Franchise Item 19 Disclosure: What 259 FDDs Report and Leave Out (2025 to 2026)

Franchise Item 19 in 12 numbers

Each figure below is a count from our hand reading of the Item 19 section of 259 franchise disclosure documents (FDDs) registered in Minnesota and issued between January 2025 and August 2026. We record what kind of disclosure each franchisor makes, never the earnings figures themselves.

1. 77.2% of 259 FDDs include an Item 19 financial performance representation (200 of 259).
2. 59 FDDs (22.8%) use the FTC’s prescribed no-representation statement instead.
3. 94.5% of Item 19s report gross sales, net sales or revenue.
4. 50.5% of Item 19s stop at revenue-type measures, with no cost or profit line.
5. 44.0% of Item 19s show at least one cost or expense line.
6. 42.5% show a profit-type line; 33.5% go below gross profit (EBITDA, operating or net income, or similar).
7. 36.3% of all 259 FDDs disclose any cost or profit figure in Item 19.
8. 85.5% is the median share of outlets whose results are included (n 192).
9. 84.0% of Item 19s leave out outlets open less than a minimum time, most often 12 months.
10. 44.4% of lodging FDDs include an Item 19, against 94.4% in education and children’s services.
11. 66.1% of systems with fewer than 10 franchised outlets include an Item 19, against 80.3% of larger systems.
12. 87.5% of Item 19s report a period that ended in the calendar year before the FDD was issued.

What Item 19 is: the FTC rule text

Item 19 is the section of the franchise disclosure document where a franchisor may state how much existing outlets sold or earned. The FTC Franchise Rule defines a financial performance representation as any representation that states, expressly or by implication, a specific level or range of actual or potential sales, income, gross profits or net profits (16 CFR 436.1(e)).

The disclosure is optional. The FTC’s compliance guide says the Rule permits, but does not require, these representations (FTC Franchise Rule Compliance Guide, 2008). A franchisor that makes none must say so in prescribed words (16 CFR 436.5(s)(2)), and it may not make earnings claims anywhere else, including advertising or websites (FTC Compliance Guide, page 86).

A franchisor that does make one must have a reasonable basis and written substantiation, and must disclose:

• whether the figures cover all existing outlets or a subset, and the dates they cover;
• the total number of outlets in the period, the number whose data were used, and the number and percent that reached or beat the stated result;
• a clear warning that a new franchisee’s results may differ;
• a statement that written substantiation is available on reasonable request (16 CFR 436.5(s)(3)).

Under 16 CFR 436.9(c), spreading any earnings claim that is not in Item 19 is an unfair or deceptive practice. Two narrow exceptions exist: the actual records of a specific outlet offered for sale, and a written supplement about a particular location (16 CFR 436.5(s)(4) and (5)).

Franchise Item 19 disclosure rate by sector

Disclosure is common in every sector we read but not uniform. Across 259 FDDs, 200 (77.2%) include an Item 19; the 95% interval for that sample share is 71.7% to 81.9%.

Lodging is the clear outlier: 8 of 18 hotel FDDs (44.4%) include an Item 19. Retail follows at 55.6% (10 of 18). Education and children’s services (94.4%), entertainment (88.9%) and senior care (88.9%) are highest.

Each sector has 17 to 27 FDDs, so one brand moves a sector’s rate by 3.7 to 5.9 points. The intervals in the table overlap for most sectors. Only lodging’s interval (24.6% to 66.3%) sits wholly below the full-sample interval; retail’s (33.7% to 75.4%) overlaps it slightly.

What franchise Item 19s disclose: revenue, costs and profit

Revenue is near universal; costs and profit are the minority. Of the 200 Item 19s, 189 (94.5%) report gross sales, net sales or revenue and 149 (74.5%) give a per-outlet average or median of sales.

88 (44.0%) show at least one cost or expense line. 85 (42.5%) show a profit-type line, but 53 of those include gross profit, which only subtracts direct costs. 67 Item 19s (33.5%) go further, to EBITDA (32), operating income (7), net income (12) or a similar line.

Grouping each Item 19 by the deepest measure it reaches: 101 (50.5%) are revenue-type only, 9 (4.5%) add costs without a profit line, 85 (42.5%) reach a profit-type line and 5 report operating metrics only. Non-dollar measures are common: 57.5% report items such as customers or members, average ticket, jobs, or results by year of operation.

Food is not the cost-heavy sector in this sample. 7 of 20 food and beverage Item 19s (35.0%) show a cost line, against 45.0% elsewhere. FRANdata found the reverse for FDDs from 2014 to 2016: 61% of food brands with an Item 19 disclosed expenses against 39% of service and non-food brands (FRANdata, 2017). With 20 food Item 19s, our figure has a wide margin.

How many outlets an Item 19 covers

Most Item 19s describe a subset, but usually a large one. 177 of 200 (88.5%) leave out some outlets of the type they describe. The most common rule is time open: 168 (84.0%) require a minimum period, and 152 of those set it at 12 months or a full year.

Other exclusions: closed or transferred outlets (91 Item 19s), outlets that did not report data (79), other formats (68) and regions (15). Only 1 Item 19 was coded as selecting outlets by performance; NASAA’s commentary says a best-performer subset must be paired with the lowest performers (NASAA FPR Commentary 19.13, 2017).

Where the share could be measured (192 Item 19s), the median Item 19 covers 85.5% of outlets of the stated type; the middle half covers 68.5% to 96.3%. 18 Item 19s (9.0% of all Item 19s) cover under half. FRANdata reported in 2017 that franchisors disclosing franchised averages based them on an average of 77% of their franchised system (FRANdata, 2017).

Whose outlets: 111 (55.5%) use franchised outlets only, 71 (35.5%) mix franchised and company or affiliate outlets, and 18 (9.0%) rely only on company or affiliate outlets.

Item 19 disclosure by system size

Small systems disclose less often but go deeper when they do. 37 of 56 systems with fewer than 10 franchised outlets (66.1%) include an Item 19, against 163 of 203 larger systems (80.3%). The 95% intervals (53.0% to 77.1% and 74.3% to 85.2%) overlap only slightly.

Among small systems that disclose, 26 of 37 (70.3%) include a cost or profit line, and 15 (40.5%) rely only on company or affiliate outlets. In systems with 1,000 or more franchised outlets, 1 of 8 Item 19s shows a cost or profit line. That group has only 10 FDDs, so treat it as indicative.

Size is the year-end count of franchised outlets in Item 20 Table 1, taken from our franchise royalty rates dataset of the same 259 FDDs.

Required caveats and how figures are presented

The required statements are almost always present. 194 of 200 Item 19s (97.0%) offer written substantiation on request and 198 (99.0%) carry a warning that your results may differ, close to the FTC’s model wording (FTC Compliance Guide, page 92). 114 (57.0%) say the figures are unaudited.

Presentation varies more. 173 (86.5%) report an average and 166 (83.0%) a median; 7 give an average with no median. 159 (79.5%) show high and low results, 102 (51.0%) split outlets into tiers such as quartiles, and 62 (31.0%) list outlets one by one.

The Rule asks historic representations to state the number and percent of outlets that reached the stated result (16 CFR 436.5(s)(3)(ii)(E)). We found an explicit count or share of outlets meeting or beating the average or median in 144 Item 19s (72.0%). Item 19s that list every outlet or describe a single outlet may meet the requirement in other ways, so this is a reading aid, not a compliance finding.

Data age: 175 Item 19s (87.5%) report a period ending in the calendar year before the FDD issue year; 57 (28.5%) show more than one year.

How this compares with earlier Item 19 estimates

Published estimates of Item 19 prevalence range widely, and few say how they were measured. FRANdata, in a 2017 report for the IFA’s foundation, found that two-thirds of more than 3,000 brands were providing FPRs in FDDs from 2014 to 2016 (FRANdata, 2017). Franchise Update Media’s 2026 survey found that 84 percent of responding franchisors said they provide one (Franchise Update Media, 2026). The FTC says only that most franchisors do (FTC consumer guide).

Our measured 77.2% sits 10.5 points above FRANdata’s two-thirds and below the self-reported survey figure. The content mix has moved less: FRANdata found 94% of Item 19s gave average unit revenues, 47% any operating expense and 34% profitability information; we find 94.5% with sales or revenue, 44.0% with a cost line and 42.5% with a profit-type line.

These figures are not strictly comparable. FRANdata’s base was its whole database, the survey is self-selected and self-reported, and our sample has equal quotas per sector. Both comparisons with FRANdata point the same way: a larger share of franchisors disclose, and a somewhat larger share of Item 19s show a profit-type line, though definitions differ.

Buyer checklist: questions to ask about any franchise Item 19

These questions follow the disclosures the FTC Rule requires. Ask them of the franchisor in writing and check the answers against the FDD.

1. Is there an Item 19 at all? If not, ask why, and remember the franchisor may not give you earnings figures any other way.
2. Is each figure gross sales, or does it go down to costs and a profit line? Ask how gross sales are defined (NASAA expects a definition).
3. Whose outlets are these: franchised, company-owned, affiliate, or a mix? Company units may not carry royalties or rent the way yours will.
4. How many outlets existed in the period, how many are included, and why were the others left out?
5. What minimum time open was required, and how do newer outlets compare?
6. Is there a median as well as an average, and how many outlets met or beat each one?
7. Which period is covered, and has anything changed since then?
8. Which costs you will pay are missing? Compare against Item 6 fees and Item 7 investment, and see our royalty and fee benchmarks.
9. Can you see the written substantiation? The Rule requires it on reasonable request.
10. What do current and former franchisees listed in Item 20 say about the figures?

For the wider buying process see buying a franchise and franchise costs and funding.

Methods in brief

We reused the 259-brand sample of our franchise royalty rates report: one Clean FDD per brand from Minnesota CARDS, issued 2025-01-24 to 2026-08-18, with 18 brands per sector (27 for food, 17 for automotive and health). We cut Item 19 out of each FDD’s text and coded it by hand against a written codebook: presence, measures, basis, coverage, period, statistics and required statements. Image-only tables were read from the rendered PDF pages.

A second coder re-read 20 random brands blind (16 fields each). The first reading was wrong in 4 of 320 fields (1.2%), all in the coverage band; the other 300 fields had no errors. Outlet counts for the other 182 Item 19s were then re-read in a second blind pass: bands agreed for 162 (89.0%), and 17 of the 20 disagreements were settled in favour of the second reading after checking the source. Full method below.