How to Read Item 20 (Outlets and Franchisee Information)

Why Item 20 is the honest Item

Item 19 is optional. Item 20 is not. Every franchisor filing an FDD under the FTC Franchise Rule must disclose three fiscal years of outlet counts in a prescribed table format, and must list its current franchisees along with those who left the system in the most recently completed fiscal year.

That combination — mandatory, standardized, three years deep, with names and phone numbers attached — makes Item 20 the most reliable section of the document. It does not tell you what a unit earns. It tells you what happened to the units, which is often the better question.

Because the format is prescribed, Item 20 is also directly comparable across brands in a way almost nothing else in an FDD is. Two franchisors may define “gross sales” differently and present Item 19 in incompatible formats, but their Item 20 tables count the same events in the same columns.

The five tables

Table 1 — Systemwide Outlet Summary. Total outlets at the start and end of each of the last three fiscal years, split into franchised and company-owned. This is the top-line growth picture and the reference against which the other tables should reconcile.

Table 2 — Transfers. Outlets transferred from franchisees to new owners other than the franchisor, by year and usually by state. A transfer is a change of ownership of an existing unit, not a closure and not an opening.

Table 3 — Status of Franchised Outlets. The core table. For each year it shows outlets at the start of the year, outlets opened, terminations, non-renewals, outlets reacquired by the franchisor, outlets that ceased operations for other reasons, and outlets at the end of the year.

Table 4 — Status of Company-Owned Outlets. The same idea for the franchisor’s own units: outlets at start of year, opened, reacquired from franchisees, closed, sold to a franchisee, and outlets at end of year.

Table 5 — Projected Openings. Franchise agreements signed where the outlet has not yet opened, projected new franchised outlets in the coming fiscal year, and projected new company-owned outlets — all as of the end of the last fiscal year, broken out by state.

Item 20 also carries three pieces of narrative that are easy to overlook: a list of current franchisees with addresses and telephone numbers; a list of franchisees who had an outlet terminated, cancelled, not renewed or reacquired, or who otherwise ceased to do business during the last fiscal year, with last known contact details; and a statement about whether franchisees have signed confidentiality clauses restricting what they may say about their experience. Jiffy Lube’s 2026 FDD, Item 20, includes that confidentiality disclosure, which is worth knowing before you make calls.

What the exit columns actually mean

The distinctions between the exit columns are not cosmetic. Each describes a different event with a different implication.

Terminations are outlets the franchisor ended, typically for breach — unpaid fees, standards failures, unauthorized transfers, abandonment. A termination reflects a relationship that failed while the agreement still had time to run.

Non-renewals are outlets where the term expired and one side chose not to continue. Non-renewal can mean the franchisor declined to renew, or the franchisee walked away at the natural end of the contract. Because agreement terms are long — Jiffy Lube’s is 20 years under its 2026 FDD, Item 17 — a system can show near-zero non-renewals for years simply because few agreements have come due.

Reacquired by franchisor means the franchisor bought the unit back. This is ambiguous on its face. It can be a rescue of a struggling operator, an opportunistic purchase of a strong location, or a strategic decision to own certain markets. The direction of travel across three years, and the mirror-image column in Table 4, usually clarifies it.

Ceased operations — other reasons is the residual category: closures that were not terminations, non-renewals or reacquisitions. In practice it captures units that simply shut down. A system with substantial numbers here and few terminations is worth a question, because it suggests units are failing quietly rather than being formally ended.

Transfers are not exits at all. The brand keeps the unit; the owner changes.

Doing the arithmetic

The tables give you counts. The useful figures are ratios you compute yourself. Two are enough to start.

Net growth is franchised outlets at the end of the three-year window minus outlets at the start. Using Jiffy Lube’s 2026 FDD, Item 20, franchised outlets went from 1,683 at the start of 2023 to 1,765 at the end of 2025 — a net gain of 82 units, or about 4.9 percent over three years.

Annual attrition is total exits in a year divided by outlets at the start of that year. Count terminations, non-renewals, reacquisitions and other cessations; exclude transfers. For Jiffy Lube in 2025: 21 terminations plus 0 non-renewals plus 2 reacquisitions plus 0 other, against 1,721 outlets at the start of the year, is 23 exits, or roughly 1.3 percent. Across all three years the system recorded 145 openings against 50 terminations, 2 non-renewals and 11 reacquisitions.

Low attrition in a large mature system is a meaningful signal of stability. It is not a signal of profitability — a unit can persist for years at a return its owner would never accept if starting over, particularly where a long term, a personal guaranty and a post-term non-compete make exit expensive.

Two refinements are worth making. Compute attrition against the start-of-year base rather than the end-of-year base, since the denominator should be the population at risk. And look at the trend rather than a single year: one bad year in a decade means something different from three rising years.

Why transfers matter

Transfers are the column buyers most often ignore and the one that frequently carries the most information.

A transfer means an existing franchisee sold. Some transfers are good news: a healthy resale market means the asset is liquid, and an operator can realize value on exit. Others are distress sales, or units changing hands repeatedly because no owner can make them work. The table alone cannot distinguish these, which is precisely why the number should prompt calls rather than conclusions.

Jiffy Lube’s 2026 FDD, Item 20, records 45 transfers in 2023, 63 in 2024 and 51 in 2025 — an average of 53 a year against a franchised base of roughly 1,700, or about 3 percent annually. Compare that with the 23 exits in 2025. Roughly twice as many units changed hands as left the system. In a system where transfers substantially exceed exits, the resale market is doing real work, and the sellers are people worth talking to.

Watch also for the same location appearing in the transfer table in consecutive years, where the state-level detail allows it. Repeat transfers at one site suggest the location, not the operator, is the problem.

Openings that are not new construction

A count of openings answers “how many outlets opened,” not “how many new outlets were built.” The two can diverge sharply, and Table 4 is where you see it.

In Jiffy Lube’s 2026 FDD, Item 20, franchised outlets opened 67 units in 2025 — the strongest of the three years. The company-owned table for the same year shows 34 outlets sold to franchisees and zero company outlets opened, with company-owned centers falling from 354 to 318. So roughly half of the franchised “growth” in 2025 was refranchising: existing company centers transferred into franchisee hands, not new sites developed.

Refranchising is not inherently bad. Buying a seasoned unit with known sales can be lower risk than building one. But it means the system added far fewer new locations than the headline suggests, and it changes what the growth number tells you about demand for new franchises.

Projected openings versus signed-not-open

Table 5 contains two numbers that are easy to conflate.

Franchise agreements signed but outlet not opened is a hard count of contracts in hand. Someone has committed. Projected new outlets in the next fiscal year is the franchisor’s forecast, and it is exactly that — an estimate, not a disclosure of fact.

Jiffy Lube’s 2026 FDD, Item 20, shows 5 franchise agreements signed but not opened as of December 31, 2025, and projects 13 new franchised outlets across eight states in the following year, plus 5 company-owned. A projection substantially larger than the signed pipeline is normal in systems that sell and open within the same year, but the gap is worth understanding. Where prior-year projections are available from an earlier FDD, compare what was projected against what Table 3 later recorded. A franchisor that consistently projects three times what it delivers is telling you something about its forecasting.

Call the franchisees — including the ones who left

The contact lists are the most valuable pages in Item 20, and the least used.

The list of current franchisees lets you sample widely rather than speaking only to the references the franchisor selects. Call units of different ages, in different markets, and in different size bands. Ask about sales relative to the Item 19 tables, about total fee load, about staffing, about what the franchisor actually does for the money.

The list of departed franchisees is more important still. These are the people the tables count as terminations, non-renewals, reacquisitions and cessations, and they are the only source for why. Some will not talk. Some are bound by settlement or confidentiality terms — which is why the Item 20 confidentiality disclosure matters. Some will talk at length. Even three conversations will tell you more about the failure modes of a system than any table can.

Caveats

Item 20 counts events, not outcomes. It cannot tell you whether a surviving unit is profitable. It reflects one franchisor’s fiscal years and, in many FDDs, U.S. outlets only — Jiffy Lube’s Item 20 tables are U.S.-only, while Item 1 separately reports roughly 155 licensed centers in Canada outside those counts. Counts can also be affected by definitional choices: how a relocation, a temporary closure or a rebranded unit is classified varies. Finally, the tables are as of a fiscal year end that may be many months before you read them.

Check that the tables foot. Table 1 should agree with Tables 3 and 4 in each year, and each row should reconcile from start to end. When they do not, ask.

This guide is informational only. It is not financial, legal or investment advice. Obtain the current FDD and consult qualified professionals before investing.

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