Emerging Franchise Brands: How Young and Small Are Franchisors? (2026 FDD Index)

Emerging franchise brands index: 259 FDDs, filing facts only

The table below lists every brand in the sample with the facts its own Franchise Disclosure Document states: the year Item 1 says franchising began, the years since then to the FDD issue year, total and company-owned outlets from Item 20 Table 1, the franchised share, and how many registration states the State Effective Dates page lists. Each row links to the filing on Minnesota CARDS.

The sample is the same 259 brands used in the site’s royalty rates dataset: a random draw of Clean FDDs filed in Minnesota with issue dates from 2025-01-24 to 2026-08-18, capped by sector. 78 FDDs carry a 2025 issue date and 181 a 2026 issue date. The table records filing facts only. It does not rate, rank or recommend any brand.

How many franchisors are emerging franchise brands?

There is no legal definition of an emerging franchise. Industry sources use age (FRANdata: started franchising in the last 5 years), size (IFPG: fewer than 50 to 75 operating units) or both (a 2026 franchisor blog: under 100 units and under five years). We applied the brief’s two tests to each FDD.

By age, 45 of 250 brands (18.0%) had been franchising under 5 years. By size, 110 (44.0%) had under 50 total outlets. 113 (45.2%) passed at least one test and 42 (16.8%) passed both. Moving the size line to 100 outlets raises the size share to 57.2%.

The two tests mostly pick the same young brands plus a large group of older, small systems: almost every brand under 5 years is also under 50 outlets, but most brands under 50 outlets have franchised for longer. The median brand with 25 to 49 outlets had been franchising 15 years.

How long franchisors have been franchising

The median franchisor had been franchising 15 years at its FDD issue date, with the middle half between 7 and 27 years. First-franchise years run from 1928 to 2026. 55 brands (22.0%) began franchising in 2021 or later.

Item 1 must state how long the franchisor and any predecessor have offered franchises of this type (16 CFR 436.5(a)(7)). For 87 brands the first year comes from a predecessor, parent or affiliate rather than the current franchisor entity, which is common after acquisitions. Predecessors only have to be named for the last 10 years, so some long-running systems show a later start than their history suggests.

For context, FTC staff estimate about 240 new franchisors a year out of about 4,000 (Federal Register, May 5, 2026). Taken at face value, that inflow implies a larger young cohort than this sample shows. Two likely reasons: some new franchisors do not register in Minnesota, and some stop franchising (Lafontaine and Shaw describe considerable exit from franchising in their 1980 to 1997 data). See Limitations.

How many outlets franchise systems have

The median system had 69 total outlets at its latest fiscal year end, and the middle half ranged from 16.5 to 194. 42 brands (16.2%) had fewer than 10 outlets and 4 had none yet.

Size tracks age closely. Brands with 1 to 9 outlets had a median of 2 years franchising and 73.0% of them were under 5 years; no brand with 250 or more outlets was under 5 years. Total outlets combine franchised and company-owned rows of Item 20 Table 1 (16 CFR 436.5(t)(1)); where a printed total row disagreed with its parts (7 brands) we used the sum of the parts.

Company-owned outlets and proof of concept

Item 20 Table 1 is the FDD’s standard summary count of the outlets the franchisor or its affiliates run themselves. 96 of 259 brands (37.1%) reported none at fiscal year end, and 77 (29.7%) reported none at any point in the three years shown. The median brand had 1 company-owned outlet.

The angle expected young brands to lack company-owned units. The filings show the opposite: 21.1% of brands under 2 years and 26.9% of brands at 2 to 4 years had zero company-owned outlets at year end, against 44.2% of brands franchising 35 years or more. This matches the pattern Lafontaine and Shaw found for 1980 to 1997: firms almost always begin franchising after opening a few company-owned outlets, and the company-owned share falls over roughly the first seven years (NBER Working Paper 8416).

A company-owned count is not the same as an operating history. Affiliate-owned outlets count as company-owned in Table 1, and the FTC notes that some franchisors buy back outlets and list them as company-owned (FTC consumer guide). Table 4 of Item 20 shows how those outlets opened, closed or were reacquired.

How long the business ran before franchising

Item 1 must also say how long the franchisor, predecessors and certain affiliates have conducted the type of business the franchisee will operate. 152 of 259 FDDs (58.7%) give a year; 34 (13.1%) say the franchisor group has not operated the concept, and the rest give only entity formation dates or no year.

Where both years are stated (148 brands), the median gap between the business starting and the first franchise offer was 3 years (middle half 0 to 8). For 46 brands (31.1%) the earliest operating year Item 1 mentions is the same as or later than the first franchise year. In older systems this usually reflects which entities Item 1 describes (for example an affiliate that bought outlets recently), not a concept that was never run.

Emerging franchise brands by sector

Entertainment and recreation was the youngest sector in the sample: its median brand had franchised 5 years and 47.1% were under 5 years. Retail, automotive and senior care had the fewest young brands. Lodging had the highest share without company-owned hotels (77.8%), which reflects how hotel brands are run rather than their age. Sector counts are 17 to 27 brands, so differences of a few points are noise.

Franchising age and outlet turnover: an association, not a cause

The franchise closure rates index already reports all franchised-outlet exits by franchising age. This section reuses the same published Item 20 counts and splits them into transfers, terminations and closures. Pooled over three fiscal years, all exits were 8.5% of outlet-years for systems under 5 years and 4.8% for systems franchising 35 years or more.

The higher termination rate in the youngest band (5.8%) and the higher transfer rate at 5 to 9 years (12.6%) are each driven by a single system: one brand accounts for 85.7% of the youngest band’s terminations and another for 74.0% of the 5 to 9 year band’s transfers. Without the largest contributor, termination rates fall between 1.0% and 1.9% in every band. Young systems are small, so one franchisee group can move a band’s rate. The youngest band covers only 23 brands with franchised outlets and 964 outlet-years.

Research on franchised chains finds that age and size both affect growth and survival, and that larger size raises rather than lowers exit among young chains (Kosova and Lafontaine, 2010). System-level outcomes are outside this dataset; the development backlog report covers signed-but-unopened units.

What regulators require of start-up franchisors

No federal rule sets a minimum age or outlet count before a company may franchise. The FTC Franchise Rule requires disclosure instead: Item 1 history and Item 20 outlet tables (FTC Compliance Guide). NASAA commentary says a start-up franchisor should still include every Item 20 chart even when it has no numbers to insert (NASAA Commentary 20.8).

Registration states can add conditions. NASAA’s guidelines let a start-up franchisor phase in audited financial statements over its first three fiscal years of selling franchises (NASAA 2008 Guidelines, Item 21). In Minnesota, where every FDD in this sample was filed, the commissioner may require escrow, impoundment or deferral of franchise fees when a franchisor has not shown adequate financial arrangements (Minn. Stat. 80C.05 subd. 3); the Department of Commerce lists fee impoundment, a surety bond sized from Item 20 projections, or fee deferral until the franchisee opens (Minnesota Commerce).

How these numbers compare with other estimates

Published shares of emerging brands are higher than this sample shows on age. FRANdata reported in 2018 that about 1,740 brands, 42% of U.S. franchise brands, had started franchising in the previous 5 years (FRANdata, 2018); in this sample the figure is 18.0%. Two differences matter: a Minnesota registration sample likely under-represents very new franchisors, and FRANdata’s figure is from 2018 and its post does not publish the method behind it.

On size the estimates are closer. An Entrepreneur article said in 2022 that experts put about 80% of franchises under 100 units (Entrepreneur, 2022), and a consulting firm puts it above 75% without a source (Oakscale). This sample has 57.2% under 100 total outlets. FRANdata’s 2018 post also reported a median of one corporate unit among emerging brands; here the median across all brands is 1. The franchise industry growth review compares industry forecasts with later counts.

What to ask an emerging franchisor

These questions point to where the FDD answers them. They are a reading guide, not legal or investment advice.

• When did franchising start, and under which entity? Item 1 gives the year and any predecessor. Compare it with the franchisor’s formation date and Item 2 management histories.
• How many outlets are open, and who runs them? Item 20 Table 1 splits franchised and company-owned outlets for three years; Table 4 shows how company-owned outlets changed.
• How long has the concept itself operated? Item 1 must say how long the franchisor, predecessors and affiliates have conducted the business. If it says none have, ask where the system was tested.
• How many franchises are sold but not open? Item 20 Table 5 and the franchisee lists show the pipeline; the development backlog report explains how to read it.
• Who can you call? Item 20 lists current and former franchisees. With few outlets the list is short, so each conversation carries more weight.
• Does a state require financial assurance? Some state addenda defer or escrow the initial fee; the franchisor financial health review covers Item 21 and state conditions.

For the wider buying process see buying a franchise and the franchise costs guide. Item 19 presence is covered in the Item 19 study.

Methods in brief

We reused the published 259-brand FDD sample and its Item 20 Table 2 and 3 counts and first-franchise years from the franchise closure rates index. Readers confirmed or corrected a parser draft of Item 20 Table 1 (franchised, company-owned and total rows for each year), the Item 1 business start year and the State Effective Dates page for every brand, opening the full FDD text where needed. A checker then re-read 20 randomly chosen FDDs without seeing the readers’ values: 3 of 140 field values differed (2.1%), all in the business start year, and re-reading upheld the readers in each case. Full method, limitations and codebook are in the Methodology section and the downloads.