The Ethical Franchise Broker: How to Calculate Franchise Turnover

Ethical Franchise Brokers can get a competitive advantage on their lax or unethical competitors by providing superior due diligence and expert guidance. Franchise Turnover Rates (FTRs) are a critical factor to consider in guiding your prospective placements to safer opportunities and away from high turnover and/or churning franchisors and Franchise Sales Organizations (FSOs). In this post, we provide an easy-to-follow, step-by-step guide to calculating the franchise turnover (failure) rate of any franchise opportunity. by Sean Kelly

(UnhappyFranchisee.Com) In recent years, the lure of easy referrals & high commissions has attracted a glut of franchise brokers posing as “consultants.”

With no test or requirement to become a franchise broker (unlike that of other industries) and with broker organizations all-to-eager to take their money, becoming a franchise “consultant” is the new get-rich-quick scheme & the latest gold rush.

Legitimate, experienced & ethical franchise advisors are as negatively affected as anyone.

Many have expressed horror stories of their broker meetings and conventions having turned into MLM-style rallies overflowing with commission-seekers who know nothing, whatsoever, about franchising.

Ethical Franchise Consultants Must Step Up to Protect Their Reputations & Industry

Horror stories like the one in the country music video “Ain’t Nobody Broker…” are increasing as FSOs dangle high conversion rate schemes (like the “Semi-Absentee” side hustle) and referral commissions starting at $30K.

Will ethical franchise brokers be swept under by the scam-like frenzy of these easy-money opportunities?

How to Calculate Franchise Turnover Rates (Step-by-Step Guide)

Go to Item 20 in the Most Recent Franchise Disclosure Document (FDD)

In this example, we’ve procured the DonutNV Franchise Disclosure Document (FDD) dated May 6, 2025 as amended June 1, 2025.

Locate Item 20, Table 3: OUTLETS AND FRANCHISEE INFORMATION

Tip: You can save a lot of time navigating FDDs by using the search bar to go directly to the desired section.

STEP #1: Add Transfers From Item 20 Table 2 to Table 3

Transfers are listed separately a few pages back in Table 2. Teach your franchise prospects to jot down the total exits next to Table 3 to include in Franchise Exits.

STEP #2: Calculate Total Franchise Exits (Including Transfers)

STEP #3: Calculate Average Outlets Open

STEP #4: Calculate 3-Year Franchise Turnover Rate

Compare Failure Rate with Similar Franchises

In this example, we used the actual mobile mini-donut franchise DonutNV.

We compared to three other mobile food concepts for the same period.

Kona Ice and Cousin’s Maine Lobster significantly outperformed DonutNV & Frios Gourmet Pops, who were virtually tied for last in the category.

Mobile Franchise Brand/ Turnover Rate (2025 FDD):

Best

KONA ICE 18%

COUSIN’S MAINE LOBSTER 22%

Worst

DonutNV 40%

Frios Gourmet Pops 41%

Are you a franchise consultant, franchise broker or franchise sales professional?

Do you consider yourself an Ethical Franchise Broker?

Would you be willing to provide input (confidentially or not) to these discussions?

Please leave a comment below or email us, in confidence, at UnhappyFranchisee[at]Gmail[dot]com.

Franchisors: The franchisor, its employees and agents are invited to submit correction, clarifications, rebuttals or other opinions for immediate consideration.

UnhappyFranchisee.com is not associated with any franchise company or seller.

Tags: Franchise Consultants, Franchise Brokers, Franchise sales, IFPG, International Franchise Professionals Group, Frannet, FranChoice, Franserve, Franchise Sidekick, The Entrepreneur’s Source, The Franchise Consulting Company (FCC), Franchise Brokers Association, FBA, Franchise Fastlane, BAI, The You Network, DonutNV, DonutNV franchise, DonutNV franchise earnings, DonutNV franchise opportunity, Donut franchise, Franchise Fastlane, Kassia Thormahlen, Alex Gingold, Amanda Gingold, Jake Hamburger,

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