What is a Franchise Disclosure Document (FDD)?
The FDD is a legal document franchisors must provide at least 14 days before any agreement is signed. It contains 23 items covering the franchisor's background, fees, obligations, litigation history, financial performance representations, and more. Reviewing it carefully — ideally with legal counsel — is one of the most important steps in the process.
How much capital do I need to buy a franchise?
Investment requirements vary enormously — from under $50,000 for home-based or service franchises to several million dollars for full restaurant or retail concepts. The FDD discloses the estimated initial investment range. The Quick Fit Assessment helps identify opportunities aligned with your available capital.
What is a franchise fee vs. a royalty fee?
A franchise fee is an upfront payment for the right to use the brand and systems — typically $20,000–$50,000 or more. Royalty fees are ongoing payments, usually a percentage of gross sales, paid to the franchisor on a recurring basis. Both are disclosed in the FDD.
How do I evaluate a franchise opportunity?
Evaluation involves reviewing the FDD, speaking with existing franchisees (called validation), assessing the brand's market position and support, understanding unit economics, and — most importantly — assessing fit against your own goals, capital, lifestyle, and operational preferences. The AFC MatchIQ Process structures this evaluation in a buyer-centered way.
What questions should I ask existing franchisees?
Key questions include: How long did it take to reach profitability? How responsive is the franchisor's support team? What would you do differently? Does the actual investment match the FDD estimates? Would you buy this franchise again? Speaking with multiple franchisees at different stages of their tenure gives the most complete picture.
What is the role of a franchise consultant?
A franchise consultant (or broker) helps prospective buyers navigate the franchise selection process. AFC's approach differs from typical brokers — we start with a structured assessment of you, rather than presenting a catalog of brands and working backward. Our advisory services are provided at no cost to buyers; we are compensated by franchisors upon placement.