Here’s a number worth getting right: many franchise brands really do keep more than 95% of their locations open year to year. That statistic is true — and understood properly, it’s far more useful to you than the version usually quoted in sales material.
What the 95% Figure Actually Measures
The number comes from Item 20 of the Franchise Disclosure Document, where every franchisor must report how many outlets opened, closed, were terminated, or were transferred. An analysis reconciling Item 20 tables across 858 franchise systems with 25 or more units found a median annual closure rate of 4.7%. Turn that around and the median brand keeps roughly 95.3% of its units open in a given year.
So yes: many franchises operate at a 95%+ survival rate. Two things about that number matter enormously once you are the one signing.
- It is an annual rate, not a five-year rate. A 4.7% annual closure rate compounds. Over five years it works out to roughly one unit in five closing, putting five-year survival near 79% rather than 95%.
- It counts units, not owners. If a franchisee runs out of money and sells the location, the unit stays open and never registers as a closure. Unit survival and owner profitability are two different measurements.
The Spread Between Brands Is the Real Story
The median tells you very little on its own, because the distance between a strong brand and a weak one is enormous. In that same dataset:
- Top-quartile brands closed under 1.9% of units annually, better than 98% survival.
- Bottom-quartile brands closed 7% or more annually.
- The bottom decile closed more than 16.2% annually.
Individual brands at the strong end are remarkable: Planet Fitness at 99.86% annual unit survival, Wingstop at 99.81%, Domino’s at 99.78%, McDonald’s USA at 99.64%, and Servpro at 99.52%.
Lending data shows the same spread. Across 501 brands and 26,749 resolved SBA 7(a) loans approved between FY2010 and FY2019, brand-level default rates ranged from 0% to 75%. Twenty-five brands with 40 or more loans recorded zero defaults, including Club Pilates, Primrose Schools, and Christian Brothers Automotive. Eleven brands with 20 or more loans defaulted on more than 40% of them.
That lending data also deserves an honest mention, because it cuts against the easy version of the franchise pitch: franchised borrowers defaulted at 10.2% overall, against 7.8% for non-franchised borrowers. Franchising is not automatically the safer bet. Choosing the right brand is what makes it safer.
Why This Is Good News
The accurate version of this statistic is more valuable to you than the marketing version. “95% of franchises succeed” invites you to relax. “Many franchise brands survive above 95%, while others fail at five to ten times that rate” tells you exactly where the work is: brand selection, a careful read of Item 20, and validation calls with current franchisees.
The FTC puts the caution plainly enough — in franchising, as in any business, there is “no such thing as a sure thing.” What there is, is a very wide gap between brands, and public data that lets you tell them apart before you sign.
Why Franchises Succeed at Such High Rates
Proven Systems Take the Guesswork Out
The biggest advantage franchisees have is stepping into a business where all the startup kinks have already been worked out. When you buy a franchise, you’re not inventing a new wheel: you’re using one that’s already been tested, refined, and proven to work.
Every successful franchise has documented procedures for everything from opening procedures to customer service protocols. The most successful franchisees are those who follow these systems consistently rather than trying to reinvent them. One of my practical franchise buying tips: master the existing playbook before you try to optimize it.
Built-In Brand Recognition
Starting a business from scratch means building brand awareness from zero. Franchisees get an immediate head start because customers already know and trust the brand. Whether it’s a nationally recognized name or an emerging brand with celebrity backing, that recognition translates directly into customers walking through the door from day one.
This brand power also means lower marketing costs. Instead of spending months or years building credibility, franchisees can focus on execution and customer service. A seasoned franchise advisor can also help you assess how much of that brand lift you’ll see in your local market.
Comprehensive Support Network
One of the hardest parts of running an independent business is feeling like you’re going it alone. Franchisees get the opposite experience: they’re part of a network that includes:
- Extensive training programs before and after opening
- Ongoing business support from the franchisor
- Established supply chains and vendor relationships
- A community of fellow franchisees to share ideas and best practices
- Marketing support and proven advertising strategies
This support system provides real franchise help and addresses many of the common franchise mistakes that trip up independent business owners.
What This Success Rate Means for You
Lower Risk, Higher Confidence
A brand with 95%+ annual unit survival genuinely does change the risk equation. While no business investment is guaranteed, franchising offers a dramatically different risk profile than starting from scratch. You’re essentially buying into a business model that has already proven it works.
For many people, this lower risk makes business ownership accessible for the first time. You don’t need to be a serial entrepreneur or have decades of business experience: you need to be willing to learn and follow proven systems. If you want help narrowing options, a franchise consultant can guide you toward the best franchises to buy for your goals and budget.
Industry Matters
Not all franchises are created equal. When doing franchise comparison research, you’ll find that certain sectors consistently outperform others:
- Home services franchises often show exceptional success rates
- Education and wellness franchises have strong track records
- Food service franchises with strong brand recognition (think Chick-fil-A or Jersey Mike’s) maintain high success rates despite operational complexity
The key is finding the best franchises to buy within sectors that match your interests and local market conditions.
Experience Optional, Commitment Required
Many successful franchisees had no prior experience in their chosen industry. What they did have was a commitment to learning the system and following it consistently. Franchisors typically provide comprehensive training that covers everything you need to know. Avoid rookie franchise mistakes by leaning on your training and support team.
The trade-off is that franchise contracts usually run 10-20 years with ongoing royalty payments averaging 5-6%. This longer commitment is part of what creates the support structure that drives high success rates.
How This Compares to Going It Alone
The contrast between franchise success and independent business success is stark. When you start a business from scratch, you’re responsible for:
- Developing all operational procedures
- Building brand recognition from zero
- Finding and vetting suppliers
- Creating marketing strategies
- Solving problems without guidance
- Managing cash flow with no proven benchmarks
Franchisees still face challenges, but they have proven solutions and support systems to address them. This is why franchise buying tips consistently emphasize the importance of choosing brands with strong support systems rather than just focusing on initial investment costs.
Maximizing Your Franchise Success
Even at a brand surviving above 95%, there are ways to stack the odds further in your favor:
Choose Wisely
The best franchises to buy are those that align with your skills, interests, and local market needs. Start with a simple franchise comparison of your top 3-5 brands. A franchise consultant or franchise advisor can help you evaluate opportunities objectively, looking at factors like:
- Initial investment requirements vs. your available capital
- Franchisor support quality and track record
- Territory availability and competition
- Growth trends in your target market
Follow the System
The franchisees who struggle are usually those who try to improve on proven systems right out of the gate. The time to suggest improvements is after you’ve mastered the existing procedures and can demonstrate better results. If you want one universal lesson from my franchise buying tips, it’s this: follow the system first.
Plan for Growth
Many successful franchisees don’t stop at one location. The systems and experience you gain with your first franchise often translate into opportunities for multi-unit ownership, which can significantly increase your overall returns.
The Franchise Advantage in Today’s Market
The franchise industry continues growing, adding over 15,000 new units annually. The sector is projected to grow 2.4% in 2025, outpacing the broader U.S. economy’s expected 1.9% growth.
This growth happens because the franchise model works: for franchisors, franchisees, and consumers. Franchisors get to expand without the capital requirements of company-owned locations. Franchisees get proven business models. Consumers get consistent experiences they can trust.
For franchise help and guidance through the selection process, working with an experienced franchise consultant can make the difference between choosing a good opportunity and finding the perfect fit for your goals and circumstances.
Your Next Step
A 95%+ survival rate at the right brand isn’t just a statistic: it reflects a model that, chosen carefully, consistently delivers results. While franchising isn’t right for everyone, it offers a proven path to business ownership with substantially lower risk than going it alone.
The key is doing your homework. Research different industries, understand the investment requirements, and honestly assess whether you’re prepared to follow proven systems rather than doing everything your own way.
With the right franchise choice and commitment to following proven systems, you’re not just buying a business: you’re buying into a success rate that independent entrepreneurs can only dream of achieving.
