Actual franchise closure data from 424 brands, extracted from FDD Item 20 filings. Not estimates or surveys — real regulatory data.
3.9%
Avg Annual Closure Rate
424
Brands with Closure Data
0.4%
Lowest Category (Coffee & Tea)
10.8%
Highest Category (Tech Services)
The franchise industry often cites failure rates below 5%, but the reality is more nuanced. We analyzed closure data from 424 franchise brands using their official FDD Item 20 filings — the legally required disclosure of unit openings, closings, and transfers over a three-year period.
A "closure" in Item 20 means a franchise unit stopped operating — whether the franchisee went bankrupt, chose not to renew, or was terminated by the franchisor. Here's what the data shows across industries.
| Category | Brands | Avg Closure Rate | Median Closure Rate | Range | Distribution |
|---|---|---|---|---|---|
| Coffee & Tea | 7 | 0.4% | 0.0% | 0.0% – 1.2% |
|
| Shipping & Moving | 3 | 1.2% | 0.6% | 0.2% – 2.6% |
|
| Fitness, Wellness & Spa | 2 | 1.4% | 1.4% | 1.2% – 1.6% |
|
| Health & Medical | 4 | 1.4% | 1.6% | 0.6% – 1.9% |
|
| Senior Care | 8 | 1.9% | 1.5% | 0.6% – 4.1% |
|
| Lodging | 36 | 2.4% | 0.6% | 0.0% – 18.0% |
|
| Bakery, Dessert | 2 | 2.5% | 2.5% | 0.0% – 5.0% |
|
| Childcare | 6 | 2.7% | 0.2% | 0.0% – 10.4% |
|
| Wellness & Spa | 18 | 2.8% | 0.9% | 0.0% – 12.9% |
|
| QSR | 61 | 2.9% | 0.8% | 0.0% – 21.8% |
|
| Pet Services | 12 | 3.0% | 0.8% | 0.0% – 24.3% |
|
| Dessert | 11 | 3.1% | 1.2% | 0.0% – 11.1% |
|
| Real Estate | 10 | 3.2% | 3.1% | 0.1% – 7.4% |
|
| Fast Casual | 33 | 3.2% | 2.1% | 0.0% – 17.7% |
|
| Food & Beverage | 8 | 3.4% | 1.3% | 0.0% – 13.3% |
|
| Health & Beauty | 6 | 3.5% | 2.5% | 0.4% – 7.9% |
|
| Casual Dining | 13 | 3.6% | 1.9% | 0.0% – 15.9% |
|
| Pest Control | 3 | 3.7% | 2.4% | 0.0% – 8.7% |
|
| Retail | 8 | 3.7% | 2.4% | 0.0% – 10.3% |
|
| Bakery | 6 | 4.4% | 4.4% | 0.0% – 8.6% |
|
| Entertainment | 9 | 4.6% | 4.5% | 0.0% – 12.0% |
|
| Business Services | 24 | 4.6% | 3.3% | 0.0% – 18.3% |
|
| Staffing | 3 | 4.8% | 0.8% | 0.6% – 13.0% |
|
| Automotive | 12 | 4.8% | 3.3% | 0.0% – 18.7% |
|
| Home Services | 53 | 5.5% | 2.2% | 0.0% – 100.0% |
|
| Fitness | 23 | 5.8% | 1.8% | 0.0% – 28.1% |
|
| Education & Tutoring | 23 | 6.0% | 3.9% | 0.0% – 25.9% |
|
| Cleaning | 5 | 6.1% | 0.3% | 0.0% – 24.8% |
|
| Other | 2 | 6.4% | 6.4% | 0.3% – 12.5% |
|
| Insurance | 2 | 7.3% | 7.3% | 2.8% – 11.8% |
|
| Financial Services | 5 | 9.5% | 7.0% | 2.2% – 25.0% |
|
| Tech Services | 3 | 10.8% | 11.4% | 8.9% – 12.2% |
|
These franchise brands have the lowest average annual closure rates based on Item 20 data.
| # | Brand | Category | Closure Rate | Units | Investment |
|---|---|---|---|---|---|
| 1 | Christian Brothers Automotive | Automotive | 0.0% | 302 | $550K – $680K |
| 2 | Dave's Hot Chicken | QSR | 0.0% | 244 | $990K – $3.22M |
| 3 | Dog Training Elite | Pet Services | 0.0% | 395 | $101K – $122K |
| 4 | Dogtopia | Pet Services | 0.0% | 263 | $543K – $1.40M |
| 5 | European Wax Center | Wellness & Spa | 0.0% | 1067 | $328K – $837K |
| 6 | FIREHOUSE SUBS | QSR | 0.0% | 1248 | $233K – $620K |
| 7 | Goldfish Swim School | Education & Tutoring | 0.0% | 177 | $1.66M – $3.75M |
| 8 | Mochinut | QSR | 0.0% | 151 | $234K – $459K |
| 9 | Nothing Bundt Cakes | Bakery | 0.0% | 643 | $667K – $906K |
| 10 | Planet Fitness | Fitness | 0.0% | 2298 | $1.52M – $5.22M |
These brands have the highest average annual closure rates — potential red flags for prospective franchisees.
| # | Brand | Category | Closure Rate | Units | Investment |
|---|---|---|---|---|---|
| 1 | Graze Craze | Food & Beverage | 13.3% | 90 | $167K – $326K |
| 2 | Goosehead Insurance Agency | Insurance | 11.8% | 1115 | $66K – $108K |
| 3 | HomeVestors | Real Estate | 7.4% | 1003 | $150K – $477K |
| 4 | Potbelly Sandwich Shop | QSR | 5.3% | 95 | $654K – $1.27M |
| 5 | Moe's Southwest Grill | Fast Casual | 5.2% | 596 | $566K – $1.59M |
| 6 | Meineke | Automotive | 5.1% | 716 | $165K – $381K |
| 7 | Auntie Anne's | Bakery, Dessert | 5.0% | 1193 | $149K – $572K |
| 8 | Jamba | Fast Casual | 5.0% | 726 | $263K – $615K |
| 9 | MAACO | Automotive | 5.0% | 429 | $276K – $1.02M |
| 10 | Huntington Learning Center | Education & Tutoring | 3.7% | 259 | $159K – $298K |
Annual closure rate measures the percentage of franchise units that stopped operating in a given year relative to the number of units at the start of that year. A 3% closure rate means 3 out of every 100 units closed during the year.
Closure rates alone don't tell the full story. A brand with 20 units that closes 2 has a 10% rate, while a brand with 2,000 units closing 40 has a 2% rate — but the larger brand had more absolute closures. System size matters for context.
Also note that "closure" includes franchisee-initiated non-renewals, franchisor terminations, and true business failures. Item 20 doesn't distinguish between a franchisee who sold at a profit and retired versus one who went bankrupt. For deeper analysis, read the full guide to franchise failure rates.
All closure data is extracted from FDD Item 20 filings. Franchise Breakdown calculates the average annual closure rate across all available years for each brand. Data reflects the most recent FDD filing for each brand in our database.
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