What to Look for in Item 19

Item 19 is the only place in the FDD where a franchisor is legally permitted to make claims about how much money franchisees earn. It is completely optional — there is no requirement to include it. That optionality is itself a signal worth understanding.

Why Some Franchisors Skip Item 19

Roughly 35-40% of franchisors choose not to disclose financial performance data. The most common reasons are liability concerns (the data could be used in lawsuits), unfavorable numbers, or highly variable results that are difficult to present fairly. A missing Item 19 does not automatically mean bad performance — but it means you have less information to work with.

Average vs. Median Revenue

If a franchisor reports average revenue, check whether they also report the median. The average can be skewed dramatically by a few high-performing locations. If the average is $1.2M but only 30% of units exceed the average, most franchisees are earning significantly less.

The median tells you what the middle franchisee earns — half do better, half do worse. It is almost always a more useful number for setting expectations.

Sample Size and Selection

Check how many units are included in the data. A system with 2,000 units reporting data from 500 is more reliable than one with 50 units reporting from 20. Also check whether the sample excludes new units (opened less than 12 months) — their numbers would drag the average down and may not represent the steady-state economics.

Revenue vs. Profit

Most Item 19 disclosures show gross revenue, not net profit. Gross revenue minus operating costs (rent, labor, supplies, royalties, insurance) equals your actual earnings. Some franchisors include cost breakdowns; most do not. If only revenue is provided, you will need to estimate operating costs independently — talk to existing franchisees.

Segmentation

Better Item 19 disclosures segment data by geography, unit age, store type, or performance quartile. A national average is far less useful than knowing how units in your target market perform. Look for whether the franchisor separates urban vs. suburban, company-owned vs. franchised, or mature vs. newer locations.

Red Flags in Item 19

• Only top-line revenue, no costs: Makes it impossible to estimate actual earnings.
• Small or cherry-picked sample: Data from 10 out of 500 units is marketing, not disclosure.
• No median: If only the average is reported, the distribution is likely skewed.
• Company-owned units mixed in: These often outperform franchised units due to different cost structures.
• Asterisks and footnotes: Read every footnote. They often contain the most important caveats.

How We Use Item 19 Data

On FranchiseVS, we extract the key figures from Item 19 — average revenue, median revenue, sample size, and percentage above average — and display them on each brand detail page. We also use median revenue to calculate estimated payback period. When Item 19 is missing, we note it explicitly so you know the gap.