Franchise vs No franchise?

September 24, 2025

by a searcher from Brigham Young University - Marriott School of Management in Charlotte, NC, USA

I’ve started entertaining franchise acquisitions. What should I keep my eyes out for with franchise sales?

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Reply by an intermediary
from United States Naval Academy in Denver, CO, USA

I am a multi unit franchise owner and am a franchise broker. I look at right fit for you, FDD for a few things, franchisee validation, and general business characteristics, as a start. - A great franchise with the wrong owner won't do well - The FDD items I look closest at when doing my first look is leadership (who owns it and how long have they been there), start up costs vs earnings claims, on going fees, territory size, and franchisee churn. - The FDD is a good start but you always have to speak to franchisees, the more the better. You can get into training, support, franchisee comradery, true start up costs, break even time line, earnings, everything. They were in your spot so are usually very open. - Tons of training and support and happy franchisees don't really matter if the industry is dying, there is no barrier to entry, the industry is being eaten by AI, etc. - You also need to shop competitors and do market research to make sure you can gain traction where you live In regards to franchise vs no franchise, it depends a lot on goals. With an acquisition you can get something that runs from day one and try to grow it. I see a lot of risk there for a first time buyer unless they have a solid team in their corner helping them navigate due diligence with the de-risking coming from the revenue it's already generating. This is usually a much larger investment than a franchise startup. With a franchise, you de-risk by having on going training and support and a model that has worked hundreds of times in other places so there should be product market fit. You still have the hard work of going through startup and growth mode. If you don't pick the right franchise then you basically have all the same issues as a startup plus you lose 6-8% of revenue on top. Once you hit scale, it is easy to buy more locations, assuming there are some for sale (low difficult to integrate other existing locations) or to startup new locations (you have been there, done that). You also have a lower barrier to entry unless you are buying something with a massive real estate footprint. That's just a quick over view, happy to talk more. You can also see my entire process of research and everything I ask people in my research tool: app.tracerfranchising.com

Reply by a searcher
from University of Toronto in Toronto, ON, Canada

I agree with ^redacted‌ on this one. The _profit sharing_ you pay a franchise is meant to compensate for the control and support you get from a franchisor (the good ones anyway). If you've been through the ringer of running a business, you might find the control will impede you not help you. Risk you run is you are not in control of your own destiny and the Franchisor can change an FDD (Franchise Disclosure Document) without consulting the franchisees and so you're at the mercy of a the management of that franchisor so make sure you align yourself with reputable companies that have great teams (interview them if you can). Otherwise, as long as you have an exit plan, it's probably not a bad way to get started in entrepreneurship if it covers your bills and leaves with more than just a salary so always forecast forward to know how much you get to keep at worst, base, and best case scenarios. Good luck, ^redacted‌!

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