FRANCHISE OWNERSHIP · FAQ
Franchise ownership questions, answered plainly.
This franchise FAQ gives straight answers to the questions people ask most often when they are considering a franchise, including how Plan B and C is compensated.
Franchise FAQ: choosing and paying for a franchise
What does a franchise consultant do?
A franchise consultant helps you evaluate whether franchise ownership fits your goals, capital, preferred role, and risk tolerance, and then helps you compare specific opportunities. At Plan B and C, that work starts with you, not a brand, and franchise ownership is compared with other paths such as buying an existing business or starting an independent one. See business ownership options and reasons to hire a franchise consultant.
How is Plan B and C compensated?
Plan B and C may receive compensation, referral fees, commissions, consulting fees, or other consideration from franchisors, brokers, business sellers, intermediaries, or related parties if a transaction is completed. That compensation does not ordinarily increase the purchase price paid by the participant. How I am compensated is explained in my disclosures.
Do I have to buy a franchise if I work with you?
No. Some people buy franchises. Others choose an acquisition, an independent business, licensing, distribution, consulting, or no transaction at all. Deciding not to buy is a legitimate outcome.
Is a franchise a passive investment?
Usually not. Some models are built around an owner-operator; others can eventually support a manager-led structure. Two franchises with similar investment levels can create very different lives for the owner, so the operating role deserves attention early.
How much does a franchise really cost?
The franchise fee is only one piece. The total investment can include real estate, buildout, equipment, inventory, technology, training, initial marketing, insurance, and working capital, and the amount needed to open is not necessarily the amount needed to reach sustainability. See Franchise Ownership and Business Ownership Financing.
What is the Franchise Disclosure Document (FDD)?
The FDD is the disclosure document franchisors provide to prospective franchisees. It covers the franchisor, fees, litigation, territory, obligations, financial statements, and more. It is not marketing material, and it should be read as a business document, ideally with a franchise attorney. The Federal Trade Commission’s guide to buying a franchise is a useful starting point.
Due diligence and next steps
What is Item 19?
Item 19 of the FDD may contain a Financial Performance Representation if the franchisor chooses to provide one. It can be very useful, but revenue is not profit, averages can hide wide variation, and mature locations may perform differently from new ones. The goal is to understand what the numbers mean for your own model.
What is franchise validation?
Validation means talking with existing franchise owners about what operating the business is actually like: time to open, how revenue developed, what surprised them, where support is strong or weak, and whether they would make the same investment again.
What are franchise registration states?
The FTC Franchise Rule sets federal disclosure requirements, including delivery of the Franchise Disclosure Document before you sign a binding agreement or pay. Some states add their own rules: a franchisor may need to register its offering with a state regulator, make a filing or notice, or qualify for an exemption before it can offer or sell franchises there, and some states also regulate the ongoing relationship, such as termination, renewal, and transfer. So an open territory and a franchise that can legally be offered in your state are not the same thing, and status changes as franchisors register, renew, amend, or withdraw. Confirm current availability with the franchisor and qualified franchise counsel. Registration is not government approval of a franchise’s quality or economics. It is a filter, not due diligence.
Do franchise rules differ by state?
Yes. Franchise rules vary by state, including Massachusetts. See what franchise registration states are, above, and confirm current requirements with a franchise attorney before relying on any assumption.
Should I consider multi-unit or area development?
Sometimes. Multi-unit ownership changes the role, the capital requirement, and the risk. See Multi-Unit and Area Development.
Where do I start?
With the Ownership Profile Questionnaire or a Corporate Refugee conversation. Either way, we start with the person, not the product.
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Start with fit before you start looking at brands.
Book a Corporate Refugee conversation, or call 508 299 5200.