🧭 Franchise expansion without structured data is like driving without a map. That's why Item 20 of the Franchise Disclosure Document (FDD) is so critical—it paints a detailed picture of your franchise system’s health, growth, and stability for prospective franchisees.
But let’s be honest: managing this level of detail state-by-state and year-over-year can become overwhelming—especially when trying to match FTC definitions and disclosure requirements. That’s exactly where Zors comes in.
In this guide, we’ll break down everything franchisors need to know about Item 20 compliance—plus how Zors simplifies the process with built-in tracking, filtering, and automated report building (coming soon 🚀).
Item 20 is a statistical and narrative disclosure of the franchisor’s outlet history, ownership changes, projected growth, and franchisee contact details. It provides transparency into how the franchise system has performed and how it's expanding across geographic regions.
Five required outlet tables, showing outlet activity over the last three fiscal years and projections for the year ahead
Contact information for current and former franchisees
Disclosure of confidentiality agreements that may limit a franchisee’s ability to share their experience
The FTC also defines each status type (like termination, reacquisition, or transfer) and expects franchisors to report these terms consistently and clearly.
Shows total franchised and company-owned units at the start and end of the past three fiscal years. This table reflects net changes in outlet count—an essential signal of brand health.
The FTC defines these broadly. A company-owned outlet is any outlet operated by the franchisor or its affiliates that is substantially similar to that offered to the prospective franchisee, including:
Units operating under a different name
Units operating under a different system
If the goods or services to be offered by the prospective franchisee then those outlets must be included with the franchisor's outlets in Item 20 disclosures for "company-owned outlets."
Why? The purpose is to prevent franchisors from hiding negative information (like using an affiliate to repurchase failing franchises)
Tracks ownership transfers of franchisee outlets (e.g., sales to another franchisee) over the past three years, state by state.
⚠️ Transfers don’t change your total outlet count—but they’re still a major indicator of franchisee turnover and system dynamics.
Displays all changes in franchisee outlet status:
Outlets at Start of Year
Outlets Opened
Terminations
Non-Renewals
Reacquired by Franchisor
Ceased Operations - Other Reasons
Outlets at End of the Year
📍 Tracked state by state across three fiscal years (see FTC definitions below for more details).
Same structure as Table 3 but focused on outlets owned by the franchisor.
Quick tip: Always disclose if the company-owned outlets are operated by an affiliate (Item 1 and as an * to the appropriate tables in Item 20).
Franchisors must forecast:
📌 New outlets they expect to open (franchised and company-owned) in each state next fiscal year
✍️ Franchise agreements already signed, but not yet opened, as of fiscal year-end
The Franchise Rule requires specific terminology. Zors tracks each status using FTC-compliant terms, so you don’t have to interpret definitions manually:
Transfer: Sale to another franchisee (not the franchisor) of the outlet or a controlling interest in the ownership of the franchise
Termination: Franchise agreement terminated by the franchisor without payment or forgiveness
Non-renewal: Franchise not continued at the end of term (franchisor or franchisee elects not to renew)
Reacquisition: Franchisor buys back the unit (includes payment via a discharge of debt)
Ceased Operation: Franchisee leaves system for any other reason (abandonment, inactivity, etc.)
🔁 Zors allows you to easily log the date and reason as part of its milestone tracking features
Most mapping platforms stop at "defining boundaries" and most CRMs stop at “franchisee signed.” Zors begins before that and follows each unit through its full lifecycle.
Track key stages for each outlet:
Available
Prospect
Pending
Sold (Not Open)
Sold (Open)
For Sale (By Zee)
Closed
Zors helps you assign and monitor key dates, like:
Contract signing date
Scheduled opening date
Renewal window
Expiration date
🧠 These milestones are visible on the territory profile and include a timeline view:
Zors makes state-by-state disclosure simple with:
Organization by state
Tracking by status
💡 Your franchise attorney will thank you for making Table 1–4 reporting this painless.
The FTC requires contact details for:
All current franchisees (or at least 100 current franchisees, based on proximity to the sale state)
All franchisees who exited the system in the last fiscal year
If any current or former franchisee signed an agreement restricting their ability to speak about their experience as a franchisee, you must include this required language:
“In some instances, current and former franchisees sign provisions restricting their ability to speak only about their experience with [name of franchise system]. You may wish to speak with current and former franchisees, but be aware that not all such franchisees will be able to communicate with you.”
✅ Franchisee can’t talk about their experience with the brand
❌ Doesn’t apply to manager roles, proprietary manuals, trade secrets
If you're selling a previously franchised unit now under your control, the FTC requires:
Name, city, state, and current telephone number
Time period of ownership
Reason for change in ownership
When the franchisor took back control
Zors helps you retain this history in each unit's profile—automatically timestamped and archived.
Soon, Zors will allow franchisors to generate:
FTC-compliant Item 20 tables
Custom exports for franchise counsel
The features our customers ask for!
📉 Manual data tracking for Item 20 is error-prone and time-consuming.
📈 With Zors, you can streamline franchise compliance using smart automation, structured lifecycle tracking, and built-in state-level views.
✅ Whether you’re preparing an FDD for registration states or just trying to keep better tabs on your system health, Zors has you covered.
👉 See how Zors can power your franchise compliance and growth.
Explore our features like Territory Mapping and Franchisee Lifecycle today.
🛑 Disclaimer:
The information provided in this blog post is for general informational purposes only and is not legal advice or a substitute for consulting with a qualified attorney. Franchise law is complex and highly nuanced, governed by both federal regulations and varying state-specific laws. Proper legal guidance requires a detailed understanding of these rules as applied to your specific circumstances. You should not act—or refrain from acting—based on anything in this post. You should consult your franchise attorney for legal advice.
Need legal advice? Contact a franchise law firm.
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