What is Item 19 of an FDD?

Item 19 is the section of a Franchise Disclosure Document where a franchisor discloses its Financial Performance Representations (FPRs) - sometimes still called "earnings claims." Under the FTC's Franchise Rule (16 CFR §436.5(s)), this is the only place a franchisor can share financial data about what franchisees actually earn or what units actually generate.

The critical rule: if a franchisor makes any claim about sales, income, gross profit, or net profit - whether in a pitch deck, on a call with a broker, or in an advertisement - that claim must appear in Item 19. If it's not in the FDD, they're not allowed to say it. Period.

That includes oral statements. If a franchise sales rep tells you over the phone that "most owners clear $200K," and that number isn't in Item 19, that's a violation of federal franchise law.

What types of data appear in Item 19?

When a franchisor does include an FPR, you'll typically see one or more of the following:

• Gross sales or gross revenue - the most common metric disclosed
• Cost of goods sold (COGS) and gross profit margins
• Operating expenses (labor, rent, marketing, supplies)
• Net income, EBITDA, or owner earnings - less common, but the most useful
• KPIs like average ticket size, customer count, or occupancy rates (for hotels, gyms, etc.)

The FTC requires that every number be based on a "reasonable basis" with written substantiation the franchisor must provide upon request. The data must be historical - no projections or hypothetical pro formas unless they meet very specific legal requirements.

References: FTC Franchise Rule (16 CFR §436.5) and NASAA FPR Commentary.

Why do some franchises not include Item 19 data?

Item 19 is completely optional. Franchisors can choose not to disclose any financial performance data at all. If they opt out, they're required to include a standard disclaimer that reads roughly: "We do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets."

The good news: the trend is moving heavily toward disclosure. According to the 2024 Annual Franchise Development Report, approximately 86% of franchisors now include FPRs in their FDDs - a dramatic increase from roughly 20% in 1995 and 52% in 2014. The franchise industry is clearly recognizing that transparency wins deals.

So why do the remaining ~14% still leave it blank?

Common reasons franchisors skip Item 19

• Data collection gaps. They don't have reliable, system-wide P&L data from franchisees. Many franchise systems - especially younger ones - struggle to collect consistent financial reporting across their network.
• Litigation risk aversion. Item 19 has historically been one of the most litigated sections of the FDD. Some brands (or their attorneys) take the conservative position that disclosing numbers creates more legal exposure than staying silent.
• Unflattering economics. If unit-level performance is weak, inconsistent, or declining, the franchisor may calculate that silence is better than transparency. This isn't always the case, but it should raise a question.
• Early-stage systems. New franchisors with only a handful of units may not have enough data to produce a meaningful or defensible FPR.

What a missing Item 19 means for you as a buyer: It doesn't automatically mean the franchise is a bad investment. But it does mean you have more homework to do. Without Item 19, your only path to understanding unit economics is calling current and former franchisees directly (you'll find their contact information in Item 20) and asking them what you need to know.

Common Item 19 formats and what they actually show

Not all Item 19 disclosures are created equal. The FTC gives franchisors significant flexibility in how they present their data, which means two brands in the same industry can have wildly different Item 19 layouts. Understanding the format is just as important as reading the numbers.

Average Unit Volume (AUV)

This is the most common format. The franchisor reports the average gross sales across some or all of its units for a given time period (usually the most recent fiscal year).

What to watch for: AUV can be heavily skewed by outliers. A system with a few very high-performing locations can inflate the average, making the "typical" unit look better than it actually is. Always look for whether they report the median alongside the average. The gap between the two tells you how skewed the distribution is.

Median and quartile breakdowns

More sophisticated Item 19 disclosures will segment performance into quartiles (top 25%, second 25%, etc.) or show the median. This gives you a much clearer picture of where a "normal" franchisee actually lands.

Why this matters: If the average is $1.2M in gross sales but the median is $850K, you know the top performers are pulling the average up significantly. A quartile breakdown shows you the realistic range you're stepping into - not just the highlight reel.

Cohort-based reporting

Some franchisors break their data by cohort: units open less than one year, one to three years, three to five years, and so on. This is extremely useful because it shows ramp-up trajectory - how long it typically takes a new location to reach mature performance.

What to watch for: A franchisor that only reports data for "mature" locations (e.g., open 3+ years) while excluding newer units may be hiding slow ramp-up times or high early-stage failure rates.

Geographic or format segmentation

Franchisors may also break data by region, market size, or store format (e.g., inline vs. drive-thru, urban vs. suburban). This is helpful if you're evaluating a specific market because national averages may not reflect your local reality.

Revenue-only vs. full P&L

Here's where you need to be most careful. According to the 2024 AFDR data, while 94% of franchisors who include an Item 19 disclose revenue figures, only about 56% share expense data and roughly 53% disclose profitability metrics. Just 32% include a complete P&L statement.

Revenue alone tells you almost nothing about what you'll actually take home. A franchise doing $1.5M in gross sales with 38% labor costs, 30% COGS, 6% royalties, and 2% marketing fund contributions is a very different business than one doing $900K with 22% labor and 15% COGS. If a franchisor only shows you the top line, you're making a major financial decision with the most important data missing.

How to sanity-check Item 19 numbers

Reading Item 19 is one thing. Knowing whether to trust it is another. Here's a practical framework for pressure-testing the numbers.

1. Check the sample size and selection criteria

The FTC requires franchisors to disclose the number and percentage of units included in the FPR. If Item 19 reports data from 45 out of 300 franchised locations, that's a 15% sample - and you need to ask why the other 85% were excluded.

Common exclusions include units open less than 12 months, units under renovation, or locations in "non-standard" formats. Some of these are reasonable. Others are ways to cherry-pick the best performers.

Rule of thumb: The more units included relative to the total system, the more reliable the data. If fewer than half the system's units are represented, ask why.

2. Look at the time period

Item 19 data is typically based on the franchisor's most recent fiscal year. If the FDD was filed in March 2026 but the data covers January-December 2024, you're looking at numbers that are 15+ months old. Economic conditions, consumer behavior, and competitive dynamics may have shifted since then.

3. Compare company-owned vs. franchised unit data

If the FPR includes company-owned locations, pay attention. Company-owned units often perform differently than franchised units because they may benefit from economies of scale, different cost structures, or preferential site selection. The NASAA commentary specifically notes that franchisors must account for these differences - for example, imputing royalty costs that company-owned units don't actually pay.

If the data mixes company-owned and franchised units without clearly labeling the distinction, that's a yellow flag.

4. Ask what costs are excluded

An Item 19 that shows gross revenue or gross profit but excludes rent, labor, local marketing, and debt service is giving you an incomplete picture. Look at the footnotes and definitions carefully. "Gross profit" in one FDD might mean something very different from "gross profit" in another.

Key costs that are frequently omitted from Item 19:

• Owner salary or management draw
• Rent and occupancy (if not standardized)
• Local advertising spend above the required marketing fund
• Debt service on startup loans
• Technology fees that appear in Item 6 but aren't reflected in Item 19

5. Cross-reference with Item 7

Item 7 tells you the estimated initial investment. If Item 19 shows average net income of $120K but Item 7 shows a total investment of $800K, your simple payback period is nearly 7 years before you account for taxes, debt service, and opportunity cost. Run the math before you get excited about the top-line number in Item 19.

6. Validate with actual franchisees

The single most valuable diligence step - and the one most buyers skip - is calling current and former franchisees listed in Item 20. Ask them directly:

• Does the Item 19 data match your experience?
• How long did it take to reach the revenue levels shown?
• What costs surprised you that weren't reflected in the FDD?
• If you had to do it again, would you?

Franchisees are under no obligation to share their financials, but many will give you directional answers that either confirm or contradict what Item 19 claims.

Questions to ask franchisors about their Item 19

Whether you're a prospective franchisee evaluating an opportunity or a vendor trying to understand the health of a franchise system, these are the questions that separate casual browsers from serious evaluators.

If the franchise includes Item 19 data

1. What percentage of your units are included in the FPR, and why were others excluded?
2. Do you report median performance alongside averages? If not, what's the range from bottom to top quartile?
3. Does the data include company-owned units? If so, have you adjusted for royalties and other costs franchisees pay that company stores don't?
4. What costs are NOT reflected in the financial performance data? (Push specifically on rent, labor, local marketing, and owner compensation.)
5. How does ramp-up performance differ from mature unit performance? (If they don't segment by unit age, ask why.)
6. Has anything changed since the reporting period that would materially affect these numbers? (New competition, price changes, supply cost shifts, etc.)

If the franchise does NOT include Item 19 data

1. Why did you choose not to include financial performance data?
2. Do you have the internal data to create an Item 19 but chose not to? Or do you not collect it?
3. Can you point me to franchisees who would be willing to share their experience with unit economics?
4. Do your franchise brokers or sales team discuss financial performance in any form during the sales process? (If they do, that's a legal violation without a corresponding Item 19.)

What vendors and suppliers should take from Item 19

If you sell products or services to franchise systems - technology, equipment, food supplies, marketing, staffing - Item 19 isn't just for prospective franchisees. It's a window into the financial health and buying power of your potential customers.

Unit economics tell you what franchisees can afford. A system where the average franchisee generates $1.2M in revenue with healthy margins has more budget for premium services than a system where units are scraping by at $400K. Item 19 helps you qualify franchise systems before you invest in selling to them.

Growth trajectory matters for pipeline. Cross-reference Item 19 economics with Item 20 unit growth. A system with strong unit economics and consistent net new openings is a high-value target for B2B suppliers - those new locations need vendors from day one.

Fee structure affects your pricing. If Item 6 shows high royalty and marketing fund rates, franchisees have less margin to spend on non-mandated services. Understanding the full cost stack (Items 5, 6, 7, and 19 together) helps you price and position accordingly.

Compare Item 19 across brands with GetFDD

Once you know what to look for in Item 19, the bottleneck becomes access and comparison. Tracking down FDDs, finding the right year's filing, pulling the Item 19 data into a format you can actually compare across brands - it's tedious work that slows down every evaluation.

GetFDD helps you move faster:

• Download FDDs so you can review Item 19 disclosures without hunting for PDFs or waiting for franchise sales teams to send them
• Structured data extraction so you can compare financial performance representations, fee structures, and growth metrics across multiple brands side by side
• Franchisee contact lists pulled from Item 20, so you can validate Item 19 claims directly with the people operating the business

Whether you're a prospective franchisee comparing three brands, a multi-unit operator evaluating your next concept, or a vendor building a franchise prospecting scorecard - getting to the data fast is the advantage.

Browse FDDs on GetFDD | See Pricing

Related reading

• How to Read an FDD: The Only Checklist You Need (Items 1-23)
• What Is a Franchise Disclosure Document?
• The Top 10 Insights Hidden in Every FDD (That Vendors Overlook)
• How to Use FDDs to Generate Sales Leads From Franchisees