Item 20 is the section of the Franchise Disclosure Document that reports the number of franchised outlets and company owned outlets in the system during the last three fiscal years. It includes openings, closures, transfers, terminations, non renewals, reacquisitions and the status of projected openings. Item 20 also contains a list of former franchisees who left the system during the last fiscal year.
Item 20 exists to give prospective franchisees a clear and accurate picture of system growth and stability based on real outlet count data.
Item 20 is one of the most important disclosure Items for evaluating a franchise system. Growth in new units combined with low turnover may signal strong support and market demand. High closure numbers or unusual transfer activity may indicate performance issues or challenges within the system.
Attorneys, lenders, consultants, brokers and state examiners rely on Item 20 to validate a franchisor’s stability and expansion trends. Franchise buyers use it to evaluate risk, system maturity and the consistency of franchisor support.
The FTC requires franchisors to disclose the following in Item 20 using standardized tables:
A table showing the number of franchised and company owned outlets at the beginning and end of each of the last three fiscal years.
A table showing franchisee to franchisee transfers for each of the last three fiscal years.
A table showing terminations, non renewals, reacquisitions, closures and other losses of franchised units.
A table showing company unit openings and closings only.
A table showing the number of franchised and company owned units the franchisor expects to open in the next fiscal year.
Franchisors are required to provide a list of current and former franchisees. These lists contain names and contact information for these current and former franchisees.
Buyers and advisors review Item 20 to understand:
actual growth of the system
the rate at which franchisees leave
how many units the franchisor has taken back
whether the system is expanding consistently
whether projected openings appear reasonable
how turnover compares to industry norms
Item 20 is often used alongside Item 19 to assess long term system strength.
Prospective buyers watch for:
high termination or non renewal counts
repeated closures in certain markets
multiple franchisor reacquisitions
large year over year outlet declines
a high number of transfers in a short period
planned openings that do not match past performance
These indicators often trigger deeper due diligence.
Item 20 appears near the end of the Franchise Disclosure Document. It follows Item 19, which covers financial performance information, and immediately precedes Item 21, which discloses audited financial statements.
Outlet
Franchise Disclosure Document
Item 19
Gross Sales
EBITDA
Franchise Turnover Rate
Franchise Territory Mapping
Integrated E-Sign
CRM Tools (Track and Chart Revenue and Expense Per Territory)
Zapier Integration (Zap Revenue)
Franchise Registration Management
The Ultimate Guide to Item 20 of the FDD (and How Zors Helps You Stay Compliant)
Territory Mapping & Item 19: Why Size Does Matter in Franchise Disclosure
Understanding Item 12 of the Franchise Rule: Territories Explained
Last updated: December 5, 2025
