How the Three-Year Closure Rate Is Computed From Item 20

The closure rate on every brand page is: franchised outlets that were terminated, not renewed, or ceased operations for other reasons over the three years in the filing, divided by franchised outlets open at the start of the first of those years. It is an outlet count from Item 20, not a failure rate, not a default rate, and not a measure of what happened to the people who ran those outlets.

Where the numbers come from

Item 20 of an FDD is required by 16 CFR 436.5(t) and has five tables. Table 3 is the one this figure reads: for each of the last three fiscal years it lists, for franchised outlets, the count at the start of the year, outlets opened, terminations, non-renewals, outlets reacquired by the franchisor, outlets that ceased operations for other reasons, and the count at the end of the year. The rule defines each column, so the same five words mean the same thing in every filing.

The site sums three of those columns across the three years and divides by the opening count of the first year. For most brands the years are 2023, 2024 and 2025; a brand with a fiscal year that does not end in December reports its own three fiscal years, and the page says so (H&R Block's run fiscal 2024 to 2026, its year ending June 30).

Worked: Subway and Dunkin'

Subway's 2026 FDD (Item 20, page 93) reports, over 2023 to 2025, 2,640 franchised outlets that ceased operations, 11 terminated and 95 not renewed, from 20,576 franchised outlets open at the start of 2023:

(2,640 + 11 + 95) ÷ 20,576 = 2,746 ÷ 20,576 = 13.35%

Dunkin's 2026 FDD (Item 20, page 97) reports 261 ceased, 7 terminated and 75 not renewed from 8,087 at the start of 2023:

(261 + 7 + 75) ÷ 8,087 = 343 ÷ 8,087 = 4.24%

The two systems ended the period in different places as well. Subway's franchised count went from 20,576 to 18,773, a three-year net change of −1,803 (−8.8%); Dunkin's went from 8,087 to 8,744, +657 (+8.1%). The net change is the second Item 20 figure on every page and it is the one that includes openings. A system can close many outlets and still grow, or close few and still shrink.

The column the formula leaves out

Reacquired outlets are not counted. An outlet the franchisor took back is still open; it has changed owner, not closed. In most filings the column is small and the choice does not move the result. In a few it is the whole story. Snap-on's 2026 FDD (Item 20, page 68) reports 0 ceased, 6 terminated and 1 not renewed over 2023 to 2025 from 3,270 at the start, a closure rate of 0.21%. The same table reports 631 outlets in the Reacquired column over those three years: franchisees who ceased operating and whose assets Snap-on took back. The page prints the 0.21% and says beside it that the 631 reacquisitions are not in it. H&R Block reacquired 454 franchised offices over its three fiscal years, and its page carries the same note.

When the denominator is tiny

Dividing by the opening count of the first year makes the rate comparable across brands of different sizes, and it breaks for a system that barely existed at the start. Ellie Mental Health had 36 franchised clinics at the start of 2023 and 249 at the end of 2025 (2026 FDD, Item 20, page 70). Its 6 ceased and 48 terminated clinics give 54 ÷ 36 = 150%. The figure is arithmetically right and the page says why it exceeds 100%: most of the clinics that closed opened after the count in the denominator was taken.

When the table counts something other than outlets

Weed Man's Item 20 counts franchise agreements, not locations. On 2024-01-01 many agreements held by the same franchisees were merged, so the count went from 241 at the start of 2023 to 121 at the end of 2025 with no loss of contracts, a printed net change of −120 (−49.8%). The closure rate, 6 closures over 241, is 2.49%; the net change needs the caveat and the page gives it. Nothing in the formula can detect this; only reading the table's footnote does.

Where the filing does not add up

Table 3 rows are supposed to reconcile: start plus opened minus the four exit columns should equal the end. Several filings do not. None of Subway's three total rows reconciles (the printed end is 45, 79 and 4 below the computed figure), and none of Snap-on's do either, because its note counts outlets under signed agreements not yet operating. The site records every figure as printed, flags the row on the page, and never adjusts a count to make it balance.

What this guide does not cover

The rate says nothing about why an outlet closed, whether the franchisee lost money, or whether the location reopened under another owner. It does not count company-owned outlets. And it is not a prediction: it is three years of one franchisor's own count, read from the page the brand page cites.

The brand index shows the three-year closure rate for every brand, and each brand page prints the formula with the counts filled in.

Sources

• 16 CFR 436.5(t), Item 20: Outlets and franchisee information
• Subway, Dunkin', Snap-on, H&R Block, Ellie Mental Health and Weed Man 2026 FDDs as filed with Wisconsin DFI, Item 20 pages as cited, via Wisconsin DFI Franchise Search.

This guide is informational only. It is not financial, legal or investment advice, and Unitnomics is not affiliated with any franchisor, state regulator or the FTC. It reports what a franchisor filed and what the site computed from it; it does not advise on whether to buy a franchise.

Last reviewed: November 2026 · Against 16 CFR 436.5(t) and the 2026 FDDs cited below.