Franchise Development Pipeline Monitor 2026: Signed but Not Opened Units and Projected Openings

This edition: what the 2026 monitor covers

This is the first annual edition of the monitor. It reads Item 20 Table 5 (Projected Openings) in the same 259-brand FDD sample used across our FDD research, and joins it to the Table 3 counts already published in our franchise closure rates index. One duplicate registration of the same Item 20 system is dropped, leaving 258 franchise systems. Of these, 18 had no open franchised outlet at year end; 8 of those had 34 signed agreements between them, and together they projected 124 openings.

The FDDs were issued from 2025-01-24 to 2026-08-18. The latest fiscal year shown is 2025 for 195 systems, 2024 for 60 and 2026 for 3. Table 5 is dated the last day of that fiscal year, so the backlog is a year-end snapshot and the projection covers the following year (16 CFR 436.5(t)(3)).

The FTC describes Item 20 to buyers as charts showing growth and owner turnover in a franchisor’s system (FTC consumer guide); Table 5 is the forward-looking part of it. Brand-level counts are in the downloadable dataset, each linked to its Minnesota filing. The page reports sector and aggregate results only; no system is singled out for the size of its backlog.

Franchise development pipeline by sector

Summary. The size of the signed-but-not-opened backlog depends mostly on what kind of business is being franchised. Median backlogs range from 0.0% of open franchised outlets in business services to 219.6% in entertainment and recreation, where the median system had more signed-but-unopened agreements than open franchised outlets (258 systems, latest fiscal year, Minnesota-registered FDDs).

Four sectors had median backlogs above 25% of open outlets: entertainment and recreation (219.6%), fitness (46.0%), health and wellness (44.9%) and pet services (30.0%). Four sectors were below 2%: home services (1.4%), retail (1.8%), automotive (1.8%) and business services (0.0%). The differences between sectors are larger than chance would produce (Kruskal-Wallis H = 59.6, p below 0.001).

Pooled figures tell a different story from medians. Food and beverage systems held 630 unopened agreements, the second-largest sector total, but that is 6.7% of their 9,347 open franchised outlets. The two sectors with the heaviest backlogs are also the youngest: the median entertainment and recreation system had been franchising for 4 years and the median health and wellness system for 5, against 33 in retail and 25 in automotive (FDD Item 1).

Backlog by system size and franchising age

Summary. Small and young systems carry backlogs that are large relative to what they have open; large and old systems carry backlogs that are small. Systems with 1 to 9 open franchised outlets had a median backlog of 158.3% of open outlets; systems with 250 or more had 1.8%. Systems franchising for under 5 years had a median of 85.7%; systems franchising for 35 years or more had 1.6% (latest fiscal year, Minnesota-registered FDDs).

The pattern is steady across bands. The rank correlation between system size (log of open franchised outlets) and backlog % is -0.35 (n = 240), and between years franchising and backlog % it is -0.43 (n = 231); both have p below 0.001. Size and age overlap: most small systems are also young.

Part of this is arithmetic. A system with 5 open outlets and 5 signed agreements has a 100% backlog; a system with 1,000 outlets would need 1,000 unopened agreements to match. Read the percentages for small systems as a statement about how much of the brand still exists only on paper, not as a comparison of sales skill. Our closure rates index shows how the same size and age bands differ in exits.

How concentrated the signed-but-not-opened backlog is

Summary. The backlog is concentrated, but about as concentrated as franchising itself. The 26 systems with the most unopened agreements (the top 10% of 258) held 54.1% of all 5,097 signed-but-not-opened agreements; 22 systems held half. For comparison, the top 10% of systems by open franchised outlets held 59.4% of all open outlets.

At the other end, 67 systems (26.0%) reported no signed-but-not-opened agreements at year end. The Gini coefficient of the backlog across systems is 0.72 (0 = every system holds the same number, 1 = one system holds all).

Because the largest backlogs sit in a few systems, sums such as the 5,097 total move a lot when one large system signs or cancels a multi-unit deal. Medians are the better guide to a typical system; sums are the better guide to how many outlets the sample as a whole expects.

Projected openings versus last year's actual openings

Summary. Most franchisors project more openings than they achieved the year before. Of the 244 systems that opened or projected at least one franchised outlet, 70.5% projected more new franchised outlets for the next fiscal year than Table 3 shows they opened in the latest year. In total the 258 systems projected 5,156 franchised openings against 4,235 franchised openings in the latest year, a ratio of 1.22 (the median system ratio is 1.50 among the 219 systems that opened at least one outlet).

The 172 systems that projected more than they opened projected 3,940 openings after opening 1,790. The 61 systems that projected fewer projected 1,129 after opening 2,358. 23 of them have 250 or more open outlets and account for 1,711 of those 2,358 openings, which is why the pooled ratio (1.22) is lower than the median (1.50). Systems with 250 or more open outlets projected 0.76 times their latest openings in aggregate; systems with 1 to 9 outlets projected 4.61 times.

Two cautions apply. Table 3 openings include existing company-owned outlets bought by franchisees, while Table 5 projects new franchised outlets (16 CFR 436.5(t)(2) and (t)(3)). And the FTC rule asks only that projections have a reasonable basis; it gives no method (FTC Compliance Guide). A one-year comparison in one FDD says nothing about whether a franchisor’s past projections came true; in 2007 the FTC declined a proposal to make franchisors print that record (72 FR 15503).

Projections also include company-owned units: 37 systems projected 210 company-owned openings, which are excluded from every ratio above.

Backlog and closure rates: a correlation check

Summary. A large backlog does not go with higher exit rates in this sample. Among the 192 systems with at least 10 franchised outlets at the start of the year, the rank correlation between backlog % and the latest-year exit rate is -0.09 (p = 0.241), and with the three-year pooled exit rate it is -0.1 (p = 0.186). Neither is distinguishable from zero.

Systems with a backlog of 50% or more of open outlets had a median latest-year exit rate of 3.0%, against 5.7% for systems with no backlog. Exit counts come from the same FDDs as published in our closure rates index (terminations, non-renewals, reacquisitions and other cessations as a share of outlets at the start of the year).

This is a correlation only. Young systems have high backlogs and have had little time to record exits, so age can hide any link. Agreements that are signed and then abandoned before opening do not appear in Table 3 at all (NASAA commentary 20.1), so Item 20 cannot show how many backlog units end without an outlet.

What Table 5 does and does not measure

Summary. Table 5 is the only place in an FDD that counts sold-but-unopened franchises, and it is thinner than it looks. The rule defines column 2 as franchise agreements signed for new outlets where the outlet had not opened by the end of the last fiscal year (16 CFR 436.5(t)(3)). It does not say how to treat units promised under an area or multi-unit development agreement before each unit agreement is signed, and in this sample only 1 of 258 FDDs said it included such commitments; 257 did not say, including 2 whose footnotes say some state rows include franchisees with multi-unit agreements without saying how units lacking a unit agreement are treated. That gap matters because multi-unit deals are a main route to growth: a study of fast-food systems found that chains with a larger share of multi-unit franchisees, including area developers, grew faster (Kaufmann and Dant, 1996), and a study of seven fast-food chains in Texas found new units were more likely to go to franchisees whose existing units were nearby (Kalnins and Lafontaine, 2004). Table 5 does not show how much of a backlog sits with existing owners.

The FTC called the signed-but-not-opened count material because it helps a buyer gauge how long it may take before an outlet becomes operational (72 FR 15503). Item 11 of the same FDD must state the typical time from signing to opening and list factors that can delay it, including leases, financing, building permits, zoning, weather, shortages and late delivery of equipment, fixtures and signs (16 CFR 436.5(k)(2)). Our time-to-open index reads those Item 11 disclosures.

Unopened agreements also leave no trace when they lapse. NASAA’s commentary says a franchisee who signed, never opened and left the system is shown in no Item 20 chart, only in the list of departed franchisees (commentary 20.1). FTC staff confirm that franchisees who have not opened must still be named in the franchisee list, marked as not yet opened (FAQ 19). A buyer can therefore compare the Table 5 count with that list and with next year’s FDD, but the FDD itself never reports how many sold units were abandoned. Our guide to buying a franchise explains where Item 20 sits among the other FDD Items, and franchise costs covers the Item 7 investment a signed franchisee must still fund before opening.

Earlier industry counts were built the same way. A Franchise Grade study of 1,003 systems reported a 17.5% rise in sold-but-not-opened units from 2012 to 2015 (Franchising.com, 2017), and Franchise Times reported that the 50 franchisors with the largest backlogs in 2013 FDDs held 12,697 unopened units (Franchise Times, 2015). Neither source reports the backlog as a share of open outlets or compares projections with openings, and both rely on FDDs from 2013 to 2015.

Methods in brief and the next edition

Each FDD’s Table 5 total row was drafted by a parser and then confirmed or corrected by reading the document (several FDDs split Table 5 into formats or brands, which were summed; area developer counts were excluded). A second reader independently re-read 20 random systems from the full text: 0 of 120 fields differed. The parser alone got 6 of 60 count fields wrong in that sample, which is why every FDD was read. Full method, codebook and limitations are in the methodology section below.

The next edition will use FDDs filed in the 2027 renewal season. Because many of the same systems will file again, it can compare each system’s projection in this edition with the openings it later reports, the test the FTC chose not to require.