After signing a franchise agreement, most new franchisees experience a mix of excitement and uncertainty. The due diligence is done. The FDD has been reviewed. The franchise fee has been paid. But the signing is the beginning, not the end, of your legal obligations. The period between signing and opening your franchise involves dozens of legal, financial, and regulatory steps, each with its own deadline. Missing a single deadline can trigger a default under your franchise agreement. At Lopes Law LLC, we guide franchise buyers through this post-signing process to ensure nothing falls through the cracks during this critical period.

This post-signing checklist covers every major legal and administrative step you need to complete between signing your franchise agreement and opening your doors. We have organized it chronologically, starting with the tasks that must happen within the first week and extending through the pre-opening period. The exact timeline varies by franchise concept (a home services franchise may open in 60 days, while a restaurant franchise may take 12 to 18 months), but the categories of obligations are consistent across virtually all franchise systems.

What Happens Immediately After Signing a Franchise Agreement?

The first 30 days after signing are the most legally intensive. These are the steps that must happen immediately, many of which have hard deadlines specified in your franchise agreement.

Week 1: Entity, Banking, and Tax Setup

If you have not already formed your business entity, this is your first priority. Most franchise agreements are signed by the entity, not by you personally, so entity formation should ideally be completed before signing. If the agreement was signed with entity formation still pending (which occasionally happens under time pressure), complete it within the first week.

• Confirm your entity is properly formed. You should have a filed and stamped articles of organization (for an LLC) or certificate of incorporation (for a corporation) from your state’s secretary of state. For more details, read our guide on franchise entity formation.
• Obtain your EIN. Apply for an Employer Identification Number from the IRS at irs.gov. This is available immediately for online applications and is required for opening a bank account, hiring employees, and filing tax returns.
• Open a dedicated business bank account. This account should be in the entity’s name. Never use your personal bank account for franchise operations. Many franchise agreements specify approved banking institutions or payment processors. Check your agreement before choosing a bank.
• File the S-Corp election if applicable. If you plan to elect S-Corp tax treatment, file IRS Form 2553 within 75 days of entity formation or by March 15 of the current tax year, whichever applies. Missing this deadline costs you an entire year of potential tax savings of $5,000 to $15,000.
• Set up your accounting system. Many franchisors require specific accounting software or chart of accounts structures. QuickBooks Online and Xero are the most commonly required. Set this up immediately so you can track all pre-opening expenses from day one.

Week 2: Insurance and Compliance

Your franchise agreement contains detailed insurance requirements that must be met before you begin any construction, hiring, or operations. The franchisor typically requires proof of insurance within 30 to 60 days of signing. Start the process now because commercial insurance quotes take time, and you may need to shop multiple carriers for the best rates.

Insurance Type	Typical Minimum Required	Estimated Annual Cost
General Liability	$1M per occurrence / $2M aggregate	$1,500 to $5,000
Commercial Property	Replacement value of buildout/equipment	$1,000 to $3,000
Workers’ Compensation	State statutory minimum	$1,500 to $8,000
Commercial Auto	$1M combined single limit	$1,200 to $4,000
Umbrella/Excess	$1M to $5M	$800 to $3,000
Business Interruption	12 months of projected revenue	$500 to $2,000

What Business Licenses and Permits Do I Need for My Franchise?

Licensing requirements vary significantly by location and industry. This is one area where franchise owners frequently underestimate the time and cost involved. Some licenses require inspections, background checks, or multi-week processing periods. Start early.

The typical licenses and permits required for a franchise operation include a general business license from your city or county ($50 to $500 annually), a state sales tax permit (usually free), a certificate of occupancy from your local building department (required before you open), signage permits ($100 to $500), an employer registration with your state’s unemployment insurance and workers’ compensation agencies, and industry-specific licenses.

Industry-specific licensing adds another layer of complexity. Food service franchises require health department permits, food handler certifications, and potentially liquor licenses (which can take 3 to 6 months and cost $5,000 to $15,000 depending on the jurisdiction). Childcare franchises require state licensing that involves facility inspections, background checks for all staff, and compliance with specific staff-to-child ratios. Home services franchises may require contractor licenses, which in some states require passing an examination and demonstrating a minimum number of hours of experience.

Your franchisor will typically provide a list of required licenses, but the responsibility for obtaining them is entirely yours. The franchise agreement will state that the franchisee is responsible for all local, state, and federal licensing requirements. Do not assume the franchisor will handle this for you.

A Client Scenario: The 90-Day Scramble

A first-time franchise owner signed a quick-service restaurant franchise agreement and immediately focused on site selection and buildout planning. He spent the first three months working with contractors and architects. At month three, when construction was nearly complete, he realized he had not applied for his health department permit, his sales tax permit, or his certificate of occupancy.

The health department inspection revealed several code compliance issues in the buildout that required $12,000 in corrections. The health permit processing took an additional four weeks after the corrections were made. His certificate of occupancy was delayed because the building permit had not been properly transferred from the previous tenant. His sales tax permit required a $5,000 security deposit because his entity had no prior tax filing history in that state.

The total delay was seven weeks beyond his planned opening date. During that period, he was paying rent ($8,500 per month), insurance ($1,200 per month), and loan payments ($3,400 per month) on a location that was not generating any revenue. The cost of the delay exceeded $30,000. All of it was preventable by starting the licensing process in week one rather than month three.

How Do I Set Up Banking and Accounting for My Franchise?

Financial management for a franchise operation is not optional; it is required by your franchise agreement. Most franchise agreements contain specific financial reporting obligations that begin from the day you sign.

Your accounting system should be set up to track pre-opening expenses separately from ongoing operating expenses. Pre-opening expenses (franchise fee, training travel, initial inventory, buildout costs, license fees, legal fees) are capitalized and amortized over 15 years for tax purposes under IRC Section 195. Treating them as current-year deductions is incorrect and will create problems with the IRS.

Hire a CPA who understands franchise operations. Franchise accounting has specific requirements that general small business CPAs may not be familiar with, including royalty calculations, advertising fund contributions, cost segregation studies for buildout expenses, and the tax treatment of franchise fees. Budget $2,000 to $5,000 per year for accounting and tax preparation for a single-unit franchise. For multi-unit portfolios, expect $5,000 to $15,000 per year. For more on managing franchise costs, see our post on how much a franchise lawyer costs.

What Training Requirements Come with a Franchise Agreement?

Nearly every franchise agreement requires the designated operator (and sometimes additional management personnel) to complete an initial training program before the franchise opens. Training programs vary dramatically in length and format. A home cleaning franchise may require three days of training at headquarters. A full-service restaurant franchise may require six weeks split between classroom instruction at corporate and hands-on training at an existing location.

Key training-related obligations in your franchise agreement typically include a deadline for enrolling in training (usually within 60 to 90 days of signing), a requirement that you complete training before opening, identification of who must attend (the designated operator, at minimum, and sometimes a general manager or assistant manager), and a statement that the franchisee is responsible for all travel and lodging costs associated with training. Budget $3,000 to $10,000 for training-related travel costs, depending on the location and duration of the program.

Failing to complete training within the required timeline is a breach of your franchise agreement. Some agreements give the franchisor the right to terminate the agreement if training is not completed within a specified period. Others allow the franchisor to delay your opening, which means you are paying rent and carrying costs on a location that cannot open. Enroll in the first available training class immediately after signing.

Site Selection, Lease Negotiation, and Buildout

For franchises that require a physical location (as opposed to home-based or mobile franchises), site selection and lease negotiation are among the most consequential post-signing decisions. Your franchise agreement likely contains provisions governing each of these steps.

Site selection deadlines. Many franchise agreements require you to identify and receive franchisor approval for your site within 90 to 180 days of signing. If you fail to secure an approved site within this window, the franchisor may have the right to terminate your agreement. Some agreements allow extensions; others do not. Know your deadline and work backward from it.

Franchisor site approval. Most franchise systems require the franchisor to approve your proposed site before you sign a lease. The approval process involves submitting a site proposal (including demographics, traffic counts, lease terms, and site plans) and waiting for the franchisor’s real estate team to review and approve or reject the location. This review can take two to six weeks. Do not sign a lease or commit to a site without franchisor approval.

Lease negotiation. Your commercial lease is typically the largest financial commitment associated with your franchise, often exceeding the franchise fee by a factor of 10 or more. A 10-year lease at $8,000 per month represents $960,000 in total obligation. Have your attorney review the lease before you sign. Key franchise-specific lease provisions include assignment rights (your ability to assign the lease if you sell the franchise), the right to modify the premises for required remodels, and co-tenancy clauses that protect you if anchor tenants leave the shopping center.

Buildout compliance. Your franchisor will provide specifications for the buildout of your location, including layout, finishes, signage, equipment placement, and brand-standard design elements. Your contractor must build to these specifications. Any deviation requires franchisor approval. Budget an additional 10% to 15% above the contractor’s estimate for unexpected costs, franchisor-required changes, and last-minute modifications.

What Are Common Post-Signing Deadlines in a Franchise Agreement?

The following table summarizes the most common post-signing deadlines. Your specific agreement may vary, so always refer to your franchise agreement for exact deadlines.

Milestone	Typical Deadline	Consequence of Missing
Entity formation	Before signing (or within 30 days)	Agreement may need to be reassigned
Insurance certificates to franchisor	30 to 60 days after signing	Default notice; potential termination
Training enrollment	60 to 90 days after signing	Delayed opening; potential default
Site selection approval	90 to 180 days after signing	Possible termination right for franchisor
Lease execution	30 to 60 days after site approval	Loss of approved site; restart process
Construction start	30 to 60 days after lease execution	Opening delay; increased carrying costs
Grand opening	12 to 18 months after signing	Default; potential termination

Pre-Opening Legal Checklist: The Complete Breakdown

Here is the comprehensive checklist we provide to franchise clients at Lopes Law LLC after signing. Each item includes the category, the specific task, and the recommended completion timeline.

Legal and Corporate

• Confirm entity formation and good standing with secretary of state
• File S-Corp election (Form 2553) within 75 days if applicable
• Execute and finalize the operating agreement
• Record all personal guarantees and maintain copies
• Register for foreign qualification in any additional operating states
• Engage franchise counsel for ongoing compliance questions

Financial and Tax

• Obtain EIN from IRS
• Open dedicated business bank account
• Set up accounting software per franchisor requirements
• Register for state sales tax collection
• Register as an employer with state unemployment and workers’ compensation agencies
• Hire a CPA with franchise experience
• Establish a separate account for royalty payments and advertising fund contributions

Insurance

• Obtain general liability, commercial property, and umbrella coverage
• Name the franchisor as additional insured
• Submit certificates of insurance to the franchisor by the agreement deadline
• Set up workers’ compensation insurance (required before hiring)
• Confirm coverage meets or exceeds franchise agreement minimums

Licensing and Permits

• Apply for general business license
• Apply for all industry-specific licenses (health, contractor, childcare, etc.)
• Apply for signage permits
• Obtain certificate of occupancy (after buildout)
• Register with state attorney general if required for franchise operations in that state

Operations

• Enroll in franchisor’s initial training program
• Complete site selection and submit for franchisor approval
• Negotiate and sign commercial lease (with attorney review)
• Hire and complete contractor selection for buildout
• Order initial inventory and equipment per franchisor specifications
• Set up POS system, phone lines, and technology per franchisor requirements
• Hire and train staff per franchise agreement requirements

Frequently Asked Questions About Post-Signing Franchise Steps

Reach out, we are friendly. Call now for a free consultation at (267) 777-9117 or schedule your free 20-minute consultation online.

For related guidance, read our posts on business entity formation for franchise owners, what an FDD review includes, and franchise validation: how to investigate before you invest.

Last updated: March 12, 2026