Buying an existing franchise means buying the business from the franchisee who owns it, with the franchisor's consent, and then operating it under the brand. It is usually called a transfer, and it is a different transaction from buying a new franchise even though it arrives at the same place.
How to buy a franchise, the sequence covers a new unit. The differences below are worth knowing before an offer rather than after one.
You may not be entitled to a disclosure document
The Federal Trade Commission's compliance guide is direct about this. A transferee, meaning somebody who buys an existing franchise directly from the franchisee who owns it without any significant contact with the franchisor (opens in a new tab), is not a prospective franchisee under the Rule.
It then goes further. Even where the franchisor has and exercises the right to approve or refuse the sale, the transferee is still not entitled to disclosures, unless the franchisor plays some more significant role in it.
So the 14 calendar day waiting period, the twenty three items and the receipt can all be absent from a transaction that otherwise looks exactly like buying a franchise, and nothing has gone wrong.
The one thing that changes it
The guide gives the example that flips it. Where the franchisor provides financial performance information to the prospective transferee (opens in a new tab), the franchisor is required to provide that transferee with its disclosure document.
That is worth holding on to in both directions. If a franchisor offers you figures during a transfer, a disclosure document is owed to you and you should have it. If no figures are offered and no document appears, that is the Rule working as written rather than somebody cutting a corner.
What you can read instead
The absence of a document does not leave you with nothing, and what replaces it is stronger. An operating unit has records, which a new unit never does: tax returns, the royalty reports filed with the franchisor, supplier accounts, payroll, and the lease with its remaining term. Ask for the royalty reports specifically, because they were prepared for a recipient with an interest in their accuracy.
The agreement you sign is not the one being sold
What a transfer requires is disclosed rather than customary, and there is a fixed place to read it. Item 17 of the disclosure document (opens in a new tab) carries a row for the franchisor's approval of a transfer by the franchisee and another for the conditions of that approval, which is where a particular system sets out what it wants: the buyer qualifying, a transfer fee, a release, and which form of agreement gets signed. What is actually in a franchise agreement covers what that document contains.
So the remaining term, the royalty rate, the territory definition and the renewal conditions may all differ from what the seller has been operating under. The business being valued is not quite the business that will be owned, and that difference belongs in the price rather than in a surprise after closing.