What Is an Insurance Franchise? Everything You Need to Know

If you’re someone looking to run your own business but don’t want to build it from scratch, an insurance franchise might be exactly what you need. It’s perfect for the business owner, the ex-sales rep, the side hustler with ambition, or even seasoned insurance agents who want more control and success.

As a franchise owner, you’ll not just work in the insurance industry, you will own a slice of it. And to do that, you need a strong business model, one that builds on brand recognition, supported by a solid franchise agreement, and backed with a franchise disclosure document (FDD). But before you get involved, you need to know what you’re buying into.

Because starting an insurance franchise isn’t similar to opening a shop. You need to understand the policy, compliance, customer service, and how franchise owners turn insurance coverage into substantial profit.

In this article, we’ll walk you through it all, including what an insurance franchise is, how an insurance franchise works, and the key components like training, fees, and legal requirements. We’ll also break down the cost of opening an insurance office, the return on investment, and how much franchisees actually make.

Additionally, you’ll learn how to choose the best insurance franchise, the pros and cons vs. independent insurance agencies, and why the franchisor's offers make all the difference. We’ll talk about risk, customer satisfaction, insurance products, common challenges, success tips, and even what it’s like to run one in Michigan. So, let’s get started!

What Is an Insurance Franchise?

In simple words, an insurance franchise is a type of business model where you buy the rights to run an insurance business under an established brand. You don’t need to build your company from the ground up. Instead, you operate using the franchisor’s name, tools, training, and support. You follow their system and use their proven strategies to sell insurance products.

Let’s say you’re a licensed insurance agent or a new business owner with no prior experience in insurance. If you want to start an independent insurance agency, it could take years to build brand awareness, develop a client base, and earn trust. But with the franchise, that’s already done.

So, by becoming a franchise owner, you walk into the market with a recognized name, ready-made insurance products, and access to an industry-approved system. And that’s the best thing about insurance franchise opportunities.

Franchise offers a variety of insurance products like auto insurance, motorcycle insurance, RV insurance, renters insurance, home insurance, health insurance, and even business commercial auto insurance. And these products are backed by top insurance companies or trusted carriers. Your job is to match the right insurance policy with the right customer.

Many insurance companies offer franchise opportunities. If you want to start an insurance franchise in Michigan, contact L.A. Insurance. By starting an L.A. Insurance franchise, you can earn a substantial profit. Our team will help you with all the training, resources, and support you need. Call us at (800) 893-9393 to schedule a meeting.

How Does an Insurance Franchise Work?

An insurance franchise works like a partnership between you and an insurance company. You (the franchisee) pay to use the brand, business systems, and insurance products of an established franchisor. In return, the franchisor offers tools, training support, and a proven business model to help you grow.

Usually, there are two types of insurance franchise setups.

• Captive Model
• Independent Model

In a captive model insurance franchise system, you’ll only sell insurance products from one insurance company. It’s great for beginners who want a strong brand backing and stick with one playbook.

In the independent model, you will have the opportunity to work with multiple carriers. It offers more flexibility and options to your clients. Subsequently, it requires more training. But at the same time, it gives you wider reach and stronger risk management potential.

So, the insurance franchise will work based on the chosen model type. However, in general, here’s how the insurance franchise works for everyone:

1. You Choose Franchise Brand

You pick from available insurance franchise opportunities. Maybe it’s a company that focuses on auto insurance or a brand with a broad range of personal line insurance, like auto insurance, property insurance, life insurance, home insurance, or health insurance. Some franchises specialize in casualty insurance or even niche areas like professional liability insurance or travel insurance.

2. Your Sign a Franchise Agreement

This is a legal contract. It includes your responsibilities, the franchise fee, ongoing royalty payments, territory rights, marketing rules, and operational guidelines. Before signing, you’ll receive a franchise disclosure document (FDD). That document shows you the fine print, cost, risks, terms, and even any past lawsuit history tied to the brand.

3. You Get Training and Tools

Once you’re in, the franchisor offers onboarding sessions, product education, marketing support, and access to tech tools like software for quoting, customer management, and claims tracking. Some brands even assist with finding the right real estate or lease for your franchise office. You might also get help with insurance licensing, which is required for franchisees. In this process, you’ll also learn about compliance, data security, and how to reduce legal liability.

4. You Sell Insurance

Now you’re ready to sell insurance. You’ll help individuals and businesses choose the right insurance coverage from vehicle insurance to group insurance, and everything in between. You’ll also guide people to understand policies, explain deductibles, and help them with renewals and claims. The role will reveal you’re no longer an insurance agent. You’re an agency owner.

5. You Earn Commission and Build Profit

Each time a customer buys an insurance policy, you earn income. The more policies you sell and, better your customer service, the more you grow. Many franchises even let you scale up and open more locations as you build your reputation. And this leads to more long-term profit, recurring revenue, and business with real return on investment.

Key Components of a Franchise Agreement

Before starting an insurance franchise, you’ll sign a legally binding franchise agreement. This document defines how your relationships with the franchisor will work, what you’re allowed to do, and what’s expected from you as a franchisee.

Here are some key parts you need to pay close attention to:

• You’ll pay a franchise fee upfront and regular royalties to keep using the established brand and its resources.
• Your assigned territory will be clearly defined to protect you from competing franchise owners nearby.
• It will list approved insurance products and available insurance carriers you can offer to each customer.
• The franchisor offers onboarding, system training, and ongoing support to help you grow your insurance business.
• You must follow branding rules to maintain consistent brand recognition and build strong customer service standards.
• It includes compliance requirements for your insurance license, data handling, and general risk management.
• The contract length, renewal terms, and exit options will be explained clearly in the franchise disclosure document (FDD).
• Some agreements may include sales benchmarks, policy targets, or inventory expectations to stay in good standing.

Every line in this contract matters. So, read it with care. If you have any doubts, bring in a franchise attorney or expert who understands legal liability in the insurance industry.

Benefits of Investing in an Insurance Franchise

Investing in an insurance franchise allows you to use a successful business model instead of starting from the beginning. This option is a real opportunity for new business owners or current insurance agents who want to grow quickly. The insurance franchise market is valued at $15 billion in 2024 and is projected to reach $25 billion by 2033, growing at a 6.5% CAGR. And this makes it a promising investment opportunity.

Here are the key benefits of investing in an insurance franchise:

• You bring a strong brand that people recognize and trust. This trust takes years to build on your own.
• The franchisor offers full support, training, marketing tools, software, and operational systems.
• You get access to a variety of insurance products like health insurance, auto insurance, home insurance, and business insurance.
• Your earnings can grow fast, thanks to recurring policy renewals and a ready-to-go business model.
• You don’t need deep industry experience. You just need the right license, a drive to learn, and a focus on customer service.
• Scaling is easier with an established brand, built-in risk management, and centralized systems from the franchisor.
• You benefit from group insurance carrier relationships, helping you offer competitive pricing and more insurance coverage options.
• Compared to starting an agency alone, this model lowers startup risk while increasing your chance of profit and long-term return on investment.

Learn More: Key Benefits of Joining an Insurance Franchise

How Much Does It Cost to Open an Insurance Franchise in the U.S.?

The cost of opening an insurance franchise in the U.S. isn’t one-size-fits-all. But there are clear ranges to expect. Most franchise opportunities require an initial franchise fee between $25,000 and $50,000, depending on the insurance company’s brand strength, market reach, and support system.

However, that’s just the starting point. Add in expenses like licensing, legal fees, office space, technology, and marketing, and the total investment can easily climb to $60,000 to $100,000 or more. Some lower-cost models (like home-based setups) may start as low as $12,250, but full-scale operations typically cost more.

You’ll also be paying ongoing royalty fees, usually 5% to 7% of your gross revenue, plus optional advertising fees. These funds support customer service systems, brand marketing, and the tools your franchisor offers to help you scale your insurance business effectively.

How Much Does an Insurance Franchise Owner Make?

Earnings in the insurance franchise space can vary a lot. But if you’re running your agency well, offering a variety of insurance products, and building strong client relationships, the numbers can be impressive.

Most franchise owners make between $50,000 and $125,000 per year. Some top performers with multiple offices or high-volume insurance policy sales can go beyond $150,000 annually. Becoming an L.A. Insurance franchise, you can earn monthly revenue between $6,000 to $12,000.

However, it’s important to remember that earnings can be affected by several factors such as location, sales skills, customer retention, and the types of insurance coverage you sell. Your ability to manage risk, deliver great customer service, and use the tools your franchisor provides can turn average results into real profit.

Difference Between Insurance Franchise and Independent Insurance Agency

An independent insurance agency is locally owned and partners with multiple insurance carriers. An insurance franchise, on the other hand, operates under a larger brand that offers a more unified experience, built-in tools, and access to wider networks of insurance products with centralized support and structure.

The following table about an insurance franchise vs. independent insurance agency demonstrates the key differences: 

Why Choose an Insurance Franchise Over an Independent Agency?

Choosing an insurance franchise gives you quick access to a trusted brand and effective systems, along with a support network. You won't have to find insurance carriers, create software, or build a marketing team on your own. The franchisor provides all this, along with training, tools, and help with risk management.

Here are a few key points that highlight why an insurance franchise is better than an independent agency:

• Proven business model
• Brand recognition
• Comprehensive training & support
• Pre-approved insurance carriers
• Marketing assistance
• Easier scalability
• Compliance help  

Besides, with a franchise, you can focus on customer service, policy sales, and building profit, not setting up the backend. It's ideal if you want to avoid the speculation and minimize early-stage mistakes while still running your own insurance business.

How to Successfully Open an Insurance Franchise in the U.S.

Starting an insurance franchise in the U.S. is a straightforward process, but it requires careful attention and preparation at each step. Here’s how to get started the right way:

1. Start with research: Look into available insurance franchise opportunities and compare what each franchisor offers, such as products, tools, fees, and support.
2. Review the franchise disclosure document (FDD): This is where the facts live. Understand the cost, commitments, legal liability, and expectations before you move ahead.
3. Secure funding: You’ll need to cover the franchise fee, license, possible real estate, setup, and startup operations. Consider loans or small business financing.
4. Apply and interview: Most insurance companies screen applicants. Be ready to show you're serious, driven, and understand the insurance industry.
5. Sign the franchise agreement: Once approved, sign your contract and officially become a franchisee.
6. Complete onboarding: The franchisor offers training, marketing tools, software, and sales systems. Pay close attention. This is your foundation.
7. Launch your agency: Set up your office (physical or remote), get licensed in your state, and start offering a variety of insurance products to your customers.

How to Choose the Best Insurance Franchise to Own

Not all insurance franchises are the same. When choosing one, you should focus on what fits your needs, the opportunities available, and the potential for long-term profit.

Here’s what to look for when choosing the best:

• Brand strength and reputation: Choose a franchise with strong brand recognition and a proven track record in the insurance industry.
• Support and systems: A good franchisor will offer training, tech platforms, risk management, marketing, and clear onboarding.
• Range of insurance products: The best franchises offer multiple lines, including auto, home, life, health, and business insurance, to help you reach a wide customer base.
• Carrier relationships: Find out what insurance carriers the franchise is partnered with. More options mean better insurance coverage for your clients.
• Earning potential: Review average return on investment, customer satisfaction scores, and real franchise owner income data. Look for transparent numbers.
• Startup cost and fee structure: Compare the franchise fee, royalties, and any additional costs tied to advertising or operations. Make sure it fits your budget and goals.
• Flexibility and territory rights: You need to know what territory you’ll get and how much control you’ll have over operations, sales, and growth.
• Reviews and franchisee experience: Talk to existing franchise owners. Read reviews. Look at real stories, especially from people in your state or similar markets.

Read More: How to Start an Insurance Franchise?

Operating an Insurance Franchise in Michigan

Starting an insurance franchise in Michigan is a great opportunity for entrepreneurs wanting to join or grow in the insurance industry. Michigan is the 10th most populated state in the U.S., and many households own cars, motorcycles, RVs, rental apartments, boats, or commercial vehicles that need insurance.

Plus, the Great Lake State has a strong economy and a diverse population, which creates a favorable environment for a successful franchise. Here are 3 key reasons to consider Michigan for your insurance franchise:

• Michigan’s central location in the Midwest offers access to a broad customer base and facilitates regional expansion.
• The state’s diversified economy, involving automotive, manufacturing, healthcare, and technology sectors, ensures a steady demand for various insurance products.
• Michigan’s regulatory framework is conducive to business operations that ensure clarity and support for insurance franchises.

L.A. Insurance, based in Detroit, is the largest independent insurance company in North America with over 200 locations and a strong brand image. We offer insurance franchise opportunities that can help you grow your business.

Looking for an affordable insurance franchise opportunity in Michigan? We have exciting new locations available across the state, including Traverse City, Rapid City, Petoskey, Charlevoix, Mackinaw City, Owosso, Port Huron, Midland, Ludington, Coldwater, Niles, Sault Ste. Marie, Sturgis, Grand Haven, New Buffalo, Menominee, Birch Run, Bay City, and Battle Creek. Don't miss this chance to expand your business in thriving communities. Secure your franchise today!

What Are the Common Challenges Faced by Franchisees?

Although an insurance franchise can lead to a noteworthy amount of revenue, the path isn’t always a bed of roses. There are a few hurdles that many franchise owners face, even though the business model comes with structure and support. First-time franchise owners in particular encounter more challenges while navigating a highly regulated, customer-driven industry.

Here are the most common struggles franchisees face:

• Strict Franchise Guidelines: Every franchise agreement has rules. From branding to pricing to marketing language, you must follow systems built by the franchisor, which can feel limiting sometimes.
• Ongoing Fees: Recurring royalty fees, tech fees, and advertising contributions can eat into your early-stage profits. Understanding your cost structure is important to managing expectations.
• High Competition: The insurance industry is saturated. Competing with local independent agencies, online insurance companies, and other insurance franchisees takes a smart strategy and standout customer service.
• Carrier Limitations: Some franchisors work with limited insurance carriers. This reduces your ability to offer certain products, which can impact customer satisfaction.
• Compliance and Liability: You’ll have to stay on top of licensing, privacy laws, and legal liability issues. Errors in insurance policy handling or data breach events could lead to a lawsuit or even the loss of a license.
• Burnout Risk: Managing sales, service, training, and operations can stretch any agency owner thin. Without the right tools and systems, burnout is real.

How to Mitigate Risks?

Risk is part of any insurance business, but smart decisions and strategy can reduce exposure. Here’s how to protect your investment and stay resilient as a franchisee:

• Understand the FDD inside-out. Before signing, study the franchise disclosure document (FDD) carefully. Know the fees, limits, and liabilities. If needed, hire a franchise attorney.
• Choose a franchise with full support. offers strong training, compliance guidance, and reliable tech. Pick a brand where the franchisor tools to reduce mistakes and boost efficiency.
• Diversify your insurance products. Offering a variety of insurance products—like home insurance, vehicle insurance, business insurance, and life insurance—helps protect you from seasonal or economic shifts.
• Invest in strong risk management practices. Use professional liability insurance, general liability insurance, and business interruption insurance to shield your business from unexpected setbacks.
• Track performance and adjust. Review your policy sales, customer feedback, and expenses monthly. Small improvements in customer service, marketing, or lead follow-up can increase profit and retention.
• Keep your team well-trained. Good people reduce your risk. Make sure your staff understands policies, sales ethics, and how to handle sensitive personal data properly.
• Stay current with licensing and laws. Keep your license updated. Know your state’s requirements for insurance coverage, reporting, and compliance.

Key Tips for Succeeding as an Insurance Franchise Owner

• Know your franchise agreement and FDD before signing anything.
• Build strong customer relationships through consistent communication.
• Focus on insurance products that solve real customer problems.
• Invest in excellent customer service from day one.
• Follow the franchisor’s training and operational systems closely.
• Track your sales and expenses monthly
• Use the provided software and tools to simplify
• Stay compliant with all licenses and legal requirements.
• Always seek referrals; word of mouth drives long-term growth
• Keep learning and try to adapt to industry changes and customer needs

Frequently Asked Questions (FAQs)

What are the disadvantages of owning an insurance franchise?

Owning an insurance franchise can limit flexibility due to strict franchise agreement rules, follow set systems, and depend on the franchisor’s brand direction. It’s not fully independent, and success still requires strong effort, sales skills, and consistent customer service.

Which insurance company offers the best franchise opportunities?

Several insurance companies provide compelling franchise opportunities:

• L.A. Insurance offers a low entry cost starting at $2,500, comprehensive training, and a 95% franchisee success rate, making it an attractive option for new entrepreneurs.
• Freeway Insurance franchise is expanding rapidly since 2021, offering opportunities in over 580 locations nationwide.
• Brightway Insurance provides extensive training and a range of insurance products, supporting franchisees in building diversified portfolios.
• Goosehead Insurance boasts over 1,200 locations with a proven model and strong support system.  

What is franchise insurance?

Franchise insurance is coverage that protects franchise owners from legal, property, and operational risks tied to running a franchise.

Does the franchise need insurance?

Yes. Every insurance franchise must carry required coverage like general liability insurance, property insurance, and professional liability insurance.

Who pays the franchise owner?

Franchise owners earn income through commissions, fees, or revenue shares from selling insurance policies to customers.

What do you call a franchise owner?

A franchise owner is also called a franchisee, an individual who operates a business under a franchisor’s established brand and system.

How do franchise owners get paid?

Franchise owners don’t receive a traditional salary like employees. Instead, they earn income from the business’s profits after covering all expenses, including operating costs, royalties, and fees. Their earnings depend on the franchise’s performance and profitability.

What is the main difference between franchise insurance and group insurance?

Franchise (business model) insurance provides customized coverage for small businesses or individuals, with each policy underwritten individually. In contrast, group insurance offers a standard policy for a whole group, with premiums set for everyone in that group. Group plans are typically more affordable and easier to access.