What is Item 19 of the FDD?
Item 19 is the section of the Franchise Disclosure Document where a franchisor may choose to share financial performance representations, commonly called FPRs, about how its franchised or company-owned units are performing. It is the only place in the entire document where a franchisor is legally permitted to make earnings claims, and disclosure of Item 19 is optional under federal franchise rules. If a franchisor includes nothing here, or simply states that it makes no financial performance representations, that is a legitimate and common choice, not a red flag by itself.
For anyone researching the franchise guide basics before making an offer, Item 19 is usually the section people jump to first, because it feels like the closest thing to a promise of results. Understanding what it can and cannot legally say will change how you read it.
What can Item 19 legally disclose?
Item 19 can disclose historical, substantiated financial data about existing units, such as average gross sales, median revenue, expense ranges, or unit-level profitability, as long as the franchisor has a reasonable basis for the figures and discloses the methodology used. The data must come from actual operating results, not projections or hopes, and franchisors are required to state how many units the figures are based on and over what time period.
Common formats you will see
- Average and median gross sales across a defined set of units, often broken out by time in operation or by unit type.
- Ranges showing the highest and lowest performing locations, sometimes with the percentage of units that fell within certain bands.
- Cost of goods sold or labor cost percentages, when a franchisor chooses to go beyond top-line revenue.
- Company-owned versus franchised unit data, shown separately when performance differs meaningfully between the two.
The required disclaimers
Any Item 19 disclosure must include specific cautionary language reminding readers that individual results vary and that the franchisor does not guarantee similar performance. This disclaimer is not boilerplate to skip past; it is the legal boundary of what the data means for your specific situation.
What can Item 19 not tell you?
Item 19 cannot tell you what your specific location will earn, cannot account for your local market, your management skill, your financing costs, or your timeline to profitability, and it cannot substitute for your own due diligence with current franchisees. Even a well-constructed Item 19 is a snapshot of a defined group of existing units, not a forecast for a new unit in a different market with different demographics, competition, and lease terms.
Averages can hide wide variation
An average or median figure can mask a large spread between top and bottom performers, so a franchise with a healthy average could still have a meaningful share of underperforming units. Always look for whether the disclosure breaks results into ranges or shows how many units fall above or below the average, rather than relying on a single headline number.
Sample size and unit selection matter
If Item 19 covers only a small subset of units, such as only units open for more than two years, or only company-owned locations, the results may not represent what a new franchisee entering the system today should expect. Check the footnotes: they usually disclose how many units were included and whether any were excluded, and why.
How should you use Item 19 to compare brands?
Use Item 19 as one input among several when comparing brands, focusing less on the headline revenue number and more on how the data is built, how much variation exists between units, and how it lines up with what current franchisees tell you in independent conversations. Two brands with similar average revenue figures can have very different cost structures, unit economics, or investment levels, so the comparison only works when you read Item 19 alongside Item 7 (estimated initial investment) and Item 6 (fees).
Questions to ask when comparing two FDDs
- Is the reporting period and unit sample similar enough between the two brands to make a fair comparison?
- Does one franchisor disclose net profit or expense data while the other only shows gross sales, making direct comparison misleading?
- How does the range of outcomes compare, not just the average?
- Does the Item 19 data align with what Item 20 shows about unit growth, closures, and transfers?
Cross-check with real conversations
Financial performance representations are most useful when paired with calls to existing and former franchisees listed in Item 20, since they can describe how their actual results compare to the disclosed figures and explain what drove the difference. This step is often skipped by first-time buyers in a hurry, but it is where Item 19 numbers either hold up or fall apart.
Why do some franchisors skip Item 19 entirely?
Franchisors skip Item 19 for several legitimate reasons, including a young system with too few units to produce a reliable average, wide variation in unit performance that makes any single figure misleading, or a conservative legal approach to avoid future disputes over expectations. The absence of Item 19 disclosure is not proof that a brand performs poorly; it simply means the burden of estimating potential performance shifts more heavily onto your own market research and franchisee interviews.
When you are lining up options across categories, from food concepts like Smashburger and MARCO'S PIZZA to service-based models like Nurse Next Door, you will find that Item 19 disclosure practices vary widely even within the same industry. That inconsistency is exactly why treating Item 19 as one data point, not the whole picture, protects you from over-relying on a single number.
How does Item 19 fit into your overall due diligence?
Item 19 should be reviewed alongside the rest of the FDD, your own financing plan, and direct conversations with franchisees, never in isolation. Browsing the franchise directory to shortlist brands is a reasonable starting point, but the real evaluation happens once you have the FDD in hand and can compare disclosed financials against fees, investment ranges, and the franchisor's growth trends. Staying current on franchise news can also help you understand how a brand's reported performance has trended over recent years, adding context that a single year's Item 19 snapshot cannot provide on its own.