Most people spend more time researching a used car than they do a franchise investment. On The CEO Project Podcast with host Jim Schleckser, Matt Stevens breaks down what experienced buyers actually do differently: how they read an FDD, which questions unlock the truth, and why the right franchise fits your life before it fits your spreadsheet.
Key Takeaways from This Episode
- Franchising spans 80-plus industries and over 4,000 brands, a breadth most buyers never discover on their own.
- Great franchisors earn on royalties, not fees. A system profiting on the franchise fee is a warning sign.
- The Franchise Disclosure Document is your single most important research tool. Know what to look for in the turnover data.
- B2B franchises are a natural fit for corporate professionals: recurring revenue, relationship sales, and no storefront overhead.
- Schedule flexibility varies enormously by category. Home services and painting businesses let owners control their calendars in ways retail almost never does.
- Senior care is a standout: 40 to 70 franchise systems nationwide, a growing market, and high personal satisfaction for owners who connect with the mission.
- Every buyer needs a compelling emotional reason. Without one, the learning curve, the financial commitment, and the vulnerability of starting over become too much.
Why Business Owners Choose Franchising as a Growth Path
Franchising is one of several ways to scale a business, but it is the one that lets owners grow nationally without diluting equity. Instead of raising outside capital the way a startup might, a franchisor uses the money and entrepreneurial drive of individual franchisees who build their own locations under a shared brand. The franchisor retains brand control and earns ongoing royalties. The franchisee builds equity, cash flow, and a transferable asset.
Matt walked Jim through the math: going from eight locations to a thousand would require outside capital one way or another. The question is what you give up to get there. Equity investors take a permanent stake. Franchisees pay royalties, but they also carry the labor, the lease, and the day-to-day risk. For a founder with a proven, replicable model, that trade-off can be very favorable.
The threshold for franchisability, according to Matt: if a stranger with motivation and purpose can replicate what you do to 60 to 80 percent accuracy using your systems, you probably have a franchisable business. Most successful systems prove the concept at several units before expanding, so they can show incoming buyers real numbers across real markets. Working with a franchise consultant helps both sides: founders evaluating whether to franchise their business and buyers evaluating whether to enter one.
The Industries Most Buyers Never Consider
Ask most people to name franchise industries and they say food, hotels, maybe fitness. The real list runs to 80-plus categories. Franchises sell water. They coach executives. They handle sign making, insurance, banking, home painting, senior care, and everything between. Matt’s point is not to overwhelm buyers. It is to make sure they do not eliminate categories before they understand them.
B2B franchises are a particularly good fit for people transitioning out of corporate careers. They are used to relationship-based selling, comfortable with a recurring revenue model, and accustomed to hearing no before they hear yes. A B2B franchise owner who can knock on 100 doors, close 10 sales, and retain those clients on a recurring basis is building a real business, without a storefront, without retail hours, and without inventory risk. Many B2B franchise categories let owners build an agency model under them, adding staff as revenue grows. Understanding how franchise ownership works before picking a category saves buyers months of wasted evaluation.
How to Read a Franchise Disclosure Document
The FDD is a regulated, standardized document that every franchisor must provide before a sale. It runs roughly 200 pages and covers everything from the franchisor’s legal history to audited financials to the list of every active and terminated franchisee. Most buyers skim it. Experienced buyers read Item 19 (financial performance representations), Item 20 (franchisee turnover data), and the contact information for past and present owners.
Turnover data is the tell. A system with low turnover typically means owners are profitable and satisfied. High turnover, especially among franchisees who left before their agreement expired, is a sign the model is not working at the unit level. Matt’s rule: look at the numbers, then pick up the phone. Speak to owners at year one, year three, and year five. Ask them what the worst part is. Ask what surprised them. Ask what they would do differently. Those questions surface the truth that a curated reference list will not. The full franchise buying process includes FDD review, validation calls, and discovery day, each step giving the buyer a clearer picture before signing.
Red Flags Every Franchise Buyer Should Watch For
Not all franchise systems are built to help their owners succeed. Matt recalled a sandwich franchise he saw at industry shows 25 and 30 years ago: delicious product, damaging culture. The number of sandwiches an owner had to sell each month just to cover their royalty obligation was impossibly high. That brand grew fast and then collapsed faster. Buyers who had read the FDD and called current owners would have spotted the unit economics problem before signing.
The single clearest red flag: a franchisor that makes its profit on the franchise fee rather than royalties. Royalty revenue is tied directly to franchisee revenue. A franchisor aligned on royalties needs you to succeed. One aligned on fees just needs you to sign. Beyond the fee structure, watch for franchise systems that provide no independent franchisee validation, no documented support infrastructure, and no improvement track record. The best systems, as Matt put it, continuously update their layout, their marketing, and their operations, and they take feedback from the field. The McDonald’s fish sandwich came from a franchisee suggestion. Systems that can accept input from their owners tend to stay relevant. Those that cannot tend to stagnate. A certified franchise consultant can help buyers identify these warning signs before they commit capital.
Schedule Flexibility: The Hidden Value Most Buyers Overlook
Return on investment matters. So does what the investment does to your life. Matt spent years in painting, at CertaPro Painters, which now has hundreds of franchisees doing significant volume, and the detail he remembers most is not revenue. It is the day he could tell a customer that his next availability was eight weeks out on a Thursday. Everything in between was entirely his to decide. He called it a life-changing realization.
Schedule flexibility is not uniform across franchise categories. Retail franchises demand consistent hours because the store has to be open. Home services such as painting, cleaning, and repair operate on scheduled appointments, which means owners control their own calendars in ways that retail almost never allows. Semi-absentee franchise models take this further, with a manager running day-to-day operations while the owner oversees from a distance. Buyers who care about schedule control should filter their franchise search by that criterion early, not treat it as a secondary consideration.
Why Senior Care Is One of the Strongest Franchise Categories Right Now
Senior care gets overlooked because it does not carry the brand recognition of fast food or fitness. But the fundamentals are exceptional: 40 to 70 franchise systems operating nationwide, a demographic tailwind that will run for decades as the baby boomer generation ages, and repeat customers built on trust rather than a single transaction. Owners who connect with the mission, supporting seniors and their families through an emotionally significant time, tend to build both a profitable business and a personally meaningful one.
Matt highlighted senior care as a franchise category that combines recurring revenue, growing demand, and high owner satisfaction. It also requires relatively lower overhead than retail-based models, since the service is typically delivered in the client’s home. For buyers evaluating categories, it belongs on the short list.
The Compelling Emotional Reason That Separates Buyers Who Follow Through
Matt’s most direct observation about who actually completes the franchise process and thrives: everyone needs a compelling emotional reason. Not a financial calculation. A reason. Some buyers have seven figures sitting idle and want to put it to work. Others want to build a legacy asset for their children. Others have simply hit the ceiling of what a corporate salary will ever give them and know they need a different path.
Without that reason, the process stalls. The learning curve becomes too steep. The financial commitment feels too large. The vulnerability of starting something new is too uncomfortable. But with a clear reason, a vision of what the business will make possible, buyers endure all of it. Matt has seen people invest $150,000, build their franchise over nine years, and sell for $1.4 million. That outcome does not happen without the emotional commitment that made the early years sustainable. Start a conversation with Matt to explore what franchise opportunity aligns with your goals.
“For anyone to make a change, you have to have what I call a compelling emotional reason to do something different: to endure the learning curve, to put forth money, to set aside your pride, to feel vulnerable.”
Matt Stevens, The CEO Project Podcast
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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Frequently Asked Questions
Franchising is a licensing agreement in which a franchisor grants a franchisee the right to operate a business under the franchisor’s brand, systems, and processes in exchange for an initial franchise fee and ongoing royalties. The franchisee owns and operates their location, invests their own capital, and keeps the profit after expenses and royalties. The franchisor provides training, marketing systems, and a proven operating model. Both sides succeed when the unit is profitable, which is why royalties, not franchise fees, are where reputable franchisors make their money.
More than 80 industries have active franchise systems. The list goes well beyond the food and hotel categories most people think of first. It includes home services, fitness, senior care, B2B business coaching, sales coaching, insurance, banking, sign making, cleaning, painting, water treatment, and dozens more. There are currently over 4,000 active franchise brands operating in the United States. Most buyers underestimate this range and eliminate strong candidates before they have a chance to evaluate them on the criteria that matter: investment level, schedule flexibility, customer type, and income potential.
Well-run franchisors earn the bulk of their revenue from royalties, a percentage of each franchisee’s gross sales, typically ranging from four to ten percent depending on the industry. The initial franchise fee generally covers the cost of onboarding, training, and early marketing support; most established franchisors do not profit significantly on the fee itself. A franchisor whose primary income comes from franchise fees rather than royalties is a warning sign: their incentive ends at the signing rather than at the franchisee’s ongoing success. Royalty-driven franchisors have a structural reason to support you after launch.
Some founders begin franchising before their first location is open, when the model exists entirely in concept, but most successful franchisors prove the system at several units first. The key question is whether a motivated person with no prior experience in your industry could replicate your results to roughly 60 to 80 percent accuracy using your documented systems. If yes, the model may be franchisable. If the owner’s personal skill or relationships are doing most of the work, systemization is the prerequisite. Building out the training programs, legal documents, and operational infrastructure to support franchisees typically costs six figures to low seven figures and takes years, not months.
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