Item 20 contains outlet and franchisee information. Review the separate categories of movement rather than treating every departure as a failure or every new opening as proof of a healthy operator experience.
Keep movement categories separate
Record the disclosed opening, transfer, termination, non-renewal and other relevant categories using their definitions. Reconcile the starting and ending outlet counts. Changes in ownership and changes in operating status can answer different questions.
Investigate patterns in context
Compare periods, formats and locations relevant to your plan. A growing total can coexist with substantial turnover, while a small net change can conceal both many openings and many departures. Use the pattern to choose follow-up questions rather than declaring a cause from counts alone.
Use the contact information responsibly
Plan conversations with current and former operators where information is available. Ask about their actual experience without assuming their departure had one cause. Keep private comments and identifiable financial information confidential unless publication is authorised.
A worked research example
Illustrative example: a network starts with 100 outlets, opens 20 and loses 15 from the relevant count, ending at 105. Net growth is five, but that figure alone does not explain the fifteen departures or establish a failure rate.
Evidence to gather
- Preserve the disclosed movement categories
- Reconcile beginning and ending counts
- Investigate relevant periods and locations
- Prepare current and former operator questions
Before you move forward
Frequently asked questions
Is every transfer a failure?
No. A transfer is not enough evidence to establish the reason or commercial outcome.
Does net growth prove low turnover?
No. Openings and departures can offset each other.
Can a single departure percentage predict my risk?
Not reliably without definitions, context and further evidence about the actual business.
Sources and scope
References checked 6 November 2026. The questions, examples and diagrams are our editorial research tools; they are not statements that every franchise has the same terms.
- eCFR — 16 CFR 436.5, disclosure items
US federal disclosure-item structure; not a review of a particular offer or all state requirements.
General editorial information, not personalised legal, tax or financial advice. Confirm local requirements and the actual documents with appropriate advisers. Examples are hypothetical. Contact the editor or suggest a correction.
Continue your research