Our Methodology

Franchisel uses five independent scores, each on a 0–100 scale, derived entirely from primary FDD data — not editorial judgment or commercial relationships. There is no single “Franchisel Score.” Instead, every brand page shows the five component scores so buyers can weight what matters most to their decision.

The Core Diligence figure shown on brand cards and rankings is the average of System Health, Franchisor Strength, and Contract Burden — the three scores that do not depend on optional disclosures like Item 19. Economics Coverage is shown separately and may be null for brands that did not file an Item 19. Data Confidence is always present and reflects how complete and fresh the underlying source data is.

Scores are tied to a specific FDD filing year, which is cited on every brand page. When a newer filing is processed, scores update and the prior year is archived.

When we process a new or updated FDD, our analysts extract data from all 23 Items, with particular focus on Items 5 (Fees), 6 (Other Fees), 7 (Estimated Initial Investment), 11 (Franchisor’s Obligations), 12 (Territory), 19 (Financial Performance Representations), 20 (Outlets and Franchisee Information), and 21 (Financial Statements).

Each extracted data point is cross-referenced against at least one independent source — typically state filings, SEC disclosures, or prior-year FDD comparisons to identify material changes. Data points that cannot be independently corroborated are flagged with a lower confidence indicator on the platform.

Community-reported data undergoes a separate verification process: submissions are matched against Item 20 franchisee lists to confirm ownership, then aggregated at the brand level. Individual submissions are never published. Only verified aggregates enter brand profiles, and they are always labeled as “community-reported” with the verification count displayed.

FDDs are required to be updated annually, with most franchisors filing in Q1 or Q2. We monitor regulatory databases and update brand profiles within 30 days of a new FDD filing. When an update contains material changes — new litigation, significant fee increases, notable changes to territory rights or support structure — we highlight the changes and recalculate the affected dimension scores.

Every brand profile displays the FDD year the data is drawn from and the date of our last update, so you always know the age of the information you are reviewing.

In addition to the five scores, we systematically scan each FDD for patterns associated with higher investment risk. Red flags are categorized by severity (Critical, Warning, or Positive) and displayed separately from scores — so a single severe issue is never obscured by a strong overall average.

Our detection logic checks for: absence of Item 19 disclosure (flagged as a data-coverage gap — not a judgment on the business), franchisee turnover above category average, active class action litigation, regulatory enforcement actions, declining net unit count over three years, royalty rates materially above category norms, territory encroachment provisions, unreasonable non-compete durations, and unusual restrictions on transfer and renewal rights.

Item 19 absence is handled as follows: the Economics Coverage score is set to null (not scored), and a Coverage Gap flag is shown so buyers can factor the missing data into their own assessment. Absence does not mean the numbers are bad — it means a data point buyers typically rely on is not available for this brand.

Everything on Franchisel sits in one of three clearly separated buckets. Understanding which bucket you are reading is the most important thing for using this platform correctly.