When you are interested in buying a franchise, you are presented by the franchisor with a legal document, the Franchise Disclosure Document (FDD), that details your rights and obligations as a franchisee. When you become a franchisee, you obtain the right to operate your business under the franchise’s name and you are also required to pay the initial fee and royalties.
Regarding obligations, the amount and details of rules differ depending on the type of business. If your franchise sells goods or food, you may have to use specific ingredients and products that will be provided by the franchisor. If, instead, your business is service-oriented, you will likely have to follow your franchisor’s manuals and procedures. Any item or service must be previously authorized by the franchisor if not yet specified in the franchise agreement.