Franchises: Entity per Location vs One Entity + DBAs

What to know

• California per-location LLCs multiply the $800 fast: 5 units = $4,000/yr before fees.
• One entity + DBAs is cheaper but lets one location’s lawsuit reach all units.
• Franchisors often mandate entity structure: read the FDD before optimizing.

Entity per location

Many franchisees own each unit through its own LLC so a lawsuit or lease default at one location can't reach the others. In California each LLC pays $800 a year plus the fee on its own receipts, five units cost $4,000 before fees. Each also files its own Form 568, payroll accounts, and local licenses.

One entity with DBAs

A single entity operating every location under trade names is cheaper and simpler, but every location's liabilities reach the whole business. Insurance can cover much of the risk; lease guarantees and loan covenants often can't be contained by entity structure anyway.

Read the franchise agreement first

Franchisors often dictate entity structure, require personal guarantees, and restrict transfers to new entities. Check the Franchise Disclosure Document and agreement before reorganizing, and coordinate any restructuring with lenders and landlords.