# NEMT Franchise in 2027: What to Check in the Disclosure Document Before You Buy

Canonical URL: https://nemtguide.com/guides/nemt-franchise/ · Updated 2026-09-28

A NEMT franchise sells you a brand, training, and a system, but not Medicaid enrollment or broker trips. Your own company still enrolls, gets its NPI, and signs each broker contract. The FTC Franchise Rule requires the franchisor to give you its disclosure document at least 14 calendar days before you sign or pay, so compare its fees in Items 5 to 7 with starting on your own.

- A franchise brand does not come with Medicaid enrollment, an NPI, or broker trips. Your company gets each one itself.
- You must receive the disclosure document at least 14 calendar days before you sign or pay, and its cover page warns that no government agency has verified it.
- Read Items 5, 6, 7, 12, 17, 19, and 20 first, with a franchise lawyer and a health care lawyer.
- Royalties are often a percentage of gross income, and the FTC warns they are typically owed even when you are losing money.
- If you already know your state's rules, starting on your own skips the fees, and SCORE mentors advise at no cost.

A franchise is a way to buy a ready-made system: a name, a manual, training, and someone to call. In many industries, the brand also brings in customers. NEMT is different. Much of the work comes from Medicaid programs, health plans, and brokers, and they send trips to the company that enrolled and signed the contract, not to a brand.

That does not make every NEMT franchise a bad deal. It means you should know exactly what the fees buy before you pay them, and the federal disclosure rules give you the tools to find out.

## What a NEMT franchise can and cannot give you

The FTC defines a franchise by three features: you operate under the franchisor's trademark, the franchisor exerts significant control or gives significant help with how you operate, and you pay the franchisor to start (16 CFR 436.1(h)). The FTC's guide to buying a franchise lists what that help usually covers: training, an operating manual, and advice on management, marketing, and staff.

The approvals that let a NEMT company get paid are a separate matter. Each one belongs to your own company.

| What you need | Can a franchisor provide it? | Who actually grants it |
|---|---|---|
| Brand name, logo, and marketing | Yes | The franchisor, under the franchise agreement |
| Training, manuals, and forms | Yes | The franchisor, as described in Item 11 |
| An EIN and a Type 2 NPI | No | The IRS and CMS, to your company, both free |
| Medicaid enrollment | No | Your state Medicaid agency, which collects disclosures on your company and its owners |
| Broker and health plan contracts | No | Each broker, after it credentials your company |
| State and local licenses | No | The state or local agency that licenses NEMT vehicles |
| Trip volume | No | Brokers assign trips at their own discretion |

Broker contracts show the limit. MTM Health's standard provider agreement, in the January 1, 2023 version Pennsylvania posts, says it guarantees no minimum number of trips and that trip volume is at MTM's sole discretion (section 1.K). It also says the provider has no claim or right to transport any particular person or anyone at any particular facility (section 1.Q), and it bars assigning or subcontracting the agreement without MTM's written consent (section 12.A). A franchisor cannot hand you a broker contract, and the territory it sells you does not bind a broker.

Enrollment can also be closed where you want to work. Minnesota stopped enrolling new NEMT providers located in the seven-county Twin Cities metro area on January 27, 2026, and on July 23, 2026 extended the freeze to January 27, 2027 (see [our news report](https://nemtguide.com/news/minnesota-metro-nemt-enrollment-freeze/)). A franchise territory there would not change that. Check your state and your brokers before you pay for a territory. The steps are in [how to become a Medicaid transportation provider](https://nemtguide.com/guides/how-to-become-a-medicaid-transportation-provider/) and [how to get NEMT broker contracts](https://nemtguide.com/guides/how-to-get-nemt-broker-contracts/).

## The federal rules that protect you before you buy

The FTC Franchise Rule, 16 CFR part 436, applies to franchises to be located in the United States. These are its main protections as of September 2026:

- **14 days to read.** The franchisor must give you its current franchise disclosure document at least 14 calendar days before you sign a binding agreement or pay the franchisor or an affiliate anything (436.2(a)).
- **7 days for changed terms.** If the franchisor makes a material change to the agreement's terms on its own, you get the revised agreement at least 7 calendar days before you sign it (436.2(b)).
- **No government check.** The cover page must tell you, in bold, that no governmental agency has verified the information. The FTC does not approve or give an opinion on the legality of anything the document discloses (436.3 and 436.10).
- **Earnings claims only in Item 19.** A franchisor may state what you could earn only if it has a reasonable basis and written support, and only in Item 19. You can ask for the support (436.9(c) and (d)).
- **No waivers of reliance.** The franchisor cannot make you disclaim what the disclosure document says (436.9(h)).
- **An earlier copy on request.** The franchisor must give you the document earlier in the sales process if you reasonably ask (436.9(e)).

Some deals fall outside the rule. The main exemptions, at the thresholds set in the FTC's update published July 12, 2024, are total payments to the franchisor of less than $735 through the first six months of operation, an initial investment of at least $1,469,600 not counting franchisor financing or unimproved land, and a buyer in business for at least five years with a net worth of at least $7,348,000 (436.8).

### Startup packages and the Business Opportunity Rule

Some sellers offer a "NEMT business in a box" without a trademark or ongoing control. That may not be a franchise. The FTC Business Opportunity Rule, 16 CFR part 437, can apply instead when the seller says it will provide outlets, accounts, or customers, or help you get them (437.1(c) and (m)). A seller promising to line up broker contracts fits that description. General advice and training do not count.

Under that rule, the seller must give you a single disclosure document in the FTC's set format at least 7 calendar days before you sign or pay (437.2 and 437.3). It lists fraud, misrepresentation, and unfair practice lawsuits against the seller from the past 10 years, any refund policy, and buyers from the past three years you can call. Any earnings claim needs a separate written earnings statement with the share of buyers who reached it (437.4). Walk away from anyone who promises contracts but will not put it in writing.

### State franchise laws

The FTC notes that several states have their own registration or disclosure laws, and some protect franchisees after the sale. Washington requires franchisors to register before offering franchises there, unless an exemption applies (RCW 19.100). California regulates franchise sales under its Franchise Investment Law, and you can search filings in its FRANSES system. Ask your state securities or franchise regulator whether the franchisor has registered.

## How to read a NEMT franchise disclosure document

Every disclosure document covers the same 23 numbered items, listed in a set table of contents (436.4 and 436.5). These are the ones that matter most for a NEMT company.

| Item | What it tells you | What to check for NEMT |
|---|---|---|
| 1. The franchisor | Its history and the laws specific to the industry | Whether it runs NEMT companies itself, for how long, and whether it describes Medicaid enrollment and your state's license rules |
| 2. Business experience | Each executive's jobs for the past five years | Whether anyone has run a NEMT company or billed Medicaid |
| 3. Litigation | Fraud, franchise, and unfair practice cases, and suits with franchisees | Cases brought by franchisees, and any case about health care billing |
| 4. Bankruptcy | Bankruptcies in the past 10 years | Any at all, then read Item 21 closely |
| 5. Initial fees | Everything you pay before opening | Whether any of it is refundable |
| 6. Other fees | Royalties, marketing, technology, training, transfer, and renewal fees | How "gross sales" is defined, and whether it includes Medicaid payments, mileage, and tolls you pass through |
| 7. Initial investment | A table of startup costs, with a total | Whether vans, insurance, and licenses are included, and whether the "additional funds" cover the months before payers pay you |
| 8. Required suppliers | Vans, equipment, systems, or insurance you must buy from set sources | What the franchisor earns from those purchases, which it must disclose |
| 10. Financing | Loans or leases the franchisor offers | The rate, the payments, and what secures the loan |
| 11. Assistance and training | What the franchisor must do for you, and when | Whether training covers your state's rules and each broker's credentialing |
| 12. Territory | Whether you get an exclusive area | The territory limits other franchisees, not brokers or health plans |
| 17. Renewal, termination, transfer | Term, renewal, defaults, transfer, and noncompetes | What you must do when it ends, and whether a noncompete keeps you out of NEMT locally |
| 19. Financial performance | Any earnings claim, with its basis | Which outlets and states the numbers come from |
| 20. Outlets | Openings, closings, and transfers for three years, with franchisee contacts | How many outlets closed or changed hands, and who you can call |
| 21. Financial statements | Audited statements, phased in for new franchisors | Whether the franchisor can afford to support you |

### Earnings claims do not travel well between states

Medicaid pays very different rates from state to state. A wheelchair van base rate is $11.15 a trip in the Phoenix and Tucson areas on Arizona's fee-for-service schedule effective October 1, 2026, and $52.90 in New York City on New York's April 2026 schedule. An Item 19 built on outlets in another state says little about yours. Ask which states the numbers come from, how many outlets they cover, and how many outlets reached them, which Item 19 must disclose for past results (436.5(s)).

### Talk to current and former franchisees

Item 20 lists current franchisees with contact details, and every franchisee who left the system in the last fiscal year (436.5(t)). The FTC suggests calling owners who have been open just over one year and owners who have been open about five years. Ask NEMT questions: how long Medicaid enrollment and broker credentialing took, how many trips brokers actually send, how long payers take to pay, and whether the franchisor's training matched their state. Item 20 must also say whether franchisees signed confidentiality clauses, so some former owners may not be able to talk.

## Medicaid rules a franchise deal has to fit

Franchise agreements are written for businesses paid by customers. Medicaid adds rules that a general franchise agreement may not account for. Have a health care attorney read these parts.

**Who receives the Medicaid payment.** A state Medicaid program may pay only the provider, with narrow exceptions (42 CFR 447.10). One exception is a business agent, such as a billing service, that bills and receives payment in your name. Its pay must be tied to the cost of billing, not a percentage of what is billed or collected, and not depend on collection. If the franchise agreement has the franchisor bill Medicaid for you and take a percentage, ask how that fits this rule. Broker contracts add their own terms: MTM's agreement requires 30 calendar days' written notice before you assign payments to a third party (section 12.C).

**Paying for referrals.** The federal Anti-Kickback Statute makes it a crime to knowingly and willfully pay or receive anything of value to induce or reward referrals of business paid by federal health care programs, including Medicaid (42 U.S.C. 1320a-7b(b)). If the franchisor sends you Medicaid riders and its fees rise with them, get a written legal opinion before you sign.

**Who counts as an owner.** Medicaid requires your company to disclose every person with an ownership or control interest, and to report changes within 35 days after any change in ownership (42 CFR 455.104). That includes anyone with 5 percent or more of the company, and anyone holding 5 percent or more of a note secured by the company when it equals at least 5 percent of its assets (42 CFR 455.101). A managing employee is anyone who runs day-to-day operations, whether as an employee or under contract. If the franchisor takes equity, finances your vans with a secured loan, or runs your operations, ask your state whether it must be listed.

**Getting out.** Your Medicaid enrollment, NPI, and broker contracts stay with your company when a franchise ends, but Item 17 lists what you must do when the franchise ends, such as stop using the brand, and any noncompete that applies after it. Selling later often needs the franchisor's approval of the buyer, on top of the Medicaid and broker steps in [how to sell a NEMT business](https://nemtguide.com/guides/how-to-sell-a-nemt-business/).

## Franchise or on your own: what each costs

The vans, insurance, drivers, and licenses cost the same either way. The difference is the franchisor's fees and what they buy.

| Cost | Franchise | On your own |
|---|---|---|
| Initial franchise fee | Item 5 of the disclosure document | None |
| Royalties and marketing fees | Item 6, often a percentage of gross revenue | None |
| EIN and NPI | Free | Free |
| Medicaid application fee | $750 for 2026 where your state charges it | Same |
| Vans, insurance, drivers, licenses | Listed in Item 7 | The same items, priced in [our startup cost guide](https://nemtguide.com/guides/how-much-does-it-cost-to-start-a-nemt-business/) |
| Training and advice | Included in the fees | SCORE mentors at no cost, and counseling at Small Business Development Centers |
| Tax treatment of the fee | The franchise fee is amortized over 15 years as a section 197 intangible | No franchise fee to amortize |

Royalties are the cost that grows. Say a franchise charges a 6 percent royalty and a 2 percent marketing fee. Those are example numbers, so use the ones in your Item 6. A company that bills $20,000 a month would pay $1,600 a month, or $19,200 a year. The FTC's guide warns that royalties are typically owed even when you are losing money, and that you may owe them for the full term of the agreement.

**A franchise can make sense when** you have never run a transportation company, the franchisor has franchisees operating in your state, and its Item 20 contacts confirm that the training got them enrolled and credentialed faster. Brand recognition also counts for more with private-pay riders and facilities, who choose their provider, than with brokers, who assign trips. See [private-pay NEMT](https://nemtguide.com/guides/private-pay-nemt/) and [NEMT facility contracts](https://nemtguide.com/guides/how-to-get-nemt-facility-contracts/).

**Starting on your own costs less when** you already know your state's Medicaid and license rules, most of your trips will come from brokers, or the royalty would take most of your margin. The [startup cost calculator](https://nemtguide.com/tools/nemt-startup-cost-calculator/) and the [business plan template](https://nemtguide.com/templates/nemt-business-plan-template/) help you price that route.

### SBA loans for franchises

If you plan to borrow through the SBA, check the brand first. SBA says brands that meet the FTC definition of a franchise must be on the SBA Franchise Directory to get SBA financing, and that listing is not an endorsement. The directory effective September 21, 2026 lists many home care brands but no brand with medical transportation in its name. SBA updates it weekly, so ask the franchisor for its SBA franchise identifier code. See [how to fund a NEMT business](https://nemtguide.com/guides/nemt-business-loans/) for other options.

## Steps before you sign a NEMT franchise agreement

1. **Ask for the disclosure document early.** You do not have to wait until the franchisor is ready to close.
2. **Check state filings.** Search California's FRANSES system and ask your state's franchise regulator whether the franchisor is registered.
3. **Confirm your state's rules yourself.** Find out whether Medicaid is enrolling new NEMT providers in your area and which license you need. See [NEMT license requirements](https://nemtguide.com/guides/nemt-license-requirements/).
4. **Call the brokers.** Ask each broker's provider relations team whether it is adding providers where you plan to work.
5. **Call franchisees from Item 20.** Start with owners in your state and owners who left the system.
6. **Price the independent route.** Compare Items 5, 6, and 7 with the cost of starting on your own.
7. **Have two lawyers read it.** A franchise lawyer for Items 6, 12, and 17, and a health care lawyer for billing, referral, and ownership terms.
8. **Sign only after 14 calendar days,** and only the agreement attached to the disclosure document or one you negotiated.
9. **Keep everything.** Keep the disclosure document, the Item 23 receipt, and every written claim. Report problems to the FTC at 1-877-FTC-HELP and to your state regulator.

## Frequently asked questions

### How much does a NEMT franchise cost?

Look at three items in the franchise disclosure document. Item 5 lists the initial fee, Item 6 lists royalties and the other fees you pay the franchisor, and Item 7 estimates your total investment, which the cover page must state. You still buy the same vans, insurance, and licenses an independent company buys. Government costs are small: the EIN and NPI are free, and the Medicaid application fee is $750 for 2026 where your state charges it.

### Can a franchisor guarantee me broker or Medicaid trips?

No. Brokers, not franchisors, assign trips, and they do it at their own discretion. MTM Health's standard provider agreement, in the version Pennsylvania posts dated January 1, 2023, guarantees no minimum number of trips and gives the provider no claim to any rider or facility. A franchisor may state earnings only in Item 19 of its disclosure document, with written support you can ask to see.

### How long do I have to review a franchise disclosure document?

At least 14 calendar days. The FTC Franchise Rule requires the franchisor to give you its current disclosure document at least 14 calendar days before you sign a binding agreement or pay the franchisor or an affiliate anything. If the franchisor changes the agreement's terms on its own, you get the revised agreement at least 7 calendar days before you sign it.

### Can I get an SBA loan for a NEMT franchise?

Only if the brand is on the SBA Franchise Directory. SBA says brands that meet the FTC definition of a franchise must be listed to get SBA financing, and placement is not an endorsement. The directory effective September 21, 2026 lists many home care brands but no brand with medical transportation in its name. Ask the franchisor for its SBA franchise identifier code before you apply.

### What happens to my Medicaid enrollment if the franchise ends?

Your enrollment and NPI belong to your company, not the franchisor, so they do not end with the franchise. The franchise agreement may still stop you from operating. Item 17 lists what you must do when the franchise ends and any noncompete that applies after it. Read both before you sign, because a noncompete can keep you out of NEMT in your area for years.

### Is a NEMT startup package the same as a franchise?

Not always. A package with no trademark license or ongoing control may not be a franchise. If the seller promises to find you accounts or customers, such as broker contracts, the FTC Business Opportunity Rule can apply instead. It requires a short disclosure form in the FTC's set format at least 7 calendar days before you sign or pay, listing lawsuits, the refund policy, and recent buyers to call.

## Official resources

- [FTC: A Consumer's Guide to Buying a Franchise](https://www.ftc.gov/business-guidance/resources/consumers-guide-buying-franchise)
- [eCFR: 16 CFR part 436, the FTC Franchise Rule](https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436)
- [eCFR: 16 CFR part 437, the FTC Business Opportunity Rule](https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-437)
- [SBA: SBA Franchise Directory](https://www.sba.gov/document/support-sba-franchise-directory)
- [California DFPI: Search franchise filings (FRANSES)](https://franses.dfpi.ca.gov/franses)
- [Washington DFI: Franchise registration](https://dfi.wa.gov/industry/franchises)
- [SBA: Find a SCORE mentor](https://www.sba.gov/counseling/local-assistance/resource-partners/#score-business-mentoring)