How to Start a Franchise in the US

Starting a franchise in the US is a powerful way to scale a successful business model, expand your brand nationwide, and generate recurring revenue. But franchising also comes with strict legal requirements and operational standards.

This guide walks you through every essential step — from franchise laws to registration, agreements, and support systems — so you can launch your franchise correctly and confidently.

What Is a Franchise?

A franchise is a business model where a franchisor licenses its brand, systems, and operations to franchisees in exchange for fees and royalties. Franchisees run their own locations, but they must follow the franchisor’s standards.
Franchising allows rapid expansion while maintaining brand consistency, making it one of the most structured business models in the US.

Steps to Start a Franchise in the US

1. Understand Franchise Laws and Regulations

Before you can legally franchise your business, you must comply with the Federal Trade Commission (FTC) and state-level franchise rules.

FTC Franchise Rule

The FTC requires franchisors to provide a Franchise Disclosure Document (FDD) at least 14 days before signing any contract or accepting payment. This rule applies nationwide.

State Franchise Laws

Some states require franchisors to register or file their FDD before offering franchises. These are called registration states (e.g., California, New York, Illinois, Wisconsin, Maryland, Virginia).

Fees vary by state.
Example: Illinois charges $500 for initial franchise registration.

Understanding these rules helps you avoid penalties, invalid agreements, or delays.

2. Prepare Your Franchise Disclosure Document (FDD)

The FDD is a mandatory legal document with 23 specific items, including:

• Business background

• Legal and litigation history

• Fees and initial investment

• Franchisee and franchisor obligations

• Training and support

• Territory rights

• Financial statements

• Trademarks and intellectual property

Because the FDD is heavily regulated, franchisors typically hire a franchise attorney to ensure accuracy and compliance.

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3. Register Your Franchise (If Required by Your State)

Not every state requires FDD registration, but the ones that do must approve your FDD before you can sell franchises.

Types of states:

• Registration states – full review of FDD, fees required

• Filing states – notice filing only

• Non-registration states – only FTC rules apply

Fees generally range from $0 to $750, depending on the state.
Renewals are usually annual.

4. Develop Your Franchise Operations Manual

Your operations manual ensures every franchise location follows the same standards. It should detail:

• Daily operations

• Employee training and staffing

• Service and quality standards

• Marketing rules and brand guidelines

• Inventory and vendor requirements

• Equipment specifications

• Safety and compliance rules

A strong manual protects your brand and supports franchisee success.

5. Build a Franchisee Training Program

Training is required for new franchisees and helps maintain consistency.

Include:

• Onboarding processes

• Product or service training

• Customer experience standards

• Financial procedures

• Technology systems

• Marketing best practices

• Safety and compliance

Most franchisors offer both in-person and ongoing virtual training.

6. Create a Legally Compliant Franchise Agreement

The franchise agreement is the contract between you and each franchisee. It outlines:

• Initial fees and ongoing royalties

• Marketing fund contributions

• Territory rights and exclusivity

• Contract length and renewal terms

• Intellectual property usage

• Termination rules

• Franchisee obligations

• Operational standards

This agreement must match the information in the FDD.

7. Handle State and Local Licensing

Each franchise location must comply with local business requirements. These vary depending on the type of business.

Examples:

• Business licenses

• Zoning approval

• Health permits (food businesses)

• Fire safety inspections

• Sales tax permits

Franchisees must complete these before opening.

8. Set Up Franchise Sales and Marketing Systems

To attract qualified franchise buyers, create a strong franchise marketing infrastructure.

This includes:

• A franchise information page on your website

• Lead generation campaigns

• Email marketing funnels

• Franchise brochures and pitch decks

• Qualification and screening processes

• Discovery day procedures

• Onboarding systems

A professional, organized sales process increases conversions and builds trust.

9. Build Ongoing Support Systems

Successful franchises offer continuous support to help franchisees run their locations effectively.

Support may include:

• Operational assistance

• Updated training programs

• Marketing and promotional guidance

• On-site visits or virtual check-ins

• Technology platforms (POS, CRM, scheduling)

• Supplier relationships and inventory support

• Performance tracking

A strong support system increases franchise profitability and brand consistency.

10. Work With Franchise Professionals

Because franchising involves legal and financial complexities, most franchisors work with:

• Franchise attorneys

• Accountants

• Consultants

• Trademark specialists

• Financial advisors

Professional guidance helps protect your brand and ensures your franchise is built on a solid legal and operational foundation.

Summary

Starting a franchise in the US requires understanding the FTC Franchise Rule, preparing your FDD, registering in required states, and building strong operational and training systems. With proper agreements, marketing processes, and ongoing support, you can successfully expand your business into a multi-location franchise while maintaining brand quality and compliance.

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