A layoff can disrupt your plans, but it can also prompt a serious look at what comes next. For some people, that means another job search. For others, it means exploring business ownership.
Franchising is one route to consider, but it is not a consolation prize for losing a job, and it is not a guaranteed shortcut to financial freedom. It is a capital deployment decision. The goal is to build a transferable, scalable asset that can operate with a manager in place, not simply create a new job for yourself.
A 2026 British Franchise Association poll found that 19% of responding franchisee members entered franchising after being made redundant. That is nearly one in five respondents, not a claim about every franchisee or market. It does show that a career transition can lead people to explore ownership.
Before you make that move, consider these ten points.
1. Severance can be startup capital, but protect your runway
Severance, savings, and other available funds may help finance a franchise. But do not treat every dollar you can access as money to spend on opening. Your plan should account for business costs, a working-capital reserve, and personal living expenses while the business establishes itself.
Some buyers explore a ROBS, or Rollovers as Business Start-ups, arrangement to use eligible retirement funds. These structures have complex tax, corporate, and employee-benefit requirements. The IRS explains ROBS compliance risks, including the possibility of losing retirement savings if the business fails or the plan is operated improperly.
Before considering a rollover, speak with an independent ERISA and tax attorney, not only a provider promoting the structure. Also consult a qualified accountant. This is not a decision to make under pressure.
2. Consider ownership as an alternative to another job search
For professionals in their 40s and 50s, a layoff can bring uncertainty about how long a job search will take, whether their experience will be valued, and how to plan for the next stage of their career. Age bias can be a concern, though each person’s situation and job market are different.
Franchising offers another path to investigate: applying your skills to an asset you own rather than returning to a role where you are paid for your time. That does not make ownership easy or right for everyone. It means you can compare the two paths based on your goals, finances, appetite for risk, and desired lifestyle.
3. Buy the system, not the brand name
A familiar brand can be appealing, but name recognition alone does not tell you whether the business suits you or can work in your market. Look at the operating system, training, ongoing support, fees, territory, franchisee feedback, and the economics of an individual location.
A system with a long operating history and a meaningful number of locations may offer more information to examine. For example, a franchisor with 10 or more years in operation and 100 or more units may have a deeper record to investigate. That is not proof of a high survival rate or a strong outcome for a new owner. Ask for actual system data and verify it in the FDD and franchisee conversations.
I learned the importance of fit through my own lifestyle-fit mistake. A brand can look impressive and still be wrong for the life you want to lead. Fit matters more than prestige.
4. Explore service models as well as food and retail
Corporate professionals often bring useful strengths to service-based businesses, including hiring, sales, operations, customer service, and process management. B2B services, home services, senior care, and commercial cleaning may be worth researching alongside restaurants and retail.
Some service models can have less facility and inventory complexity than a traditional storefront, but “service-based” does not automatically mean easy to manage or low-cost to operate. Staffing, scheduling, customer acquisition, local competition, and service quality all matter. Compare the day-to-day work with your strengths and preferences.
5. Calculate the full investment, not just the opening cost
The FDD’s Item 7 estimates initial investment, including certain opening expenses and, where applicable, additional funds for an initial operating period. Use it as a starting point, then build your own plan.
Include:
- Working capital for the first 6 to 12 months, adjusted to the business and market
- Payroll, rent, insurance, taxes, and professional services
- Personal living costs during the transition
- Training, equipment, inventory, marketing, and required fees
- A contingency for delays or costs that exceed estimates
Under-capitalization can put pressure on the business before it has time to establish operations. Get independent quotes where possible and make sure your assumptions are realistic.
6. Read the FDD like an owner
The Franchise Disclosure Document is not just a formality. The FTC’s guide to buying a franchise explains what to review. Pay close attention to:
- Item 6: Ongoing and other fees
- Item 7: Estimated initial investment
- Item 12: Territory rights and limits
- Item 19: Any financial performance representations the franchisor makes
- Item 20: Openings, closures, transfers, and franchisee contacts
- Item 21: The franchisor’s financial statements
Do not rely on verbal earnings promises that are not disclosed in Item 19. Have an experienced franchise attorney review the FDD and agreement, and ask an accountant to assess the financial information.
7. Speak with current and former franchisees
Call at least ten franchisees, including newer owners, established operators, and former franchisees where possible. Item 20 provides contact information to help you build a balanced picture.
Go beyond “Are you happy?” Ask:
- How closely did the opening process match your expectations?
- What costs or challenges surprised you?
- How useful are training and ongoing support?
- What does a typical week require from you?
- What would you do differently if you were starting again?
- For former owners, why did you leave, and how did the transfer process work?
Listen for patterns, not just one person’s opinion. Franchisee conversations are a core part of franchise due diligence.
8. Stress test the numbers before you sign
Build three cases: a base case, a conservative case, and a downside case. Use verified information from Item 19, franchisee discussions, and local market research. Make sure you understand what expenses are included and what may be missing.
If the business only works under the most optimistic assumptions, it does not work for your decision. No financial model can eliminate risk, and no franchisor or consultant can guarantee your results.
9. Use the timeline deliberately
Franchise discovery and due diligence typically take months, not days. The steps can include learning about the business, reviewing the FDD, speaking with franchisees, meeting the franchisor, and getting professional advice.
A layoff can make the urge to act quickly feel intense. Use your runway to investigate carefully instead of treating speed as progress. A franchise consultant can help organize the search and compare options, but the decision should remain yours.
10. Think about the asset you want to build
The objective is not simply to replace a paycheck. It is to build a business with processes, a capable team, and a potential path to transfer or sale. A manager may eventually handle daily operations, but that requires the right model, economics, people, and oversight. It is never automatic, and returns are not guaranteed.
A transferable asset can offer more options than a business entirely dependent on the owner’s daily labor. Evaluate the franchise agreement’s transfer terms, the franchisor’s approval rights, and the system’s history of resale. My lifestyle-fit mistake reinforced this lesson: choose a business that fits your life and long-term ownership goals, not only one that looks attractive at the start.
For more guidance, see Gregory’s book, Real Freedom.
Frequently asked questions
Is buying a franchise a good move after a layoff?
It may be worth evaluating if you have suitable capital, a clear ownership goal, and the willingness to complete thorough due diligence. It is not a fit for every unemployed professional, and it should not be treated as a guaranteed replacement for a salary.
Can I use severance or retirement funds?
Severance and savings may be part of a funding plan. Retirement rollovers, including ROBS structures, require specialized legal and tax advice. Understand the risks before moving any funds.
Does franchising mean I can be absent from the business?
Not necessarily. Many owners are involved, especially at the beginning. Building a business that can be managed by others takes sound systems, staffing, capital, and ongoing oversight.
What should I review before signing?
Review the complete FDD and franchise agreement, validate the numbers with current and former franchisees, and consult qualified legal and financial professionals. You can also use this list of questions to ask a franchisor.
About Gregory Mohr
Gregory Mohr has more than 15 years of experience in restaurants and franchising, has received multiple Franchise Consultant of the Year awards, and is a Wall Street Journal bestselling author of Real Freedom. He has supported more than 300 franchise placements. His role is to provide clear, honest guidance, not pressure you into a decision.
If you are weighing a career transition and want to explore whether franchise ownership fits your goals, book a free discovery call.