25,000$ 

From 15,000$



Jeff is a technological company that has revolutionized the franchise industry combining the online and offline world. Jeff is the fastest growing franchise in the world. In only 2 years, they already are on the Top 60 global franchises, and they will go further!

mr jeff laundry franchise

One of its specialities is Mr Jeff. With this speciality Jeff has managed to revolutionized a sector as traditional as laundry. With just a few clicks they take care of picking up, washing, ironing and delivering clothes to wherever the user wants. You could recover your investment in the short term, the total investment is US$ 25k.


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