Fundamentals

Franchise Unit Churn Rate

Also known as: Unit Turnover Rate, Closure Rate, Churn

Franchise unit churn rate measures the percentage of franchise locations that close, are terminated, or transferred within a given year relative to total operating locations. Unlike the SBA default rate which only captures financed locations, churn captures all closures. A healthy rate is typically below 3-5% annually, while rates above 7-10% indicate systemic issues. Calculated from Item 20 data: (closures + terminations + non-renewals) divided by total units at start of year.

Real-World Example

A 500-unit fitness franchise shows in Item 20: 30 closures, 10 terminations, and 5 non-renewals out of 500 locations at year start, resulting in a 9% churn rate. This is double the industry average and signals that approximately 1 in 11 locations fails each year.

Related Terms

Franchise Attrition Rate
Fundamentals
Item 20 (Outlet and Franchisee Information)
Legal & Compliance
Franchise Default Rate
Financial

Related Resources

Health Score Methodology·Franchise Finder·Compare Franchises·Low-Cost Franchises

Use real franchise data to evaluate your investment.

Explore FDDIQ Franchise Data

Last updated: April 2026