FDD Item 19: Financial Performance Representations Explained
What FDD Item 19 covers, when franchisors can make financial performance claims, and how to stay compliant.
Key takeaways
- Item 19 is optional—franchisors can omit financial performance info. But if included, rules are strict.
- Any earnings claim (FDD, sales materials, or verbal) must be in the FDD, substantiated, and compliant.
- Work with a franchise attorney before making financial performance representations.
FDD Item 19 is the optional Franchise Disclosure Document section for financial performance representations. Franchisors can omit it—but if they include any earnings claim, the rules are strict. Get it wrong, and you face enforcement and liability.
Item 19 is different from the other 22 items. Here's what it covers and how to approach it.
What Item 19 Is
FDD Item 19: The optional Franchise Disclosure Document section where franchisors may disclose financial performance information about franchisees. If included, it must be substantiated and compliant.
Item 19 is the section where franchisors may—emphasis on may—disclose information about the actual or potential financial performance of their franchisees. This could include:
- Historical revenue or profit data
- Average sales figures
- Earnings claims
- Projections or forecasts
The key word is "may." Franchisors can omit Item 19 entirely. Many do. But if you include any financial performance representation (FPR), it must comply with FTC and state requirements.
This article is for informational purposes only and does not constitute legal advice. Item 19 is highly regulated. Always work with a qualified franchise attorney before making any financial performance representations.
When You Need Item 19
You need Item 19 if you make any claim—in the FDD, in sales materials, or verbally—about how much franchisees earn or can earn. That includes:
- "Our franchisees average $X in revenue"
- "Typical franchisees achieve profitability within Y months"
- "Based on our data, you can expect..."
If you're making those claims, they need to be in the FDD, substantiated, and compliant. Off-the-cuff earnings claims during a sales call can create liability even if they're not in the FDD.
Substantiation Requirements
The FTC doesn't prescribe exact formats, but financial performance representations must be:
- Substantiated — Based on written records you can produce
- Reasonable — Not misleading or exaggerated
- Accurate — Reflect actual data, not aspirational goals
State laws (especially in California, New York, and others) may add requirements. Some states require specific disclaimers, time periods, or formats.
Common Item 19 Formats
Franchisors who include Item 19 often use:
- Historical performance — "Of our 50 franchisees in 2024, average gross revenue was $X"
- System-wide averages — With appropriate disclaimers about variation
- Subset data — "Franchisees who have been open 24+ months..."
- Ranges — "Gross revenue ranged from $X to $Y"
The format depends on your data, your system size, and your attorney's guidance.
What Item 19 Doesn't Cover
Item 19 is specifically about financial performance. It doesn't cover:
- Costs of goods sold (that's Item 7)
- Initial investment (Item 7)
- Fees (Item 5 and 6)
- General business advice or industry trends
Relationship to Operations Manuals
Item 19 doesn't directly reference operations manuals. But your manual and your FDD should tell a consistent story. If your Item 19 assumes franchisees follow certain procedures, your operations manual should document those procedures. Inconsistency can undermine both.
For more on the FDD, see what is an FDD and FDD Item 11 explained.
Documentation that supports your FDD
Operations manuals that align with your franchise disclosures.
Get StartedFrequently Asked Questions
- What is FDD Item 19?
- FDD Item 19 is the optional Franchise Disclosure Document section where franchisors may disclose financial performance information—revenue, profit, earnings claims, or projections. It's the only FDD item that's optional. If included, it must be substantiated, reasonable, and accurate. State laws may add requirements.
- Do I have to include Item 19 in my FDD?
- No. Item 19 is optional. Many franchisors omit it. But if you make any claim about franchisee earnings—in the FDD, sales materials, or verbally—you need Item 19. Off-the-cuff earnings claims during a sales call can create liability even if not in the FDD.
- What are the requirements for Item 19 financial performance representations?
- Representations must be substantiated (based on written records), reasonable (not misleading), and accurate (reflect actual data). The FTC doesn't prescribe exact formats. California, New York, and other states may add requirements. Work with a franchise attorney before including Item 19.
- Can verbal earnings claims create liability?
- Yes. If you make earnings claims during a sales call—'Our franchisees average $X'—those claims need to be in the FDD and compliant. Verbal claims can create liability even if they're not in the document. Document what you say and ensure it matches your FDD.