You’ve built something people love – your DMs are flooded, your storefront is packed, and your team is running at full speed! But instead of feeling triumphant, you’re overwhelmed. You’ve hit a ceiling, and growing your business feels risky, expensive, and just plain confusing.
Here’s the thing: most small business owners wait too long to consider franchising. They assume it’s only for national chains or fast-food giants but, in reality, learning how to start a franchise can be the most effective way to grow a brand.
This guide is built for business owners like you: ambitious, capable, and ready to scale smart. Let’s break down what it really takes to start a franchise – from trademarks to training, legal foundations to ongoing support.
“Franchising isn’t about giving up control. It’s about amplifying your success through systems.” – Chris Conner, President of FMS Franchise.
Before we get into legal protections or agreements, let’s zoom out. The first real question is whether your company can be franchised.
Here’s what you should be asking yourself:
If the answer is yes, you’re sitting on a scalable concept, and now is the time to transform it into a profitable system. If you’re still unsure about it, take our feasibility questionnaire to get a clear picture of your brand’s franchise potential
Let’s walk through the key building blocks of that business model, starting with protecting your intellectual property in franchising.
Your brand is more than a name – it’s your reputation, your processes, and what sets you apart from the competition. Before you even think about how to start a franchise, you need to lock that down legally.
Remember, your franchise system will rely on others representing your brand. You need legal authority to ensure consistency and protect what you’ve built.
Once you’ve protected your IP, it’s time to move to the next cornerstone of franchising: your Franchise Disclosure Document (FDD).
This is one of the most important legal tools in franchising. It’s more than a formality, since this document clearly defines what franchisees are buying into and what they can expect from you, the franchisor. If you’re truly ready to learn how to start a franchise, understanding the FDD is non-negotiable.
Required by the Federal Trade Commission (FTC), the FDD must be provided to prospective franchisees at least 14 days before they sign any agreement or pay any fees. It’s your opportunity to be fully transparent and your obligation to protect your brand.
Here are the most critical components you need to understand:
In here, you should describe your company’s legal identity, ownership, and operational history. It builds context and credibility with prospective franchisees, so it should be very thorough.
This section lists past or ongoing legal disputes involving the franchisor. Remember that a clean record builds trust, but if you’ve had disputes, it’s better to be transparent.
This part is a breakdown of all the costs franchisees are expected to pay, including the franchise fee, royalty percentages, and marketing contributions. Clear disclosure prevents future friction, so make sure to list every expense in here to avoid surprises later.
Give your potential franchisees a realistic financial picture of what it takes to launch one of your locations. This section typically includes equipment, real estate, insurance, training, and working capital.
In this part, you need to clarify what support you’re required to provide – from training and manuals to field visits and operational assistance. The goal is to show prospects that you’re invested in their success.
This section allows you to share historical results from existing locations. While you’re not legally required to include this data, it’s one of the most powerful tools you have to attract serious prospects. Buyers want to understand potential returns, and credible financial disclosures can help them feel more confident moving forward. But remember: it must be backed by actual data.
These items, along with the 16 others in the full FDD, create the foundation for a trustworthy franchise relationship. A well-written document can answer questions before they’re asked and help you attract more serious, qualified franchisees.
Work closely with a franchise professional to draft your FDD. It should reflect not just your legal obligations, but your operational reality. And it must align perfectly with the franchise agreement you offer.
Now that you know what is a franchise disclosure document, let’s explore how to choose the right markets to grow into.
A great concept doesn’t guarantee success everywhere, and poor location decisions can strain new franchisees and hurt your brand. So before you award your first location, you need to know where your business will thrive.
That’s why a market and competition analysis is essential. This process helps you identify viable territories, spot red flags early, and refine your franchise offering to meet local needs. Your analysis should include:
Who is your ideal customer, and where do they live? Use census data, local consumer reports, and industry studies to identify areas where your core customer base is concentrated.
Map out other businesses offering similar services or products. What are their strengths and weaknesses? How are they pricing their offerings? What gaps can your franchise fill?
Each state (and many cities) have unique business laws, zoning restrictions, and health or industry-specific codes. Understanding the regulatory landscape helps you avoid costly delays.
Look at where similar franchises or independent competitors already operate. You want to avoid over-saturated markets while identifying under-served areas that align with your brand.
Franchisees want to invest in locations with real potential, which is why a strong market analysis is an essential part of your franchise sales pitch. It will support your territory strategy as it tells potential owners: I’ve done the homework, and there’s a path to success here.
Pro tip: Use trusted sources like Census Bureau tools, Nielsen Scarborough data, and Google Trends to research customer behaviors and stay current on the latest franchise market trends. But don’t forget to pair that with on-the-ground research, including drive-by analysis and local feedback, to get a full picture.
Let’s now talk about what it’ll cost to bring your franchise system to life.
How much does it really cost to franchise a business in the US? The honest answer is: more than most business owners expect, but less than opening and operating every new location yourself.
Understanding your costs early on is critical to building a model that’s financially sustainable for both you and your future franchisees. As the franchisor, your job is to develop a complete system, which means investing in everything from legal work and training materials to sales infrastructure and marketing assets. These startup costs are typically one-time or front-loaded and should be factored into your business plan before offering a franchise opportunity.
Let’s break down some of the major cost categories:
Expect to spend $15,000 to $30,000 on legal services that include drafting not only that document, but also franchise agreements, registration filings, and franchise legal compliance. This is a non-negotiable investment that forms the legal foundation of your entire system.
Securing your brand’s trademarks can cost anywhere between $2,000 and $5,000, depending on how many marks you file and whether you’re filing internationally. This step is essential to protecting your business name, logo, slogan, and proprietary assets.
The operations manual is your franchise blueprint, so make sure to budget $10,000 to $25,000 to develop detailed standard operating procedures (SOPs) that franchisees will rely on daily. This includes everything from opening checklists to customer service protocols.
Your brand’s visuals, messaging, and positioning all need to be translated into marketing kits, brochures, website updates, and launch materials. This often runs $5,000 to $15,000 and is essential for attracting your first franchisees.
If you plan to scale, you need a sales and CRM system built for franchising. A platform to manage lead capture, candidate vetting, and sales tracking can cost $10,000 to $20,000, depending on functionality and integrations.
These aren’t just arbitrary costs, they’re strategic investments that, if done right, will position your brand for growth and help you scale faster, without compromising on quality. In addition, knowing your cost structure also helps you set a competitive franchise fee and royalty percentage that reflects real value.
Once you understand these numbers, you can make informed decisions about staffing, pricing, and territory rollout. Let’s look at who you’ll need on your team next.
Franchising is a leadership shift. As a business owner, you’re used to doing it all, but once you become a franchisor, your role evolves. You’re no longer in the day-to-day operator – you’re the CEO building systems that empower others to run your model successfully.
Your staffing strategy should reflect that transition. You’ll need people who can help you select the right franchisees, support them after onboarding, and protect your brand as you grow. Think of your team as the backbone of your franchise’s long-term success.
Franchise Development Manager:
Leads franchise sales efforts, qualifies candidates, and manages the recruitment pipeline. This person is often the first human connection between your brand and a potential franchisee.
Franchise Marketing Lead:
Responsible for creating marketing campaigns to attract both franchisees and customers at the local level. This includes brand consistency, digital marketing, and launch support.
Training and Support Coordinator:
Serves as the point of contact for onboarding and performance issues. This role is essential to help you implement effective franchisee training programs that ensure every location starts strong and stays aligned with your brand.
Legal and Compliance Advisor:
Ensures your franchise remains compliant with federal, state, and local laws. This may be an in-house role or an outside counsel depending on your scale.
However, not every franchisor hires all of these roles right away – some start lean and grow as the system expands. But even if you outsource initially, make sure these functions are accounted for, because without a proper support team, your first franchisees may struggle, which can hurt your reputation before you ever hit full stride.
With your core team in place, it’s time to make sure everything is built on a solid legal foundation. Let’s dive into how to structure your legal setup so your franchise can grow without unnecessary risk.
Franchise law isn’t something you can wing – it’s one of the most complex and highly regulated aspects of your business journey. If you’re planning to expand, securing the right legal guidance is foundational.
The legal professional you choose will set the tone of your franchise registration, relationships with franchisees, and protection of your brand across different territories. A knowledgeable specialist keeps you compliant and help you avoid costly mistakes by laying the groundwork for sustainable growth. Lets explore what to look for in a franchise attorney:
Your attorney should have a proven track record drafting Franchise Disclosure Documents (FDDs) and franchise agreements that are both compliant and strategically sound.
Some states have extra filing and disclosure requirements. Choose legal counsel who understands how to navigate these jurisdictions without delays.
Beyond setup, you’ll need continuous guidance on renewals, advertising rules, enforcement actions, and legal updates that impact your system. A good attorney is a long-term partner, not a one-time hire.
If you plan an international franchise expansion, you’ll also need legal support in each country you operate. Laws on franchising vary widely, and a misstep in one market can jeopardize your reputation globally.
Here’s the bottom line: when it comes to franchising, legal shortcuts are expensive. The sooner you bring in a franchise law expert, the more smoothly your system will grow.
Once your legal counsel is in place and your franchise legal compliance strategy is mapped out, the next foundational decision is how to legally structure your business. The entity you choose will shape your taxes, risk exposure, and long-term flexibility as you grow.
One of the earliest and most strategic decisions you’ll make in this journey is how to legally structure your business. This entity will determine how you’re taxed, how liabilities are managed, how investments are raised, and how cleanly your business can scale.
So, should your franchisor be an LLC or a corporation? Each has advantages, depending on your growth goals, investor involvement, and operational complexity.
This option is often favored by smaller, domestic franchise systems due to its simplicity. It has an easier setup and lower maintenance, and filing requirements tend to be lighter than those for corporations, making it an accessible option for first-time franchisors. LLCs also offer pass-through taxation, which means profits are reported on your personal tax return, helping you avoid the double taxation that comes with traditional corporations. If you’re planning for local or regional growth and want a leaner administrative structure, an LLC can offer the flexibility and control you’re looking for.
If you’re aiming for large-scale growth or want to attract investors, this structure may be a better fit. Corporations can issue shares, which makes them ideal for raising outside funding or preparing for a future IPO. They also come with built-in governance through boards, bylaws, and designated officers – a level of accountability that can appeal to partners and investors. While corporations require stricter compliance and formal reporting, they offer a scalable structure that’s often necessary for multi-state or international expansion. If your long-term vision includes raising capital or building a high-growth brand, this format gives you the structure to support it.
Many franchisors set up a new legal entity dedicated solely to the franchise system, even if they already operate as an LLC or corporation for the original business. Doing so helps isolate liability, streamline accounting, and cleanly separate franchise royalties from corporate revenue.
Once your entity is properly formed and documented, you’ll be ready to build the agreement that governs your relationship with franchisees: your franchise agreement.
This agreement is the operational contract that binds you and your franchisees – it’s the blueprint for that relationship. It protects your brand, outlines each party’s responsibilities, and helps prevent costly misunderstandings down the road.
Every franchise agreement should be built around clearly defined clauses that address both your needs and those of your future franchisees. Here are some of the most critical components to include:
Define how long the franchise term will last (commonly 5 to 10 years), and under what conditions it can be renewed. This provides long-term clarity and reduces uncertainty for both parties.
Define how long the franchise term will last (commonly 5 to 10 years), and under what conditions it can be renewed. This provides long-term clarity and reduces uncertainty for both parties.
Clarify whether the franchisee will have exclusive rights to operate within a specific territory or whether others can open nearby. This protects their investment and prevents market saturation.
Outline the rules around how franchisees must present and operate the business. This includes signage, uniforms, store layout, service processes, and use of approved suppliers. Consistency here is what preserves the integrity of your brand.
Specify how franchisees will pay you – typically through a percentage of revenue or a flat monthly fee. Include payment timelines, penalties for late payment, and any contributions to marketing funds.
Address how and when the agreement can be terminated by either party. Include procedures for non-compliance, transferability, and what happens to assets or branding if the franchise relationship ends. This is also where strong franchise transition planning comes into play, ensuring there’s a clear path for both parties if the agreement is not renewed or is terminated early.
Your franchise agreement should not be boilerplate. It needs to reflect the actual operations of your business, the expectations you have for franchisees, and the support you’ll provide in return. Work with legal counsel to tailor every section.
Once this foundation is in place, you’re ready to guide prospective franchisees through their due diligence process and give them the tools they need to evaluate your opportunity.
If you want to attract the right partners – people who are invested, qualified, and ready to grow with you – you need to understand how they’ll evaluate your opportunity.
This is where due diligence comes in. Smart franchisees will analyze your business from every angle: legal, financial, operational, and cultural. They’ll read your FDD line by line and ask tough questions – as they should.
Here’s what strong due diligence support looks like:
If you’re making financial representations, be prepared to back them up with accurate and defensible data. Clear, well-presented numbers help candidates understand potential returns and build confidence.
Encourage prospective owners to speak with existing franchisees. Provide a list of contacts and let your network share their experiences – both the wins and the challenges. Nothing builds trust like hearing it from a peer.
Host structured Discovery Days where candidates can visit your headquarters, meet your leadership team, and see the brand in action. This gives them a sense of your culture, values, and commitment to support.
The goal is to remove mystery from the process. Transparency attracts serious operators, and informed candidates are more likely to become high-performing franchisees.
Now that we’ve covered evaluation from their side, let’s explore what your support systems need to look like after they join.
Wondering how franchisors support franchisees for success? Once the agreement is signed and the doors are open, franchisees need more than a brand name – they need infrastructure, accountability, and real tools to help them succeed.
Your partners will look to you for operational guidance, marketing leadership, and long-term development. Providing these systems consistently is what protects your brand’s reputation and helps ensure each location delivers a high-quality, consistent experience.
Onboarding programs and initial training:
Help new franchisees get up to speed quickly with structured, repeatable onboarding processes. This includes brand orientation, system navigation, and staff training.
Marketing toolkits and CRM integration:
Equip franchisees with ready-to-use promotional materials, digital campaign templates, and tools that integrate with your CRM. This allows for consistent messaging and measurable marketing ROI.
Field support and performance coaching:
Regular check-ins from field reps or performance managers help identify issues early and provide hands-on guidance. This personal touch can boost accountability and morale.
National advertising fund (NAF):
If you collect marketing fees, clearly define how funds are used – whether for brand campaigns, digital strategy, or creative assets. Transparency builds trust.
We know that support is not a one-size-fits-all model. The best systems adapt as your network grows, offering foundational tools for first-time owners and advanced resources for experienced franchisees looking to scale.
When you invest in strong post-sale support, your franchisees are more likely to succeed and success stories are your most powerful recruitment tool.
If you’re still asking yourself how to start a franchise, the answer is: one step at a time, with the right partner.
Franchising isn’t easy. But when done right, it creates a path to expansion that’s scalable, capital-light, and incredibly rewarding. And the good news is that you don’t have to figure it all out alone. FMS Franchise has helped hundreds of businesses go from single-location success to national market domination. Whether you’re just starting to explore or ready to franchise now, our team is here to build the system that matches your vision.
Ready to turn your business into a franchise powerhouse? Let’s build the blueprint that turns your momentum into a legacy.
Contact us today for a free consultation and take the first step toward expansion that works on your terms.
FRANCHISE CONSULTANT
Gloucester, Virginia – Kimberly Moody has secured an impressive track record in implementing financial goals for a business base of more than $300 million in assets covering customer service, financial planning, estate planning, banking services, and all aspects of investment management. Additionally, she worked as an Adjunct Instructor for Christopher Newport University, where she taught investment courses to individuals interested in learning more about financial planning. Ms. Moody also has experience as the Co-Host for WVEC Channel 13’s show “Investing 101” and Co-Host of WTKR’s radio station’s financial planning show. She has also held more than 100 public seminars on financial planning topics and was the speaker for National Space Society Conferences for NASA. Ms. Moody intends to use her proven business expertise, natural leadership ability, and personal determination to sell and grow franchise development.
FRANCHISE CONSULTANT - MARKETING & SALES
New York, NY – Paul has 25+ years experienced in business development management and direct sales with Blue-Chip companies – CA, ADP, Pitney Bowes and National accounts such as Deutsche Bank, PepsiCo, Verizon. Received many awards and acknowledgement for sales achievement and success where personally responsible for generating in excess of $100m in revenue. Paul has been married for 34 years with six children. Paul graduated from Northern Michigan University in Marketing and from Marquette with a Bachelor’s Degree in Education.
FRANCHISE CONSULTANT
FRANCHISE CONSULTANT
GRAPHIC DESIGNER & AD STRATEGIST
Kaitlin is a graphic designer and a Facebook™️ ad Strategist. A born creator, her passion for creativity grew as she explored the design and artistic side of marketing. She has a special focus on presentation and visual design and is insanely curious about learning new skills to continuously improve her portfolio.
Tackling everything from Brochure design to Landing Pages and everything in between, she is always excited to grow her clients’ brands into something beautiful. When she isn’t working, her creative roots are always showing. Her love for Marketing and design go beyond the desk, her creative juices flow in the kitchen and in the garden. She also loves nature and all animals big and small but what she really loves is making her clients happy.
VIRTUAL DESIGNER
Augusta, GA – Noah is a designer for FMS. He has been designing for 4 years and has a wide range of skills when it comes to designing. Noah has a passion for communicating visually and creating visually successful brands. He loves creating for a wide range of clients and strives to fulfill their needs in design.
