GLOSSARY

Churning (retread units)

Churning is the pattern of a franchisor repeatedly reselling the same failed location to successive new franchisees, collecting a fresh fee each time.

A churned unit looks deceptively healthy in summary statistics: each failure is offset by a "new opening" at the same address, so system size holds steady while individual owners cycle through losses. The tell is in Item 20's detail: reacquisitions and terminations that keep pace with openings, and transfer counts that spike without system growth.

Validation is the countermeasure — ask owners what happened to the previous operator of your proposed territory, and ask the franchisor directly how many owners the location has had. The FDD exhibits list former franchisees for exactly this call.