Sawaram Suthar / 7 Mins Read
Updated: September 19, 2025
If you're wondering about buying a franchising or acquiring business, then here is solid guide to look.
The business ownership landscape in 2025 looks different from past years. According to PricewaterhouseCoopers’ (PwC) Restructuring 2025 Outlook, higher borrowing costs have reduced access to capital for many companies. Moreover, PwC’s Deals Industry Outlook 2025 reports that inflation continues to pressure both consumers and operators. These financial realities mean that entrepreneurs considering ownership must weigh capital requirements and operating costs more carefully than in previous years.
Artificial intelligence (AI) is another defining force. McKinsey finds that 78 percent of organizations now use AI in at least one business function, up from 55 percent a year earlier. For small businesses, adoption jumped from 39 percent in 2024 to 55 percent in 2025, according to a Thryv survey. AI is streamlining operations and reshaping valuations. Finro Financial Consulting reports that AI-driven companies are achieving average revenue multiples of 25.8x in mergers and acquisitions. OpenLedger adds that AI is reducing due diligence timelines from six to eight weeks to 10–14 days, cutting costs by up to 30 percent.
These shifts mean that both franchising and acquisition are being redefined. Franchising is adopting AI to improve efficiency and customer engagement, while acquisitions are influenced by how well businesses integrate AI into their operations.
Franchising and acquisition remain two of the strongest entry points into business ownership in 2025. The International Franchise Association (IFA) projects franchising output to exceed $936 billion, with nearly 851,000 establishments and more than 210,000 jobs added this year. Bain & Company reports that strategic mergers and acquisitions grew 11 percent year-over-year through May 2025, showing that deal-making remains resilient even in a higher-cost environment.
At the small-business level, BizBuySell’s Q2 2025 Insight Report shows a more cautious environment. BizBuySell reports that 2,342 small businesses changed hands in Q2 2025, down 4 percent from the prior year as tariff uncertainty and financing constraints slowed activity.
Buyers are proceeding cautiously, especially in industries exposed to import costs, but deal volume remains only 1% lower than the previous quarter, suggesting that demand has not disappeared but just shifted under new conditions. This contrast highlights how larger corporate transactions remain active while small business deals are adjusting to credit conditions and financing constraints.
Because both paths offer opportunity, the choice comes down to alignment between personal goals and market realities. This assessment helps clarify which path fits your circumstances. Score each factor 1-5:
| Factor | Favors Franchising | Favors Acquisition | Your Score |
| Available Capital | Limited startup funds (4-5) | Substantial capital (1-2) | |
| Risk Tolerance | Prefer proven systems (4-5) | Comfortable with unknowns (1-3) | |
| Control Preference | Guided operations (4-5) | Full autonomy (1-2) | |
| Industry Experience | Limited/none (4-5) | Relevant background (1-3) | |
| Exit Timeline | Long-term operation (3-5) | 3-7 year exit (4-5) | |
| AI Integration | Learn with franchisor (4-5) | Build/acquire own (1-3) |
Interpretation:
Entrepreneurs can use three filters to guide that decision:
1. Financial Goals
2. Risk Tolerance
3. Exit Horizon
Defining financial goals, risk tolerance, and exit horizon provides clarity on which ownership path is more realistic. The next step is verification. Both franchising and acquisition demand careful due diligence to confirm assumptions, uncover risks, and ensure that the chosen path is built on solid ground.
Every ownership path looks promising at first glance, but the details determine whether it succeeds. Due diligence is the process of confirming those details before signing a franchise agreement or purchase contract. Skipping this step can turn an opportunity into a liability. Due diligence confirms whether an opportunity is as strong as it looks.
Franchising
According to the IFA, the FDD is the central tool for assessing a franchisor’s stability. It contains audited financial statements along with other key information:
Numbers alone are not enough. The FTC advises buyers to study fees, contract terms, and obligations carefully. Speaking directly with current and former franchisees helps test whether the franchisor delivers on its commitments, how responsive support teams are, and what margins look like in day-to-day operations. Visiting actual franchise locations and observing customer traffic, staff practices, and marketing execution can further confirm whether the system operates as advertised.
According to BizBuySell’s Due Diligence Checklist, buyers should begin by reviewing financial and operational records that reveal the true condition of a business. Key areas include:
The checklist also highlights the importance of checking for pending legal issues and reviewing physical assets, equipment, and inventory for condition and replacement needs. Speaking with staff and major customers helps confirm whether relationships will endure after the sale. Visiting the business in person allows a buyer to see operations firsthand, from workflow to customer service. Accountants and attorneys provide the final safeguard, confirming liabilities and ensuring the purchase agreement protects the buyer.
Access to capital is one of the biggest factors in choosing between franchising and acquisition. The cost of borrowing has risen in 2025, and financing structures often determine whether a deal can close.
Franchising
Franchise buyers often rely on the Small Business Administration’s (SBA) 7(a) loan program. According to the SBA, franchises are eligible if they appear on the SBA Franchise Directory, and lenders often view them as lower-risk because of their proven models. Some franchisors also offer in-house financing for franchise fees or equipment purchases, making entry more accessible. Retirement plan rollovers, where owners use existing 401(k) or Individual Retirement Account (IRA) funds without early withdrawal penalties, are another tool supported by specialized providers.
Acquisition
BizBuySell’s Q2 2025 Insight Report notes that tighter lending standards have shifted many acquisitions toward seller financing. In these structures, the seller finances part of the purchase price, typically 10–25 percent, and payments are made over time. Buyers may combine this with bank loans, SBA 7(a) loans, or outside investors. Equity partnerships, where multiple investors pool resources to purchase a business, are also becoming more common in higher-value transactions.
Closing a deal is only the beginning. The first three months often determine whether the transition is smooth or disruptive. A clear execution plan reduces uncertainty and helps owners establish credibility with employees and customers.
Franchising
The IFA emphasizes the importance of following the franchisor’s established onboarding process, which usually covers site setup, staff training, and launch marketing. A practical 90-day roadmap may include:
Acquisition
According to BizBuySell’s First Steps After You Buy a Business, new owners should avoid making major changes immediately and instead focus first on learning how the business operates. A practical 90-day roadmap may include:
BizBuySell emphasizes that the first months are about listening and stabilizing, not overhauling. By communicating clearly with staff and customers, and by watching how the business runs in practice, buyers can build trust and prepare for more significant changes later.
Even with careful planning, new owners often make avoidable mistakes. Awareness of these pitfalls helps reduce the chance of expensive setbacks.
Franchising
· Entering without enough working capital to cover slow ramp-up periods.
· Overlooking restrictions on marketing, territory, or supplier choices.
· Accepting promises from sales staff without verifying them in the FDD.
· Failing to speak with multiple current and former franchisees for a balanced view of system support and profitability.
· Underestimating time demands, especially during the first year of operations.
· Mismatch between the franchisor’s culture and the owner’s values or management style.
Acquisition
· Relying on seller-provided numbers without independent review of tax returns and financials.
· Ignoring customer concentration risk where a few clients drive most revenue.
· Overlooking lease terms, supplier obligations, or pending legal issues that transfer with the sale.
· Neglecting cultural fit between buyer and staff, leading to turnover during transition.
· Failing to connect with the local customer base, causing loyalty to weaken.
· Overestimating the ease of replacing the seller’s personal relationships that kept the business running.
Both franchising and acquisition offer real opportunities, but they suit different types of owners. Franchising brings stability, brand recognition, and a clear playbook. It is a good fit if you value proven systems and want to avoid reinventing the wheel. Acquisition gives you control, immediate cash flow, and the chance for bigger returns, but it also puts more responsibility on your shoulders.
Some buyers even combine the two. Acquiring an existing franchise location blends structure with continuity. Others start with one model and expand into the other as their confidence and resources grow.
The better path is not about what looks best on paper. It comes down to fit. If you thrive with rules, support, and consistency, franchising may feel right. If you prefer independence, decision-making freedom, and building value your way, acquisition may be more rewarding.
In a year shaped by higher borrowing costs, inflation pressures, and rapid tech adoption, the smartest move is the one that matches both the market and who you are as an owner. What matters most is choosing the path you can see yourself committed to, because ownership is a long game and success comes from consistency as much as from the model you choose.
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Sawaram Suthar (Sam) is a Founding Director at Middleware. He has extensive experience in marketing, team building and operations. He is often seen working on various GTM practices and implementing the best ones to generate more demand. He has also founded a digital marketing blog - TheNextScoop.
