---
title: Franchising
description: Franchising lets you run a business under an established brand. You will learn how franchise agreements work, evaluating opportunities, financing and the economics of franchisor and franchisee.
category: business-entrepreneurship
subcategory: entrepreneurship
difficulty: beginner, intermediate, advanced
url: /subject/franchising
---

# Franchising

Franchising lets you run a business under an established brand. You will learn how franchise agreements work, evaluating opportunities, financing and the economics of franchisor and franchisee.

## Available Resources

2 Books • 2 Websites • 2 Papers

## Websites

### 1. Minnesota CARDS Franchise Registration Search

Reading actual FDDs, including several years of one brand to spot closures and transfers, is the most useful due-diligence practice and the only one that bypasses sellers' marketing. The Minnesota Department of Commerce's free public database of franchise registration filings. It holds full Franchise Disclosure Documents from the past ten years, so readers can compare real Item 7 costs, Item 19 earnings claims and Item 20 outlet closures across brands.

**Difficulty:** Intermediate | **Language:** English | **Price:** Free

**Link:** https://www.cards.commerce.state.mn.us/

**Tags:** franchise disclosure document, fdd, franchise due diligence, item 19 earnings claims, franchise registration

### 2. A Consumer's Guide to Buying a Franchise

**Author:** Federal Trade Commission

This is the neutral, regulator-written starting point for anyone evaluating a franchise, and the rest of the field (state regulators, the IFA) reposts it. The Federal Trade Commission's guide for prospective franchisees. It explains franchise fees, royalties and franchisor controls, how to screen opportunities, what each of the 23 items of the Franchise Disclosure Document means, and how to test earnings claims before signing.

**Difficulty:** Beginner | **Language:** English | **Price:** Free

**Link:** https://www.ftc.gov/business-guidance/resources/consumers-guide-buying-franchise

**Tags:** buying a franchise, franchise disclosure document, due diligence, franchise fees, ftc

## Books

### 1. Fundamentals of Franchising (Fourth Edition)

**Author:** Rupert M. Barkoff, Andrew C. Selden, Joseph J. Fittante Jr., Ronald K. Gardner Jr. (eds.)

The American Bar Association Forum on Franchising's primer on franchise law. It covers the definition of a franchise, federal and state disclosure and registration, franchise agreement terms, relationship and termination laws, trademarks, antitrust and international franchising. How franchise agreements work is a core part and this is the neutral legal reference on agreement terms and state relationship laws, written for lawyers rather than for selling franchises.

**Difficulty:** Intermediate | **Language:** English | **Price:** Paid

**Link:** https://www.amazon.com/dp/1634252829?tag=edmonddante07-20

**Tags:** franchise law, franchise agreements, disclosure and registration, franchise relationship laws, trademark licensing

### 2. The Economics of Franchising

**Author:** Roger D. Blair, Francine Lafontaine

An economic analysis of how franchise systems work, drawing on extensive empirical data. It covers franchise contracts, royalty and fee structures, vertical restraints, quality control, tying, encroachment, advertising funds, termination, and the recurring conflicts between franchisors and franchisees. The chapters on encroachment, tying and termination explain the structural reasons franchisee disputes happen.

**Difficulty:** Advanced | **Language:** English | **Price:** Paid

**Link:** https://www.amazon.com/dp/0521775892?tag=edmonddante07-20

**Tags:** franchise economics, vertical restraints, franchise contracts, encroachment, franchisor-franchisee relations

## Papers

### 1. Incentive Contracting and the Franchise Decision

**Author:** Francine Lafontaine, Margaret E. Slade

An NBER working paper that surveys the theory and evidence on why firms franchise some outlets and own others, and how royalty rates and franchise fees are set. It compares principal-agent predictions with the empirical studies.

**Difficulty:** Advanced | **Language:** English | **Price:** Free

**Link:** https://www.nber.org/papers/w6544

**Tags:** franchise contracts, principal-agent theory, royalty rates, vertical integration, industrial organization

### 2. Franchise Rule Compliance Guide

**Author:** Federal Trade Commission staff

The FTC staff's official explanation of the amended Franchise Rule (16 CFR Part 436). It goes through what franchisors must disclose in each FDD item, with sample disclosures, exemptions, timing rules and the rules on financial performance representations.

**Difficulty:** Intermediate | **Language:** English | **Price:** Free

**Link:** https://www.ftc.gov/business-guidance/resources/franchise-rule-compliance-guide

**Tags:** ftc franchise rule, franchise disclosure document, franchise regulation, financial performance representations, compliance

---

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