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CategoryFranchises: what they are and how they work
Everything you should know about the franchise model before investing in the United States.
A relationship between franchisor and franchisee
The franchisor owns the brand and system; the franchisee invests to open and run a unit. The franchisee gets a license to use the brand, processes, suppliers and support, and commits to meeting the system’s standards.
In the U.S., franchise sales are regulated by the Federal Trade Commission (FTC) Franchise Rule, which requires delivering the FDD before signing. Some states also have their own registration requirements.
What is usually included
Brand
The right to use the name, logo and reputation of the brand.
Operating system
Manuals, processes, technology and quality standards.
Training
Initial and ongoing training for the owner and team.
Support
Help with opening, operations, suppliers and marketing.
Marketing
Brand campaigns funded by the shared fund.
Network
A community of franchisees to share experiences with.
Official sources: FTC – A Consumer’s Guide to Buying a Franchise · IFA – Franchising Economic Outlook
The upside and what to consider
Advantages
A more structured path
Proven model, brand recognition, support and access to suppliers on better terms.
Considerations
Rules and ongoing fees
Less freedom, royalties and fees, and dependence on the franchisor’s decisions and reputation.
How franchises work in practice
A franchise is an agreement in which a company (the franchisor) authorizes an investor (the franchisee) to operate a business with its brand, its system and its support, in exchange for an initial fee and, usually, ongoing royalties. The franchisee owns the unit and takes on the investment, but must follow the brand’s standards.
In the United States, the Federal Trade Commission (FTC) Franchise Rule requires the franchisor to deliver the Franchise Disclosure Document (FDD) at least 14 calendar days before you sign or pay. The FDD has 23 sections with information about the company, its litigation, fees, the estimated initial investment, each party’s obligations and the list of current and former franchisees.
Before investing, read the FDD with a specialized attorney, talk to franchisees in the network and compare several brands according to your budget and lifestyle. An FBA certified franchise broker helps you narrow down options; the final decision and the financial analysis are always yours, and no brand can guarantee results.
Sources consulted
Data checked in October 2026. Rules and requirements may change: always confirm current information with the official sources.
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