Verified — real FDD extraction
SBA-eligible · directory code S0067 since 2017
Ace Hardware
Home Services · independent · est. —
Ace Hardware is a retailer-owned hardware cooperative whose stores sell tools, paint, lawn and garden supplies, and home-maintenance products. An owner operates a neighborhood hardware store, buying through the cooperative's distribution network and serving homeowners and local contractors.
Ace Hardware net unit count grew +524900.0% from 2020–2025 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Too new to judge
Distress
This system grew to 4982 franchised units from a base of 0 — the record looks clean because very few units have been exposed for very long, not because many have survived. Median SBA time-to-default is about 61 months; this system has not lived through that window at scale. Judge the disclosures, not a verdict.
Exit rate · latest year
1.5%
vs 4.8% across 42 home services systems
Cost to open
$612K–$2.0M
Item 7 total investment range
SBA loan defaults
12.2%
vs 14.8% avg across rated brands
Market density · California
Typical density
8% denser than the national average
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2020–2025
Survival record
FDD Item 20 · outlet status by year
In fiscal 2025, 71 of 4,885 franchised outlets left the system — a 1.5% annualized exit rate, vs 4.8% across 42 home services systems. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|
| Outlets at start | 1 | 1 | 1 | 4,867 | 4,994 | 5,144 |
| Opened | 0 | 0 | 0 | 190 | 210 | 173 |
| Transfers | 0 | 0 | 0 | 105 | 112 | 105 |
| Terminations | 0 | 0 | 0 | 75 | 65 | 71 |
| Non-renewals | 0 | 0 | 0 | 0 | 0 | 0 |
| Reacquired by franchisor | 0 | 0 | 0 | 1 | 19 | 5 |
| Ceased — other reasons | 0 | 0 | 0 | 0 | 0 | 0 |
| Outlets at end | 1 | 1 | 1 | 4,994 | 5,144 | 5,250 |
| Net change | 0 | 0 | 0 | +127 | +150 | +106 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 1,216 SBA-backed loans to Ace Hardware franchisees since 1991. Of the 706 that have resolved, 12.2% were charged off (defaulted) rather than paid in full, versus 14.8% across 570 rated brands.
12.2%
86 of 706 resolved defaulted
55.7%
avg. charged-off $ ÷ approved $
6.8%
default rate × loss severity
$1,040,566
what recent franchisees borrowed
76 mo
approval → charge-off, defaulted loans
89 vs 71
distinct banks still lending
Charge-off rate by loan approval year (%)
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO ACE HARDWARE BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
The owner's side of the deal
FDD × federal loan record
Who finances it
Wells Fargo Bank National Association
15.2% of this brand's loans
That lender charges off 15.4% of its loans to other franchise brands, vs 14.8% nationally.
Who buys it
64.5%
first-time franchise owners
The rest already owned at least one other franchise. Across the corpus, brands bought mostly by repeat operators charge off at roughly 10% versus 17% for brands sold mostly to newcomers.
Does experience help here?
−8.1pp
multi-unit vs single-unit owners
Owners of multiple units default at 6.5%; single-unit owners at 14.6%.
Computed from 1,216 SBA 7(a)/504 loans to Ace Hardware franchisees joined to the brand's own FDD. Debt service assumes level amortization at the average disclosed term and rate. A lender's rate excludes its loans to this brand, so it reads the lender, not the brand.
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $10K franchise fee (Item 5) and a total investment of $612K–$2.0M (Item 7). The franchisor publishes an earnings claim (Item 19) — read its methodology closely.
To open (Item 7)
$612K–$2.0M
all-in investment range
Franchise fee (Item 5)
$10K
upfront, one-time
Royalty (Item 6)
—
of sales, ongoing
Your figure — cross-check against this brand's Item 19 and current-owner validation.
Royalty you'd pay / yr
$0
0% of sales, before profit
Over a 10-yr term
$0
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for Ace Hardware with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 50 wage cases against operators of this system, recovering $136K in back wages for 188 workers, including 14 child-labor cases. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
50
Back wages owed
$136K
Employees affected
188
Since 2020
6
14 of these cases involved child-labor violations, covering 45 minors across the system's franchised locations.
Read this carefully. The employers in these cases are individual Ace Hardware franchisees — separately owned businesses operating under the brand name — not Ace Hardware itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2023.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
East Memphis Ace Hardware closing
news:Daily Memphian · 2mo ago
Ace Hardware class action alleges price fixing, antitrust violations
news:Top Class Actions · 3mo ago
Mary Means Business: Ace Hardware closing in Starkville
news:Commercial Dispatch · 3mo ago
9 questions to ask a Ace Hardware franchisee
Built from this brand's own disclosures · take it to your validation calls
The franchisor will give you a list of owners to call. Most buyers ask whether they like it. These are the questions built from what Ace Hardware has actually disclosed — each one carries the number it came from, so you can tell whether the answer squares with the record.
- 01
Ace Hardware’s own Item 20 shows 71 of 4,885 franchised outlets left the system in fiscal 2025 — about 1.5%. Do you know any of those owners, and do you know why they left?
A franchisor will call these “transitions.” An owner three doors down usually knows whether they sold at a profit or handed the keys back.
FDD Item 20 · FY2025
- 02
105 units transferred to new owners in fiscal 2025. When you look at those, were they people cashing out a good business — or getting out of a bad one?
Transfers count as neutral in every ranking. They are the single easiest place to hide distress.
FDD Item 20 · FY2025
- 03
Of 706 SBA loans to Ace Hardware franchisees that have finished, 12.2% were charged off — the borrower didn't repay. Did you finance with an SBA loan, and how close did your first two years come to trouble?
This is the lender's view of failure, from public federal records, and it is independent of anything the franchisor discloses.
SBA 7(a)/504 loan record, FY1991–present
- 04
Item 7 says the low end to open is $612K, but the average recent SBA loan to a Ace Hardware franchisee was $1.0M. What did you actually spend to open, all in?
Lenders size loans to real project costs. A large gap between the disclosed floor and what banks actually fund is the most common way buyers get underfunded.
FDD Item 7 vs SBA approvals FY2020+
- 05
Ace Hardware makes an earnings claim in Item 19. Does your unit look like that number — and do you know which units they included to build it?
Item 19 is legal to build from a flattering subset. Ask whether they excluded new units, closed units, or company stores.
FDD Item 19 · 2026
- 06
How many months did it take to cover your own costs, and how much cash did you burn getting there?
Ramp-to-breakeven working capital is the most underestimated line in any franchise purchase, and the most common reason otherwise-good units fail.
Not disclosed in any FDD — ask an owner
- 07
What does the franchisor charge for that you didn't expect — required tech fees, mandatory remodels, approved-supplier pricing?
Required spending appears across Items 6, 8 and 11 rather than in one place, so buyers routinely miss the total.
FDD Items 6, 8, 11
- 08
If your agreement came up for renewal tomorrow at current terms, would you sign again?
The single most predictive question you can ask. A hesitation is the answer.
Ask every owner you speak to
- 09
Who else should I call — including someone who left?
The franchisor's list is curated by definition. Former franchisees are where the unflattering truth lives, and current owners usually know how to reach them.
Ask every owner you speak to
Want this as a checklist you can take to the calls?
I'll email you the printable version, and tell you if Ace Hardware’s numbers move — a new filing, a rising exit rate, a distress signal. Unsubscribe in one click.
A broker is paid by the franchisor to place you. I'm paid by you — and the job is pressure-testing Ace Hardware's numbers, including talking you out of a bad deal.
This page is what buyers see before they call you for validation. If the record above is wrong — or right in a way the numbers can't show — say so. Corrections are checked against the filings; nothing you write is published with your name unless you agree to it.
Ace Hardware franchise questions, answered from the filings
What percentage of Ace Hardware franchises closed last year?
In Ace Hardware's latest FDD Item 20 (fiscal 2025), 71 of 4,885 franchised outlets left the system — an annualized exit rate of 1.5% — compared with 4.8% across 42 home services systems tracked here. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a Ace Hardware franchise cost?
Per Ace Hardware's 2026 FDD, buying in requires an initial franchise fee of $10K (Item 5) and a total initial investment of $612K–$2.0M (Item 7).
Does Ace Hardware disclose earnings (Item 19)?
Yes — Ace Hardware makes a financial performance representation in Item 19 of its 2026 FDD. Read it closely: franchisors choose which units and which metrics to include.
How often do SBA loans for Ace Hardware franchises default?
Across 1,216 SBA-backed loans to Ace Hardware franchisees since 1991, 86 of the 706 that have resolved were charged off — a 12.2% default rate, versus about 14.8% across all rated franchise brands. This is the lender's-eye view of franchisee failure, drawn from public SBA 7(a)/504 FOIA data and independent of the franchisor's own disclosures.