Buying an existing franchise location from its current owner (example scenario)

What it costs to start

Amounts are itemized estimates. “Not verified” means we don’t have a defensible figure; it is not $0.

Ongoing costs

Financing

Financing may come from a bank loan, a note to the seller, or both; none is guaranteed. Some brands are eligible for SBA-backed loans, and SBA 7(a) loans can be used for changes of ownership. Check current eligibility and equity rules with a lender.

What you need

• Equipment included in the sale (inspect it)
• Franchisor-required systems and software
• Helpful: Franchisor approval of you as the new owner — The sale usually cannot close without it. Franchisors may apply financial, experience and background criteria.
• Helpful: Signing the franchisor’s current agreement — Some franchisors require it, which can change fees, territory or remaining term compared with the seller’s agreement.

Licensing: Local business licenses, permits and insurance usually need to be issued in the new owner’s name. The franchisor’s approval is separate from any government license.

Skills that help: Operations and management, Sales, Customer service, Accounting or administration.

Time: An operating location needs an owner or manager from day one; the transition period is especially demanding.

Typical customer: The location’s existing customers within its territory

How it makes money: Sales under the franchise brand, minus royalties, advertising fees and operating costs

Business model: Franchise, Existing business acquisition

Risks and downsides

• The location may be for sale because it underperforms; verify why the owner is leaving.
• The franchisor can reject you, delaying or killing the deal after you have paid for due diligence.
• A transfer may require signing a new agreement with higher fees or a shorter remaining term.
• Required remodels or equipment upgrades can add cost after closing.
• Seller-reported sales may not match royalty reports; compare both.
• The remaining term of the franchise agreement may be short, with uncertain renewal.

Your first step

Then

1. Ask the franchisor for its current FDD and read Item 6 (fees), Item 17 (transfer) and Item 20 (outlet turnover).
2. Ask the franchisor in writing what it would require to approve a transfer of a specific location.
3. Compare the seller’s financial statements with royalty reports and tax returns, with an accountant.
4. Call current and former franchisees from Item 20 about the brand’s support and resale experience.

Sources and review

• A Consumer’s Guide to Buying a Franchise (Federal Trade Commission). Supports: What the Franchise Disclosure Document covers and questions to ask before buying.
• A Consumer’s Guide to Buying a Franchise (full text) (Federal Trade Commission). Supports: Item 17 explains what is needed for franchisor approval to sell a franchise; for an existing outlet, the franchisor must disclose who owned and operated it for the last five years.
• Buy an existing business or franchise (U.S. Small Business Administration). Supports: Due diligence when buying a business, using an attorney and accountant, and the SBA Franchise Directory of brands eligible for SBA financial assistance.
• 7(a) loans (U.S. Small Business Administration). Supports: SBA 7(a) loans can be used for complete or partial changes of ownership. Does not show whether any borrower qualifies.

Last reviewed October 18, 2026. Method: Itemized editorial estimate built from typical starter equipment and setup items. Cited sources support the requirements and context, not each dollar figure. Items we could not price defensibly are marked "Not verified" instead of $0. Local prices vary.