July 27, 2026
According to Quantum Franchise Group something significant is happening inside the franchise industry right now, and it deserves a clear-eyed explanation for anyone who is considering business ownership. The news cycle has been full of dramatic franchise headlines this week, and if you're reading them without context, the picture can look alarming. Bankruptcies. Store closures. Operators drowning in debt.
But here is what the headlines aren't showing you: while some of the franchise world's oldest and most overextended brands are struggling, the growth side of this industry is producing some of the most aggressive expansion activity we've seen in years. New multi-unit deals. Record financing capacity. An IPO that may be the largest in restaurant industry history.
The franchise industry is not collapsing. It is bifurcating. And if you understand which side of that divide you want to be on, this moment is actually one of the more interesting entry points for a new franchise owner in recent memory.
Let me break down what happened this week.
The Old Guard Is Struggling Under the Weight of Its Own Debt
The biggest story of the week is FAT Brands, the parent company behind Fazoli's, Round Table Pizza, Smokey Bones, On The Border, Twin Peaks, and Fatburger, filing for Chapter 11 bankruptcy protection. The company was carrying $1.26 billion in debt that was declared immediately due two months ago, and this week the restructuring became formal.
What does that mean for the franchisees operating those brands? Daily operations continue during the reorganization. FAT Brands is still projecting up to 100 new openings in 2026 and claims a 1,000-unit pipeline. But the immediate consequences are real. Twelve corporate Fazoli's locations across Kentucky, Michigan, Ohio, and Indiana closed this week. Smokey Bones' remaining Pennsylvania locations, including Erie and York, shut down. And the portfolios of their other brands are under active review.
This is not an isolated story. Subway lost 729 U.S. locations in 2025 alone, and its domestic franchise revenue declined even as the parent company's overall net income climbed. A second Subway franchisee filed for Chapter 11 bankruptcy this week, a North Dakota operator carrying approximately $1.8 million in debt against $19,000 in total assets. That follows a June bankruptcy by a 43-unit Subway operator across five states who had taken out over a million dollars in merchant cash advances to stay afloat.
The Popeyes bankruptcy saga involving franchisee Sailormen also concluded this week. A chain that once operated 136 locations exited the system with 23 units sold for $2.67 million and 39 locations permanently closed.
There are also emerging legal stories worth watching. A major investigation published this week detailed 54 franchise owner complaints filed with the FTC against Kitchen Tune-Up and Bath Tune-Up, brands owned by Home Franchise Concepts, with franchisees alleging aggregate losses of $26.4 million and claims of inaccurate financial disclosures and misuse of advertising funds. Separately, 11 franchisees across Mighty Dog Roofing and iFoam have active lawsuits alleging misrepresentation of startup costs and financial performance.
What is the common thread running through all of these stories? Legacy debt, oversaturation, and in some cases, franchise systems that grew faster than their economic model could support. These are not indictments of franchising as a concept. They are indictments of specific brands that were built on financial structures that didn't have the resilience to survive a difficult stretch.
Meanwhile, Capital and Growth Are Moving to the Right Brands
Flip the picture entirely and you see something different happening on the other side of the industry.
Jersey Mike's, the sandwich chain with more than 3,300 locations in the United States and Canada, launched its IPO roadshow this week targeting a valuation of up to $7.94 billion. The company is offering shares on the New York Stock Exchange under the ticker JMKE, with pricing targeting $21 to $25 per share. This is projected to be the largest restaurant industry IPO on record. Blackstone, which backed the brand, will retain 76.5% voting control after the offering. Jersey Mike's represents exactly what the growth side of franchising looks like: a founder-led brand with a clear value proposition, controlled expansion, and franchisee economics that have supported system growth rather than system contraction.
On the financing side, a significant structural change took effect July 4th that most aspiring franchise owners haven't heard about yet. The Small Business Administration officially decoupled its 7(a) and 504 loan programs, doubling the cumulative loan cap from $5 million to $10 million for borrowers who use both. Previously, taking a 7(a) loan reduced the amount you could access through the 504 program. That restriction is now gone. An entrepreneur can now secure up to $5 million through a 7(a) loan and an additional $5 million through a 504 loan, and the two don't count against each other. This is described as the largest single expansion of franchise financing capacity in SBA history. For anyone who has been exploring franchise ownership and wondering how to structure the capital, this change has material implications for what is possible.
The legislative environment also moved in a favorable direction. The American Franchise Act advanced out of the House Education and Workforce Committee this week, heading to the House floor. The bill, which has bipartisan support, codifies a joint-employer test that would require substantial direct and immediate control over employment conditions before a franchisor could be held liable for a franchisee's employment practices. For franchise owners, this is meaningful protection. One of the recurring concerns for aspiring franchisees has been the legal ambiguity around joint-employer liability. This bill, if it passes, removes significant uncertainty from that equation.
The Growth Side Is Moving Fast
While legacy brands restructure, a wave of growth is happening across younger, better-positioned franchise systems.
Club Pilates signed a 70-unit development agreement with a single franchisee this week, one of the largest single-brand commitments in the Xponential fitness family's history. Hand and Stone Massage and Facial Spa's largest franchisee, already operating 63 locations across eight states, signed a deal to add 13 more over the next five to six years. Rita's Italian Ice reported that franchise inquiries have doubled year over year, with more than 30 new deals signed, pushing the 600-unit chain into Massachusetts, New Jersey, Ohio, and Texas. Batteries Plus signed 15 franchise agreements covering 30 units in the first half of 2026 alone.
Layne's Chicken Fingers, a Texas-born chicken finger concept, hit 60 total units and signed a 12-unit California deal through experienced IHOP multi-unit operators. Birdcall, a Colorado-based fast-casual chicken brand, signed its first Midwest development agreement targeting approximately 100 locations across Indiana, Kansas, Missouri, Nebraska, Ohio, and Wisconsin over five years.
In the senior care space, Right at Home signed 10 new territory agreements plus 8 resales in the first half of 2026 and is on pace to award 24 new territories by year end. Always Best Care and Seniors Helping Seniors both announced new territory expansions this week, continuing the steady growth of the in-home senior care category that demographic trends have been building for years.
WellBiz Brands, which operates Drybar, Elements Massage, Fitness Together, Amazing Lash, and Radiant Waxing, reported 15 new franchise agreements and 6 openings in the second quarter alone, with its portfolio now at 737 open units. And Authority Brands, which already operates several of the largest and most respected home services franchise brands, acquired STOP Restoration this week, continuing its consolidation of the home services space into one of the most formidable multi-brand platforms in franchising.
What This All Means for You
If you have been watching the franchise news and trying to make sense of it, here is the honest summary.
The brands that are collapsing this week share common characteristics: they are legacy systems that overextended during periods of growth, took on debt they couldn't service, and found themselves unable to adapt when the economic environment tightened. The franchisees caught inside those systems are experiencing real pain, and it is a real reminder that franchise due diligence matters enormously. Not every franchise is a safe investment. Not every franchisor is financially stable. Reading an FDD carefully, doing validation calls with existing owners, and working with a knowledgeable consultant who can assess a system's health before you sign are not optional steps in this process.
But the brands that are growing this week tell a different story. They are growing because their unit economics work, their franchisees are profitable, and the demand for what they offer is real and sustainable. And they are growing into a financing environment that just became meaningfully more accessible, with a legislative climate that is moving in franchisees' favor.
The franchise industry in August 2026 is not a monolith. It is a collection of thousands of individual concepts at very different stages of health, stability, and opportunity. The question is never whether franchising is a good idea in the abstract. The question is always whether this specific franchise, in this specific market, with this specific financial structure, is the right investment for you.
That question deserves a careful answer. And it deserves someone who knows how to find it.
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