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Keep the population and period consistent
Read the actual headings, reporting periods and outlet types. Company-owned and franchised units are different groups. Termination, nonrenewal, transfer and closure are not interchangeable categories.
Net growth alone establishes neither operator success nor support quality. Use the described contacts and records to investigate the specific questions raised.
Net growth leaves important questions open
Fictional example: a counted population begins at 20 units, adds eight and has five leave it. It ends at 23, a net increase of three. The calculation does not say why the five left or whether the new units are performing as expected.
Check the real categories before interpreting departures; do not label them all failures or treat every transfer as an outlet closure. Growth also raises a separate question about the resources available to support the larger network.
Scope
- This explains the selected federal disclosure item. State and territorial requirements and the terms of the particular offer remain separate.
Next step
Read the period and categories before comparing totals, and use current/former operator information to investigate specific changes.
Sources & review notes
Federal Franchise Rule
FTC overview · Compliance Guide · Guide PDF · Current regulation
Federal Trade Commission
Passage, dates and research notes
primary · Item 20: Outlets and franchisee information
the number of franchised and company-owned outlets
Current substantive item read in full from current eCFR. This guide explains selected management implications; it is not a substitute for all prescribed disclosure text.
Federal Trade Commission
Passage, dates and research notes
primary · section-436.6
Respond fully to each disclosure Item.
Current eCFR displayed through 2026-11-09; eCFR is authoritative but not the official legal edition.
Detailed rule records (1)
Item 20 contains outlet tables and prescribed current/former franchisee information, with defined categories and periods. Net growth can coexist with terminations, non-renewals and transfers. System size alone does not establish support quality or investment outcomes.
16 CFR §436.5(t): FDD Item 20Keep this reading in your learning library.
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