Franchise Closure Rates by Brand (2026): Item 20 Data

Contents

• Key findings
• Highest closure rates
• Largest net-growth brands
• Closure rates by industry
• Analyze any single brand: $49

Key facts

• How these rates are computed — read before quoting
• The 25 highest single-year closure rates among systems with at least 25 units at risk.
• The other side of the ledger: the 25 systems (25+ units) that added the most franchised units net of closures in their last fiscal year.
• Aggregate roll-up across every industry with at least eight Item 20–reporting brands: total units, closures, openings, net growth, and the aggregate closure rate (industry closures ÷ industry units at risk).
• A one-year closure rate is a signal, not a verdict.

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VetMyFranchise · Original Research

Which franchises close the most units — from the franchisors' own FDD Item 20 disclosures. Closure and turnover rates across 2,200 franchise systems, with leaderboards covering the 1,295 systems of 25+ units, plus openings, net growth, and industry aggregates.

Source: 2022-2026 FDD filings · 2,414 brands analyzed

Key findings

• Across 1,295 franchise systems with at least 25 units, the median single-year closure rate is 4.3% (FDD Item 20, 2026 analysis by VetMyFranchise).
• The highest closure rate among sizable systems is 80.6% — Nativewahl closed 87 of 108 units at risk in its last fiscal year, per its own FDD.
• 12% of qualifying systems reported zero closures in their last fiscal year — closures concentrate in a minority of brands.
• Staffing & HR has the highest aggregate closure rate at 9.0%; Child Services & Education the lowest at 3.0%.
• In aggregate, analyzed systems opened 40,199 franchised units and closed 26,882 last fiscal year — net +13,317 units (overall closure rate 5.5%).

How these rates are computed — read before quoting

Formula. For each brand, the single-year closure rate is units_closed ÷ (units_total + units_closed) — closures in the last fiscal year divided by the units that were at risk of closing during it (year-end count plus the units that closed). Leaderboards include only systems with at least 25 units at risk, so one closure in a five-unit system doesn't outrank sixty in a four-hundred-unit system.

What counts as a closure. Unit counts come from each brand's FDD Item 20 tables. "Closed" includes terminations, non-renewals, and outlets that otherwise ceased operations, exactly as the franchisor disclosed them; transfers to new owners are counted separately by franchisors and are not included here. Rows reporting more than 100 closures and more than five times their year-end unit count are excluded as suspected extraction artifacts pending manual review.

Vintage. Figures reflect each brand's most recent FDD on file with VetMyFranchise (2022-2026 FDD filings), so "last fiscal year" differs by brand. A high rate in one filing year can reflect a one-time network pruning rather than sustained decline — always check the brand's three-year Item 20 history.

Highest closure rates

The 25 highest single-year closure rates among systems with at least 25 units at risk. A caveat before you screenshot this: these are the franchisors' own Item 20 numbers for one fiscal year. A brand can appear here because it is genuinely shrinking — or because it culled underperforming locations in a single restructuring year. Click through to each brand's full analysis before treating a row as a verdict.

Largest net-growth brands

The other side of the ledger: the 25 systems (25+ units) that added the most franchised units net of closures in their last fiscal year. Fast net growth is a demand signal — but pair it with the closure column, since aggressive openers can also be aggressive closers a few years later.

Closure rates by industry

Aggregate roll-up across every industry with at least eight Item 20–reporting brands: total units, closures, openings, net growth, and the aggregate closure rate (industry closures ÷ industry units at risk). Sorted by closure rate, highest first.

Go deeper

• Franchise failure rate statistics — what the data actually shows
• First-year franchise turnover rates by industry
• Franchise Network Health — openings, closures & net growth by industry

Analyze any single brand: $49

A one-year closure rate is a signal, not a verdict. Our full 12-section FDD analysis covers a brand's complete Item 20 history, Item 19 earnings, litigation, fees, and a buyer verdict — $49 per report, or three for $99.

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Frequently Asked Questions

What franchise has the highest failure rate?

Among the 1,295 systems with at least 25 units analyzed by VetMyFranchise, Nativewahl shows the highest single-year closure rate at 80.6% (87 closures against 108 units at risk), as disclosed in its own FDD Item 20. Note that a closure rate is not strictly a "failure rate" — Item 20 closures include terminations, non-renewals, and units that ceased operations for any reason — and a single bad year can reflect a deliberate pruning of underperforming locations. Check the brand's multi-year Item 20 tables before drawing conclusions.

What is a normal franchise closure rate?

The median single-year closure rate across 1,295 qualifying systems is 4.3%, and 12% of systems closed zero units in their last fiscal year. As a rule of thumb, a sustained closure rate above roughly 5% per year — or closures exceeding openings for consecutive years — signals stress worth investigating with existing franchisees before buying.

Are franchise closures the same as failures?

No. FDD Item 20 reports units that were terminated by the franchisor, not renewed at end of term, or ceased operations for other reasons. Some of those outlets were profitable but exited on owner retirement or non-renewal; conversely, transfers to new owners are counted separately and can hide distress (a struggling unit "sold" rather than closed does not appear as a closure). That is why this report shows closures, openings, and net growth side by side rather than a single "failure" number.

Cite this page

• Title: Franchise Closure Rates by Brand (2026): Item 20 Data
• URL: https://vetmyfranchise.com/c/claude/reports/franchise-closure-rates

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