INDUSTRY BENCHMARK · 137 SYSTEMS · FISCAL 2016–2025
Are food & dining franchises a good investment?
Across 137 food & dining franchise systems (48,674 franchised units), franchisees exited at an annualized rate of 8.6% in their latest FDD Item 20 filings, while new outlets opened at 11.0%. The median buy-in: a $35K franchise fee, 6.0% royalty, and a total investment of $330K–$814K.
People search for a “food & dining franchise failure rate,” but no such official number exists. What franchisors must disclose — in the Item 20 outlet tables of the FDD — is how many franchised outlets were terminated, not renewed, or “ceased operations — other reasons” each year. That annualized exit rate is the honest, measurable proxy: it slightly overstates failure (some exits are retirements or sales) and slightly understates distress (struggling units often sell before they close), but unlike survey numbers it comes from legally mandated disclosures.
8.6%
4,189 exits / 48,768 units at start
11.0%
5,356 outlets opened
137
verified FDD extractions
48,674
at latest fiscal year end
$35K
FDD Item 5
6.0%
FDD Item 6
$330K–$814K
FDD Item 7
85/137
systems disclosing an FPR
SOURCE: FDD ITEM 20 OUTLET TABLES FILED WITH STATE REGULATORS (MINNESOTA CARDS) · 137 SYSTEMS · 137 FILINGS · FISCAL 2016–2025
| Signal | Brand | Index | Grade |
|---|---|---|---|
| STRONGEST | LAYNE'S CHICKEN FINGERS | Proven & strong | |
| STRONGEST | WING-STOP | Proven & strong | |
| STRONGEST | EINSTEIN BROS. RESTAURANT | Proven & strong | |
| WEAKEST | Champps Kitchen + Bar | Too new to judge | |
| WEAKEST | Smoothie Factory, Smoothie Factory + Kitchen | Too new to judge | |
| WEAKEST | BOSTON'S THE GOURMET PIZZA RESTAURANT & SPORTS BAR | Too new to judge |
HEALTH INDEX: SOURCED 0–100 SCORE FROM EACH BRAND'S OWN FDD ITEM 20 · METHODOLOGY
Food & Dining franchise questions, answered from the filings
What percentage of food & dining franchises fail?
There is no official failure rate, but FDD Item 20 filings show the honest proxy: across 137 food & dining franchise systems, 4,189 franchised outlets left their systems (terminations, non-renewals, and "ceased operations — other") out of 48,768 open at the start of the year — an annualized exit rate of 8.6% in fiscal 2016–2025. Not every exit is a failure (some are retirements or sales), but it is the measurable floor.
How much does a food & dining franchise cost?
Across the latest FDD filings of 137 food & dining systems, the median initial franchise fee is $35K (Item 5) and the median total investment range is $330K–$814K (Item 7).
What royalty do food & dining franchises charge?
The median ongoing royalty across 137 food & dining franchise systems is 6.0% of gross sales, per Item 6 of their latest FDD filings.
Are food & dining franchises growing or shrinking?
In the latest Item 20 filings, food & dining systems opened new franchised outlets at an annualized rate of 11.0% while franchisees exited at 8.6%. Openings currently outpace exits in this industry.
What is the healthiest food & dining franchise?
By the Watch Desk verdict system (computed from FDD Item 20 with an evidence gate), the strongest verified food & dining system tracked is LAYNE'S CHICKEN FINGERS.
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