Opening a franchise comes down to eight steps, from getting clear on your budget to completing training and launching your doors.
Opening a franchise comes down to eight steps: get clear on your goals and budget, understand how much liquid capital you need, explore the right categories, build a shortlist, do your due diligence on the disclosure document, line up financing, make serious validation calls, and complete training before you launch. The hard part isn’t the steps. It’s knowing which franchise is actually right for you, and avoiding the expensive mistakes people make when they go it alone.
I’m Matt Stevens, The Franchise Guy. I’m an independent franchise consultant with over 30 years in the industry, and I’ve owned four businesses myself, so I know what these decisions feel like from the inside. Over the years I’ve helped hundreds of candidates across nearly all 50 states find the right fit, and my help doesn’t cost you anything. When you’re placed with the right brand, the franchisor pays my fee, not you. Here’s exactly how how to open a franchise works, step by step.
Key Takeaways
- Opening a franchise follows eight steps, from self-assessment to launch, and typically takes three to twelve months.
- Liquid capital (accessible cash), not just total net worth, is what most franchisors require to qualify.
- The Franchise Disclosure Document (FDD) is the most important document you’ll read. Don’t skip it.
- A franchise consultant guides you through the entire process at no cost to you. The franchisor pays the fee.
- Financing options include SBA loans, ROBS rollovers, and franchisor-backed programs.
The 8 Steps to Open a Franchise at a Glance
Before the details, here is the full path from first conversation to opening day:
- Get honest about your goals, budget, and how involved you want to be
- Set your investment budget and understand your liquid capital
- Explore the right franchise categories, not just the ones advertising to you
- Work with a franchise consultant to build a shortlist of strong-fit brands
- Do your due diligence: read the disclosure document, make validation calls, attend Discovery Day
- Line up your financing
- Review the franchise agreement and sign
- Complete training, launch, and focus on your first year
Step 1: Get Honest About Your Goals, Budget, and Lifestyle
The smartest place to start isn’t a brand. It’s you. Before you look at a single franchise, get clear on what you want the business to do for your life. Are you replacing a job, building something to sell later, creating income alongside your career, or buying yourself more freedom? Your answer changes everything that comes next.
How Hands-On Do You Want to Be?
One of the first things to sort out is how hands-on you want to be. Some candidates want to run the business day to day as an owner-operator. Others want a semi-active role, where they hire a manager to handle daily operations while they oversee the business and keep another job or focus on growth. Neither is better. They just point you toward very different brands.
Step 2: Set Your Budget and Understand Liquid Capital
Every franchise lists a required investment range and a minimum liquid capital figure. Total investment is what it costs to open and begin building. Liquid capital is the cash you can access quickly: checking, savings, and investments you could convert in a few days. Franchisors ask to see it because it shows you can cover startup costs and still keep a cushion while the business finds its feet.
Total Investment vs. Liquid Capital
Get clear on both numbers before you fall in love with a brand. For a deeper breakdown of how much you actually need and what counts, see my guide on what liquid capital is and how much a franchise requires.
Why Liquid Capital Matters More Than Net Worth
A franchisor doesn’t just want to know you’re wealthy on paper. They want to know you can fund operations in the early months without financial stress. Liquid capital signals financial stability and reduces the risk of trouble during the ramp-up phase.
Step 3: Explore the Right Categories, Not Just the Loud Ones
Most people start by looking at the franchises they already recognize, the ones running ads and buying billboards. That’s the trap. The brands most likely to fit you often aren’t the obvious ones, and they won’t call you out of the blue. I’m not tied to a short, random list of franchisors, which means we can look across the full range of opportunities and focus on the ones that match your skills, budget, and goals rather than whoever markets the hardest.
Why the Loudest Brand Isn’t Always the Right Fit
Some of the strongest performers in franchising are B2B or service brands you have never seen advertised. Chasing name recognition alone is one of the most common ways candidates end up with a franchise that does not match their goals, budget, or lifestyle.
Step 4: Build a Shortlist With a Franchise Consultant
This is where a franchise consultant earns their keep. Instead of you sorting through the entire universe of brands alone, a consultant learns your goals, budget, and strengths, then introduces you to a small set of brands worth your time. That focus saves you months and keeps you from chasing information that’s hard to find on your own.
Why a Consultant Saves You Months
My service is free to you, nationwide, and without obligation. The franchisor compensates me only when you’re placed, so my job is helping you find the right fit and navigating the research until you’re in or out. Schedule a free call to get started →
Step 5: Do Your Due Diligence
Once you have a shortlist, the real work starts. Every franchisor has to give you a Franchise Disclosure Document, usually called the FDD. Read it closely, ideally with help.
What to Read in the FDD
A few sections matter most: Items 5 and 7 cover the fees and the total investment range. Items 20 and 21 cover unit counts, turnover, and the franchisor’s financial statements. Read all three carefully.
Item 19: Financial Performance Information
Item 19 is financial performance information, if the franchisor chooses to include it. Not all do. Where it exists, it will help you with questions, not answers, so review it alongside your own numbers rather than as a promise.
Validation Calls and Discovery Day
Make validation calls to current franchisees and, when you’re serious, attend the brand’s Discovery Day. The candidates who skip this step are the ones who end up surprised. The ones who do it well walk in with their eyes open.
Step 6: Line Up Your Financing
Most candidates don’t pay entirely in cash. Financing helps with the total investment, but lenders and franchisors still want to see real liquid capital from you on top of any loan.
Common Ways to Fund a Franchise
Common options include an SBA-backed loan, a home equity line of credit, a ROBS rollover that puts retirement funds to work without early withdrawal penalties, personal savings, or a partner who brings capital. I’ll point you to specialists who handle each of these.
SBA Loans and ROBS Rollovers
SBA 7(a) loans are one of the most common financing tools for franchise buyers, offering competitive rates with government backing. A ROBS rollover lets you use retirement funds to invest in a franchise without triggering early withdrawal penalties, though it requires working with a specialized provider.
Franchisor Financing Programs
Many franchisors also maintain relationships with preferred lenders or offer their own financing for a portion of the investment. Ask about these options during the discovery process.
Step 7: Review the Agreement With a Franchise Attorney
The franchise agreement is a contract of often ten years but can be shortened or lengthened. Before you sign, have a franchise attorney review it so you understand your rights, your obligations, and your options down the road. There are a few ways to do this. Take my quiz first and then let’s set up a 15-minute call.
Key Clauses to Understand Before You Sign
Pay close attention to the royalty structure, the renewal terms, the transfer and exit provisions, and any personal guarantee requirements. An attorney helps you understand what you’re agreeing to and flags anything unusual.
Territory Rights
If territorial exclusivity matters to your model, confirm exactly what “protected territory” means in the agreement. Some agreements offer geographic exclusivity; others are non-exclusive by population radius or zip code. Understand what you’re getting before you sign.
Step 8: Training, Launch, and Your First Year
Once you sign, the franchisor trains you in their system and helps you get open. Your first year is about following that system, not reinventing it. The whole point of building a franchise is that someone has already figured out what works, so lean on the success playbook, use the support you’re paying for, and give yourself room to ramp.
What Your First Year Looks Like
Once you sign, the process moves quickly. Most systems combine classroom-style training with hands-on support during your opening days, followed by ongoing check-ins as you build momentum.
What Franchisor Training Covers
Training typically covers operations, customer service protocols, technology systems, marketing execution, and financial reporting. Many systems also provide ongoing training, annual conferences, and field visits throughout your agreement term.
How Long Does It Take to Open a Franchise?
For most candidates, the process takes somewhere between three and twelve months from first conversation to opening day. The research and matching phase can move quickly if you stay focused. The timeline usually comes down to how fast you make decisions, secure financing, and complete training and any buildout your brand requires.
The Mistakes I See Most Often
- Falling for the loudest brand instead of the right-fit brand
- Underestimating working capital and running short on cushion early
- Skipping validation calls or Discovery Day
- Reading the FDD without context
- Choosing an owner-operator brand when what they really wanted was a semi-active role
Whatever stage you’re at in the opening process, The Franchise Guy is here to help, at no cost to you. If you’re still deciding whether ownership is right for you, start with how to become a franchise owner. If you’re weighing the numbers too, see the companion guide on how much it costs to buy a franchise, or explore home based franchise opportunities if a storefront isn’t part of your plan.
Frequently Asked Questions: How to Open a Franchise
Opening a franchise means purchasing the rights to operate a business using an established brand’s name, systems, and support. You pay an upfront franchise fee and ongoing royalties in exchange for a proven business model, marketing infrastructure, and operational training.
No. Most franchisors train you in their system, and many of the candidates Matt works with come from regular jobs and careers, not business ownership. What matters more is your willingness to follow a proven model.
Often, yes. Semi-active models let you hire a manager for daily operations while you oversee the business. It’s a common path for people who aren’t ready to leave their career.
A franchise consultant helps you identify, evaluate, and select the right franchise for your goals. Working with Matt costs you nothing. The franchisor pays his fee when you’re placed, so his guidance stays focused on what fits you.
Matt Stevens — The Franchise Guy
Independent Franchise Consultant · 30+ Years Industry Experience · 4 Businesses Owned · 500+ Franchisees Placed Nationally
Matt Stevens is one of the most experienced independent franchise consultants in the United States, based in Dublin, Ohio. Since the mid-1990s he has guided hundreds of buyers into franchise ownership across nearly all 50 states — at no cost to the buyer. Learn more about Matt →
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