INDUSTRY BENCHMARKS · 16 SECTORS · 752 SYSTEMS
Franchise exit rates by industry — FDD Item 20 data
There is no official “franchise failure rate.” What every franchisor must disclose, in its FDD Item 20 outlet tables, is how many franchised outlets were terminated, not renewed, or “ceased operations — other reasons” each year. The exit rate (fiscal year) is that count divided by franchised units open at the start of the year. For each industry the table shows the median system's exit rate in its latest fiscal year, so one large system cannot speak for the rest, and a pooled rate in which no system counts for more than 20% of the weight. It covers 752 systems (217,316 franchised units) with an FDD filed in the last 24 months, fiscal 2021–2026. By the median system, real estate has the highest exit rate (7.8%) and education & children the lowest (0.8%).
| Industry | Systems | Fr. units | Exit rate (median) | Pooled (≤20%/system) | Opening rate (median) | Med. fee | Med. royalty | Med. investment | Item 19 |
|---|---|---|---|---|---|---|---|---|---|
| Real Estate | 22 | 7,904 | 7.8% | 11.2%RE/MAX = 39% of base | 7.1% | $35K | 5.5% | $87K–$253K | 8/22 |
| Retail & Products | 28 | 7,756 | 6.3% | 10.7%Ace Hardware = 64% of base | 7.3% | $40K | 6.0% | $176K–$388K | 18/28 |
| Home Services | 107 | 12,191 | 6.2% | 9.3% | 14.6% | $50K | 6.5% | $121K–$220K | 89/107 |
| Business Services | 58 | 26,149 | 5.9% | 5.2% | 9.0% | $48K | 7.3% | $78K–$131K | 41/58 |
| Pet Services | 26 | 2,330 | 4.7% | 5.6% | 21.3% | $50K | 7.0% | $171K–$497K | 22/26 |
| Cleaning & Restoration | 44 | 16,325 | 4.5% | 6.3%JANI-KING = 30% of base | 8.5% | $50K | 7.0% | $131K–$286K | 38/44 |
| Other | 9 | 227 | 4.5% | 4.5%BRUEGGER'S = 30% of base | 30.1% | $50K | 7.0% | $201K–$423K | 7/9 |
| Senior Care | 29 | 4,658 | 4.1% | 5.4% | 23.9% | $54K | 6.0% | $100K–$181K | 25/29 |
| Fitness | 41 | 17,330 | 4.0% | 4.4%JAZZERCISE = 31% of base | 14.3% | $50K | 7.0% | $310K–$754K | 32/41 |
| Hotels & Hospitality | 37 | 5,502 | 4.0% | 6.8%QUALITY INN = 29% of base | 5.0% | $58K | 5.5% | $8.8M–$17.7M | 26/37 |
| Food & Dining | 186 | 82,090 | 3.8% | 7.1% | 8.3% | $35K | 5.5% | $375K–$957K | 127/186 |
| Beauty & Personal Care | 32 | 9,662 | 2.3% | 6.8%GREAT CLIPS = 44% of base | 11.5% | $50K | 6.0% | $303K–$547K | 28/32 |
| Recreation & Entertainment | 25 | 4,342 | 2.0% | 3.6%CRUISE PLANNERS = 74% of base | 19.5% | $50K | 7.0% | $483K–$797K | 20/25 |
| Health & Wellness | 44 | 9,543 | 1.7% | 7.9%HEALTH MART = 45% of base | 33.0% | $50K | 7.0% | $300K–$690K | 31/44 |
| Automotive | 27 | 7,041 | 1.7% | 4.6% | 3.9% | $38K | 6.0% | $235K–$786K | 16/27 |
| Education & Children | 37 | 4,266 | 0.8% | 3.7%Mathnasium Centers = 25% of base | 24.1% | $50K | 7.5% | $179K–$388K | 34/37 |
SOURCE: FDD ITEM 20 OUTLET TABLES FILED WITH STATE REGULATORS (MINNESOTA CARDS) · 752 SYSTEMS · FISCAL 2021–2026
Methodology
- ▸ Exit rate = terminations + non-renewals + “ceased operations — other reasons” ÷ franchised units open at the start of the year, from each system's FDD Item 20 status tables, for one fiscal year: the latest in each system's most recent filing. The industry figure is the median system's rate. The pooled rate adds every system's exits and starting units, with no system counting for more than 20% of the weight; where one system is more than a quarter of the base, the table names it.
- ▸ Opening rate = new outlets opened ÷ franchised units open at the start of the year, same tables; the median system's.
- ▸ Fees, royalties, and investment ranges are medians of Items 5–7 across each industry's latest filings. Item 19 counts systems that disclose a financial performance representation.
- ▸ Only figures extracted from real FDD filings no more than 24 months old feed these numbers. Sample data is excluded. Industries with fewer than 3 such systems get no benchmark page.
- ▸ Exit rate is not the same as a “failure rate” — some exits are retirements or owner sales recorded as non-renewals — and it misses struggling units sold as transfers. Full scoring formula: methodology.
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