INDUSTRY BENCHMARKS · 15 SECTORS · 864 SYSTEMS
Franchise failure rates by industry — 2026 data
There is no official “franchise failure rate.” The honest, measurable proxy is the annualized exit rate every franchisor must disclose in its FDD Item 20 outlet tables: terminations + non-renewals + “ceased operations — other reasons,” divided by franchised units open at the start of the year. This table aggregates that figure across 864 franchise systems (239,295 franchised units), using each system's latest verified filing. In the current data, health & wellness runs the hottest exit rate (11.0%) and retail & products the coolest (1.9%).
| Industry | Systems | Fr. units | Exit rate | Opening rate | Med. fee | Med. royalty | Med. investment | Item 19 |
|---|---|---|---|---|---|---|---|---|
| Health & Wellness | 35 | 11,310 | 11.0% | 10.5% | $50K | 6.3% | $224K–$575K | 22/35 |
| Real Estate | 16 | 6,217 | 9.9% | 5.3% | $35K | 6.5% | $64K–$244K | 6/16 |
| Food & Dining | 146 | 52,034 | 8.2% | 10.6% | $35K | 6.0% | $328K–$831K | 91/146 |
| Business Services | 28 | 10,687 | 8.1% | 8.1% | $27K | 6.0% | $69K–$120K | 16/28 |
| Education & Children | 20 | 1,935 | 6.9% | 12.0% | $53K | 7.0% | $212K–$383K | 18/20 |
| Other | 414 | 102,098 | 6.2% | 9.3% | $50K | 6.0% | $181K–$465K | 320/414 |
| Automotive | 18 | 5,079 | 5.6% | 6.8% | $45K | 6.0% | $228K–$1.1M | 9/18 |
| Senior Care | 20 | 2,907 | 5.6% | 19.6% | $50K | 5.5% | $94K–$163K | 16/20 |
| Recreation & Entertainment | 15 | 572 | 5.5% | 11.4% | $45K | 6.0% | $1.2M–$1.8M | 12/15 |
| Beauty & Personal Care | 21 | 8,729 | 5.4% | 2.9% | $45K | 6.0% | $325K–$600K | 17/21 |
| Home Services | 42 | 8,896 | 4.8% | 11.7% | $52K | 6.3% | $118K–$207K | 32/42 |
| Pet Services | 18 | 1,684 | 4.7% | 18.2% | $55K | 7.0% | $265K–$498K | 15/18 |
| Fitness | 33 | 10,326 | 3.4% | 7.8% | $45K | 7.0% | $309K–$629K | 24/33 |
| Cleaning & Restoration | 24 | 5,235 | 3.1% | 7.6% | $50K | 7.0% | $130K–$260K | 19/24 |
| Retail & Products | 14 | 11,586 | 1.9% | 4.0% | $40K | 6.0% | $141K–$345K | 6/14 |
SOURCE: FDD ITEM 20 OUTLET TABLES FILED WITH STATE REGULATORS (MINNESOTA CARDS) · 864 SYSTEMS · VERIFIED EXTRACTIONS ONLY
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, aggregated across the industry. It is annualized and taken from each brand's latest verified filing — not a survey, not self-reported marketing.
- ▸ Opening rate = new outlets opened ÷ franchised units open at the start of the year, same tables.
- ▸ 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 verified extractions from real FDD filings feed these numbers. Sample data is excluded. Industries with fewer than 3 verified 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 — but it is the closest honest, measurable proxy in the public record. Full scoring formula: methodology.
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