Understanding Item 20

The event types are genuinely different

• Opening: a new outlet began operating.
• Termination: the franchisor ended the agreement. The reason is not disclosed here.
• Nonrenewal: a term expired and was not renewed. This can be either party's choice.
• Reacquisition: the franchisor bought the outlet back. It may continue operating.
• Transfer: the outlet changed owner. The business continues; often a routine exit.
• Ceased operations, other: closed for a reason not otherwise categorized.

Don't combine them into a failure rate

Adding terminations, nonrenewals, transfers and reacquisitions together and calling the result a failure rate treats a routine sale of a healthy business as equivalent to a franchisor terminating an operator. The resulting figure is not meaningful.

What to look at instead

Look at the direction of each series across the three years, at the ratio of transfers to the outlet base, and at whether terminations cluster in a particular period. Then ask the franchisor about the specific years that stand out, and ask departed franchisees — Item 20 requires their contact details to be listed.