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Franchise FAQs

What is a franchise? How do I find the best franchise for me? How do I finance a franchise purchase? Here you’ll find the answers to some of the most frequently asked questions we hear around franchises and becoming a franchisee.

The Six Most Frequently Asked Questions About Franchises

You’ve done it! Welcome to the last chapter of the Complete Guide to Buying a Franchise. Most of the information in this section will be old news to you, but feel free to come back here for a quick review whenever you’d like.

What is a franchise?

A franchise is an arrangement where the owner of an existing brand and business model gives you the right to use said brand and business model (with all attending trademarks, products, systems, etc.) in exchange for money. In the franchise system, the owner is the franchisor and you are the franchisee. Read more about franchising in Chapter 1.

How do I pick a franchise?

There is no “perfect” or “best” franchise – they all have their strengths and weaknesses. However, you can narrow them down through the use of personality and fit tests, personal research and franchise consultants. Check out Chapter 2 for more information.

What is an FDD?

The Franchise Disclosure Document is a document that franchisors are legally obligated to present to potential franchisees. It is designed to provide specific, accurate information about the franchise so the potential new franchisee can make an informed buying decision. Known for being long and complicated, the FDD covers such topics as litigation and bankruptcy history, fees and initial investment amounts and the legal obligations of both the franchisor and franchisee. We cover the FCC in depth in Chapter 6.

How can I finance my franchise purchase?

There are a variety of options available to you for purchasing a franchise. It’s a misconception that new business owners can’t get funding – they just have to look in the right places. 401(k) business financing, SBA loans, unsecured loans and portfolio loans are just a few of the available options. Dive into the funding landscape in Chapter 7.

Is it easier to finance a franchise purchase than an independent business?

Getting an SBA loan can be a little easier for a franchisee if your brand is pre-approved for loans by the Small Business Association. However, you will still need to meet certain qualifications. For finance options like 401(k) rollovers or portfolio loans, your business type doesn’t matter.

How much does a franchise cost?

The range of franchise costs is wide. Some as low as $1,000 and others into the low millions. However, often your initial franchise fee will sit between $10,000 and $50,000. Other costs will include the construction of your location, equipment, materials and the royalty fee. You can learn more about these costs in Chapter 5. The actual cost of your franchise will be laid out in your brand’s FDD.

And with that, congratulations are in order! You’ve officially made it through the entirety of this guide. We hope this has provided value and helped increase your understanding of the franchise process. Good luck in this new adventure!

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Rollover for Business Start-ups SBA Loans | Portfolio Loans | Unsecured Loans

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