How to Buy a Restaurant Franchise in 2025

Owning a restaurant franchise isn’t for the faint of heart. Franchise ownership can be highly rewarding, but it certainly still comes with its challenges.

If you are considering buying a restaurant franchise but are not completely sure where to start, you’ve come to the right place. In this article, I will walk you through every step of the process for buying a franchise ownership. By the end of this post, you’ll be fully prepped to start your new restaurant business venture.

Key Takeaways

• Research restaurant franchise opportunities that align with your interests, budget, and local market demand.
• Assess all financial requirements, including the initial franchise fee, ongoing royalties, and total investment needed.
• Review the Franchise Disclosure Document (FDD) to understand the franchisor’s financial standing, obligations, and legal history.
• Secure financing through traditional business loans, SBA loans, or franchisor-backed financing programs.
• Participate in the franchisor’s training programs to gain a thorough understanding of restaurant operations and brand standards.
• Conduct due diligence by speaking with current and former franchisees to learn about their experiences and challenges.

How to Purchase a Restaurant Franchise: Step-by-Step Process

So, are you thinking of purchasing a restaurant franchise? It’s one of the most common franchising industries and definitely the most popular sector in the food and beverage franchise industry. Here’s my handy step-by-step guide to follow.

Step One: Research Different Franchises

You can’t just walk onto the field and expect to win. You need to know the rules, the players, and the plays. Before you pull the trigger and purchase a restaurant franchise, you’ll need to do your due diligence, which means you should have a pretty broad understanding of the restaurant franchise market.

The U.S. restaurant franchise market is booming, projected to hit $893.9 billion in 2024. That’s not a fluke. Quick-service powerhouses like Taco Bell and Chick-fil-A are rewriting the rules of fast food. 

That said, these are monsters in the restaurant franchise world. For example, you’ll need between $575,600 and $3.3 million to open a Taco Bell.

Chick-fil-A, on the other hand, asks for a mere $10,000 upfront. Sounds too good to be true, right? Well, what’s the catch? Chik-fil-A takes 50% of pre-tax profits from franchise owners. That’s the price tag franchisees pay to use the company’s name and reputation.

Franzy is your best friend when it comes to researching and comparing franchises. The platform makes it much easier to gather all the data points to assist in making a confident decision.

Step Two: Read Through the Franchise Disclosure Document

The FDD is your ultimate guide when learning how to buy a franchise restaurant. Every franchisor is legally required to hand over the FDD at least 14 days before signing the franchise agreement.

Buried inside this massive document is essentially everything you need to know about the franchise business, such as the initial fees you’ll pay, royalties payments, and specific brand guidelines you’ll be required to follow.

FDDs contain 23 items and will also disclose information about the company, such as past litigation, insurance claims, bankruptcy history, financial statements, and more.

It’s not light reading, but I highly recommend that you thoroughly read through the FDD. After all, it is a direct insight into what running the restaurant franchise will look like.

It is important to pay particular attention to the numbers in the FDD. Initial franchise fees range from $10,000 to $45,000, but some popular franchises may charge close to $100,000. As for royalties, most restaurant franchises charge a royalty fee of 4% to 9% of your gross sales.

Step Three: Draft a Business Plan

Now that you’ve picked your brand and read the documents, it’s time to create a business plan for your new restaurant franchise. A business plan won’t just help you organize your plans and goals for the franchise, but it will also help you secure funding down the road.

Start with the big questions. Who is your primary customer base? Why will they choose you over the guy down the street?

Your business plan should map out the numbers with estimations for food expenses, revenue projections, staffing costs, and profit margins. 

You’ll also need to paint a clear picture of how your restaurant will operate. Who’s managing the day-to-day operations? How will you train your staff? What’s your marketing strategy?

Your business plan should include anything and everything that will go into your business. Don’t leave anything to the imagination. If it isn’t part of your business plan, it isn’t going to be part of your franchise.

Step Four: Secure Funding for Your New Restaurant Franchise

Opening a franchise isn’t cheap. The average cost sits somewhere between $100,000 and $300,000, though some high-cost franchises can set you back well over $1 million.

No matter what type of restaurant franchise you purchase, the fact of the matter is that unless you have this kind of cash lying around, you are going to need financing for your franchise. And unfortunately, banks don’t just hand out loans just because you asked nicely.

The Small Business Administration is a good place to start. Their loans are tailored for entrepreneurs like you. But they’re not your only option. Some franchisors offer in-house financing, making it much easier to secure funding. Others may point you in the direction of a reputable lender that specializes in franchise loans.

While securing financing for a restaurant franchise is no walk in the park, you certainly have options, and with a good credit score, a strong business plan, and enough cash to make a down payment, you shouldn’t have too much of an issue getting a loan.

Step Five: Choose Your Location Wisely

Location is everything. You could have the best food, but if people can’t find you or your location has too much competition, you’ll likely struggle.

Think about traffic. The best places to open a franchise have heavy vehicle or foot traffic. Take busy streets, shopping centers, and college campuses, for example.

That said, you also want to make sure your restaurant franchise is a good fit for the location. A Taco Bell in a high-end mall? Probably not the best idea. But a Chick-fil-A near a busy highway might just hit the jackpot.

You’ll also need to check zoning restrictions in your region and potentially ask for approval from the franchisor. Some cities don’t want too many fast food chains, while others will bend over backward to welcome them.

Step Six: Review and Sign the Franchise Agreement

This is where the deal becomes real. You’ve done the research, crunched the numbers, and planned for the future of the franchise. Now, it’s time to commit.

Just as with the FDD, I urge you to read through every inch of the franchise agreement. The franchise agreement isn’t a friendly handshake. It’s a legally binding contract with terms that can make or break your future. Take time to read the fine print and hire an attorney with experience in franchises to pick out any red flags.

Here are some red flags to look out for in franchise agreements:

• High royalty fees
• Overly high franchise fee
• Location restrictions
• Lengthy non-compete clause
• Restrictive termination clauses
• Ambiguous language about marketing obligations

When everything checks out and you’re confident you understand every line, sign the papers. Congratulations—you’re now a franchisee!

Step Seven: Pay the Franchise Fee

After signing the franchise agreement, it is time to pay the franchise fee to the parent company. 

As mentioned, franchise fees vary wildly. Chick-fil-A’s famously low $10,000 fee sounds like a dream, but remember, they take a significant cut of your profits. Dunkin’ Donuts, on the other hand, charges $40,000 to $90,000 just to get started.

But the initial fee is just the tip of the iceberg. You’ll also have to pay for equipment, renovations, permits, and initial inventory, not to mention the cost of leasing or purchasing property for the franchise.

Step Eight: Acquire Essential Licenses and Permits

Before you can serve your first customer, you’ll need to get all of the necessary licenses and permits.

The list of required permits and licenses can feel endless, including food service permits, building inspections, alcohol licenses, signage approvals, and more. The more licenses and permits your franchise requires, the more time and money you’ll have to spend getting them approved.

The exact permits you need depend on your location, and some state or local governments will require more licensing than others. The good news is that your franchisor will likely be able to assist you and will provide you with a list of the different permits you’ll need to acquire.

My recommendation? Make sure to get it right. One missed permit can shut you down before you even open.

Step Nine: Hire and Train Staff

A restaurant is a team sport, and the players you pick will make or break your success. Look for people who aren’t just qualified but who fit the culture of the brand. When it comes to training, you may be in luck, as many franchisors offer comprehensive programs.

Restaurant franchises tend to struggle with employee turnover and labor costs. In 2024, 98% of restaurant operators reported higher labor expenses as a major issue. That said, investing in training and creating a positive work environment can make all the difference.

Treat your employees fairly. Remember, happy employees create happy customers. And happy customers come back for more.

Step Ten: Prepare to Open Your New Franchise

The grand opening of your restaurant franchise is a pivotal moment. Prepare for this event to the best of your ability, as a strong first impression is what will help build a loyal customer base.

Look over every detail of your operations with a fine-toothed comb. Test all of your equipment, review your inventory, and ensure your staff is fully trained and ready to serve. Consider doing a soft opening and inviting your friends and family so that you can pinpoint any issues and address them before the actual opening day.

And don’t forget marketing! By purchasing a restaurant franchise, you do have a leg up in terms of already having a name and reputation, but don’t underestimate the power of local marketing and advertising to make your presence known to your community. Build some hype around the grand opening, and get people talking!

With proper preparation, you can set your franchise up for success.

Benefits of Buying a Restaurant Franchise

Wondering if purchasing a franchise is worth it for you? Franchising is by no means an easy business venture, but it comes with serious perks.

Support From the Franchisor

One of the biggest perks of franchising is that you’ll get a lot of support from your franchisor. Franchisors will provide you with an operational manual, training materials, and marketing support. It is in the franchisor’s best interest for you to succeed because your success is their success, so you can rest assured that you are not in this alone.

Brand Reputation

It can take years to grow a brand from scratch. But when you buy a restaurant franchise, you’ll inherit the ready-made brand reputation of the parent company. This makes things much easier for you from day one and allows you to do what you do best: run the franchise.

Less Risk Than Standard Business Model

Compared to independent startups, franchises are safer bets. They fail much less often and are more likely to turn a profit. Franchises are proven systems, and when you purchase a restaurant franchise, you’re stepping into a system that’s already worked out the kinks. You’re not reinventing the wheel—you’re buying one that already rolls.

Little to No Experience Required

Even if you have never worked in a kitchen a day in your life, you still have a solid chance of finding success in a restaurant franchise. Franchisors will provide you with foundational training and support, making it possible to purchase a franchise with zero previous experience.

Downsides of Restaurant Franchises

At first glance, purchasing a restaurant franchise may seem like the perfect low-risk business venture, but it’s important to have well-rounded expectations by looking at the downsides, too.

High Startup Costs

As I’ve discussed, restaurant franchise startup expenses can be astronomical. Leasing property, paying the franchise fee, hiring staff, purchasing inventory, and advertising can quickly add up, not to mention royalty payments to the franchisor.

Turnover Rate

At a whopping 74% in 2023, the restaurant industry has one of the highest employee turnover rates. Restaurant owners struggle to retain workers for long periods, which can cause franchisees to spend more time hiring and training new employees and less time growing their franchise.

Competition Is Fierce

Franchises don’t operate in a vacuum, especially in the restaurant industry. It’s inevitable that you’ll have competition surrounding you. In some cases, there may be another, similar restaurant in close proximity to your location. And in other cases, your biggest rival might even be another location of your own brand.

Lack of Control

One of the biggest complaints I often hear from new franchisees is that they are disappointed about the lack of control they have over the business. When you buy into a franchise, you gain the rights to operate the business, but you won’t have much control or creative freedom when it comes to the menu, decorations, uniform, or pricing. If having more freedom is important to you, I recommend opening your own business because, in the franchise system, the franchisor always has the final say.

How Much Do Restaurant Franchises Cost?

Before purchasing a new restaurant franchise, it is important to understand if you have the financial capacity to take on this rewarding (but costly) business venture. Here are some of the different costs you’ll need to consider:

• Franchise fees: $10,000 to $90,000
• Leasing property: $3,000 to $10,000 per month
• Build-out costs: $100,000 to $1 million
• Equipment: $10,000 to $100,000+
• Staffing: 28% to 33% of total revenue
• Marketing: 2% to 5% of total revenue
• Royalties: average 4% to 9% of gross sales

On the low end, you’re looking at around $200,000 to get started. But, on the high end, starting a franchise can easily set you back a couple of million dollars.

Franchising isn’t cheap. But it is an investment. And if you play your cards right, it’s one that pays off.

Ready to Own Your Future?

Here’s the truth: Building a restaurant franchise from scratch is costly and comes with some risks. But when you purchase a franchise, you buy into a proven system and have a much higher chance of success than with a standard business venture.

The only question is—where do you start?

Franzy isn’t just a tool; it’s a platform built for prospective franchisors and franchisees. With Franzy, you can compare hundreds of food and beverage franchises side-by-side and discover emerging franchises before the rest of the world catches on.

Historically, finding a franchise that perfectly fits your goals, values, and budget is a near-impossible task. But with Franzy, your franchise dreams can quickly become a reality.