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Each year, millions of Americans choose to start a business and work for themselves. Data shows that since 2021, the country has averaged about each year, reflecting a strong interest in entrepreneurship. For some aspiring owners, franchising can be a way to turn that ambition into reality.

Franchising is a business arrangement in which an established company allows an independent owner to operate a location using its brand name, products and operating system.

The company that owns the brand is called the franchisor, while the individual who purchases the rights to run a location is known as the franchisee. The specific location or business unit is typically referred to as a franchise.

The franchise business model employed about 8.8 million workers in 2024 while accounting for around $550 billion in the U.S. economy, according to the International Franchise Association. Franchising also continues to grow.

While franchises are often associated with household-name brands, they represent only a small part of the market. Fifty-two percent of all franchises are local, and almost half count 25 or fewer locations. This means that a variety of opportunities can be available to those interested in starting a business.

There are two main franchise models. In the business format, the franchisor offers a complete operating system that may include branding, marketing, training and standardized procedures. A product distribution franchise focuses more on the sale of specific branded goods through authorized dealers. Opportunities also vary by scale, from single-unit ownership to multi-unit or area developer agreements.

As of 2026, the sectors expected to continue to expand include child services, commercial and residential services, and full-service restaurants.

Franchising can offer a structured path for people interested in ownership. Instead of creating a new business model, franchisees operate within an existing system. When considering the pros and cons of buying a franchise, its brand awareness can be a deciding factor for many.

Operating under a brand that customers already recognize can be a clear benefit of a franchise arrangement. As a result, these new businesses may build a customer base more quickly.

The parent company also typically shares established marketing strategies, logos and advertising campaigns. The materials tend to help maintain consistency across locations and support the entire network.

Franchising may also reduce some of the uncertainty that comes with launching a new company. Franchise systems may have already been tested in multiple locations. In such cases, their products, services and operating procedures will have been proved in other markets.

Because of this structure, franchisees often follow a set of established guidelines rather than developing every process themselves.

Another advantage is that the franchisor provides training and guidance. Before the business opens, new owners typically receive formal training. They might learn about daily operations, customer service practices and tools to manage the business.

Support may continue after the location becomes operational. Some licensing companies offer ongoing advice, updated procedures and additional marketing assistance. This can be helpful for those who have never managed a business before.

While franchising can offer many benefits, it also brings some challenges that should be weighed carefully. Understanding them can help individuals decide if this business model could suit their needs.

One of the possible disadvantages of a franchise is the cost. Local franchise operators are typically responsible for both an upfront payment and ongoing fees associated with operating under the brand name and system, called royalties.

The initial investment can be high, with some businesses reaching an overall investment of $1 million. Royalties usually represent a percentage of revenue. Together, they can affect the new business’s profit potential.

For this reason, potential business owners should review the contract documents thoroughly before signing an agreement.

Franchise agreements generally include rules and guidelines that dictate many aspects of the business. A parent company may control location, store layout, product offerings and supplier choices. The purpose is to maintain consistency across the network. Nevertheless, it can also prevent owners from making decisions that could be more beneficial to their local store. Those who prefer complete control over business operations may find these limitations difficult to accept.

Running a franchise often requires strong day-to-day involvement. Owners usually manage staff, assist customers and make sure the business follows the franchisor’s guidelines. Even with guidance and hiring a store manager, many operational decisions remain the owner’s responsibility. In the early stages of a business especially, these duties can require a full-time commitment.

Individuals exploring this type of business may also want to look at conditions within the broader franchise system. In some cases, nearby locations operating under the same brand may compete for customers. The financial stability and long-term direction of the franchisor can also influence how the business performs.

Selling the unit later on could also be more complicated than with other types of businesses, as any sale needs the franchisor’s approval. Because of these reasons, careful research and clear expectations can help prospective owners decide whether this path fits their goals.

The answer to whether franchising can be right for someone depends on several personal factors, including career goals, available budget and preferred work style. Reviewing the following factors can help determine if this type of business ownership may be a good fit.

Assessing personal finances should be top of mind, as inadequate funding is often the primary cause of franchise failure. A substantial upfront investment is usually needed to buy a franchise. On top of that, it might take years for a business to become profitable. Savvy potential owners normally examine their savings, available financing options and expected operating expenses before committing.

Because many franchisors provide training, running a franchise can be less intimidating than starting other types of businesses. Yet aspiring owners can benefit from transferable skills such as leadership, communication, organization or problem-solving to hire and manage employees, make decisions and handle day-to-day operations.

As mentioned, professionals interested in a franchise should also not underestimate the time investment, as it may be substantial, especially in the early days of the business. The commitment may affect personal schedules and family time.

Prospective owners should also consider whether they could operate comfortably within an already established system or if they would need more creative freedom. Finally, choosing an industry that holds genuine long-term interest can also make it easier to handle the pressure of running the business.

One place to start is online where potential investors can explore franchising opportunities across different industries and brands. It allows for comparison of startup costs, operational requirements and long-term potential.

Visiting franchisors’ websites, consulting franchise opportunities handbooks or attending expositions is common. Another option is simply approaching those who already own a store. Observing how they operate and learning about their experience can provide insights into the business.

Potential investors may also work with franchise brokers who help connect them with franchisors. While valuable, some caution may be advisable with this option. Brokers may receive compensation for recommending certain franchise opportunities.

Besides that, getting familiar with the specific franchise concept can also be wise. Factors such as demand for the product or service, the level of competition in the local market and the reputation of the franchisor can influence the potential performance of a location.

After approaching the franchisor, the next step is to study the Franchise Disclosure Document. This document provides exact information about the company’s franchise system and the obligations involved. It usually includes information such as:

• Franchisor’s background
• Litigation and bankruptcy history
• Initial and ongoing fees
• Estimated startup investment
• Franchisee obligations
• Financial statements

Understanding these details may help individuals evaluate potential risks and compare opportunities more carefully.

Clarifying lingering doubts is recommended before signing any contract. Questions about the length of the training, nonrefundable fees, approved suppliers or renewal conditions are just a few examples of reasonable information that can help an investor spot red flags and make the final decision.

Finally, the local Better Business Bureau, banks, lawyers and the office of consumer affairs can also be resources for evaluating the investment.

People from many different career paths can pursue franchising opportunities. Formal education can help make the journey smoother by learning practical business and management skills.

���۴�ý offers various online business degrees that teach skills aligned with entrepreneurship aspirations, such as the Bachelor of Science in Business, which can be paired with the Small Business Management and Entrepreneurship Certificate. The certificate can also be earned on its own.

Contact the University for more details.