Item 19 of the Franchise Disclosure Document covers Financial Performance Representations (FPRs). It is the only section of the FDD where a franchisor can make claims about how much money franchisees actually earn. About 66% of franchise systems now include Item 19 data, up from 52% in 2014. The remaining 34% include a statement that they do not make financial performance representations — which means you receive no franchisor-sourced earnings data before investing $100,000 to $500,000 or more in the franchise. At Lopes Law LLC, our FDD Validation Review ($3,000 flat) includes a detailed statistical analysis of Item 19 data to help franchise buyers evaluate the financial viability of the franchise opportunity.

Understanding Item 19 is critical because the data it contains — or the data it omits — directly affects your ability to project revenue, expenses, and profitability for the franchise. At Lopes Law LLC, we have reviewed Item 19 disclosures across 200+ franchise brands and have developed a systematic framework for evaluating financial performance data. Call (267) 777-9117 for a free consultation.

What Is Item 19 in an FDD?

Item 19 is regulated by the FTC Franchise Rule at 16 CFR 436.5(s). The rule allows — but does not require — franchisors to include Financial Performance Representations in their FDD. If a franchisor chooses to include Item 19 data, the representations must have a reasonable basis, must be substantiated at the time they are made, and must include the material assumptions underlying the data.

The term “Financial Performance Representation” is defined broadly by the FTC. It includes any representation — written or oral — that states, suggests, or implies a specific level or range of actual or potential sales, income, gross profits, or net profits of a franchise. At Lopes Law LLC, we review Item 19 data within this legal framework to ensure the franchisor’s representations are properly substantiated and not misleading.

A Brief History of Item 19

Before the 2007 FTC Franchise Rule amendment, the equivalent disclosure (then called “Item 19” under the UFOC Guidelines) was rarely used. Only about 25% of franchisors included earnings claims in the 1990s. The 2007 amendment broadened the definition of financial performance representations and created a more permissive framework for disclosure. Since then, the percentage of franchisors including Item 19 has increased steadily — from 25% in the 1990s to 52% in 2014 to approximately 66% as of 2026. This trend reflects growing recognition that franchise buyers expect financial transparency.

What Does Item 19 Include?

Item 19 disclosures vary significantly from one franchise system to another. There is no required format, and franchisors have wide latitude in deciding what data to present. Common types of Item 19 data include:

• Gross sales or revenue: The most common type of Item 19 data. Shows average, median, or range of gross sales for franchise units. Gross sales alone do not tell you anything about profitability — you need expense data to determine whether the franchise generates a profit.
• Cost of goods sold (COGS): Some franchisors disclose COGS as a percentage of revenue. This is particularly common in food service franchises where COGS is a major expense category. At Lopes Law LLC, we compare disclosed COGS percentages against industry benchmarks.
• EBITDA or operating profit: A smaller number of franchisors disclose EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or operating profit data. This is the most useful type of Item 19 data because it provides a proxy for profitability. At Lopes Law LLC, we consider EBITDA disclosures a strong positive signal about the franchisor’s transparency.
• Systemwide averages: Some franchisors report a single average figure for all units. Others break data down by region, unit age, or performance quartile. At Lopes Law LLC, we prefer granular data because systemwide averages can mask significant performance variation.
• Unit-level economics: The most comprehensive Item 19 disclosures include full unit-level financial statements showing revenue, COGS, labor, occupancy, marketing, and other expenses. These are rare but extremely valuable for franchise buyers.

How to Evaluate Item 19 Data

At Lopes Law LLC, we use a five-factor framework to evaluate every Item 19 disclosure. This framework has been developed through reviewing 200+ FDDs across every major franchise industry.

Factor 1: Median vs. Mean

The mean (arithmetic average) can be significantly skewed by outlier units. If a franchise system has 100 units and the top 5 each generate $3 million in revenue while the other 95 generate $350,000, the mean revenue is $482,500 — a figure that overstates what most franchisees actually earn. The median (the middle value when all units are ranked) is $350,000 in this example — a much more representative figure.

At Lopes Law LLC, we always ask: does the Item 19 use mean or median? If it uses mean only, we flag this as a potential concern and attempt to calculate or estimate the median from the data provided. Franchisors that report only mean averages without context are presenting data that may overstate typical performance.

Factor 2: Sample Size

The sample size relative to the total number of franchise units is critical. An Item 19 based on 50 out of 500 total units (10% sample) is less reliable than one based on 400 out of 500 units (80% sample). At Lopes Law LLC, we examine which units are included in the sample and which are excluded. Common exclusions include units open less than 12 months, units undergoing remodeling, and units in non-standard formats (kiosks, airports, etc.). Each exclusion can make the data look better by removing underperforming units from the calculation.

Factor 3: Geographic Mix

Franchise performance varies significantly by geographic market. A franchise system that operates primarily in high-income coastal markets may report Item 19 data that does not reflect performance in lower-cost midwestern or southern markets. At Lopes Law LLC, we evaluate whether the Item 19 data reflects the geographic market where the prospective franchisee plans to operate. If the data is based on units in New York and San Francisco, it may not be representative for a franchisee opening in Allentown or Wilmington.

Factor 4: Time Period

Item 19 data is based on a specific time period — usually the most recent fiscal year. At Lopes Law LLC, we examine whether the reported period is representative of normal operations or whether it was an unusually strong or weak period. We also look at whether the franchisor provides multi-year data, which allows for trend analysis. A franchise that showed strong growth in the reported year but declining performance in prior years may be presenting a misleadingly optimistic picture.

Factor 5: Above/Below Analysis

The most informative Item 19 disclosures include a statement of what percentage of units actually achieved the reported figures. For example: “The average gross revenue for all units was $500,000. Forty-three percent (43%) of units achieved or exceeded this average.” At Lopes Law LLC, we consider this the gold standard of Item 19 disclosure because it tells the franchise buyer exactly how likely they are to achieve the reported numbers. If 57% of units did not meet the average, the prospective franchisee needs to understand why.

What If a Franchise Has No Item 19?

About 34% of franchisors do not include Item 19 data in their FDD. Their FDD simply states: “We do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets.” This is legal under the FTC Franchise Rule, but it means you are being asked to invest $100,000 to $500,000+ without any franchisor-provided financial data.

Why Some Franchisors Omit Item 19

There are several reasons a franchisor might omit Item 19:

• New franchise systems may not have enough operating history to provide meaningful data.
• Underperforming systems may avoid Item 19 because the data would discourage franchise sales.
• Legal caution: Some franchise attorneys advise their franchisor clients to omit Item 19 to reduce litigation risk from franchisees who claim the data was misleading.
• Inconsistent data: Franchise systems with highly variable unit performance may find it difficult to present Item 19 data in a way that is both accurate and useful.

At Lopes Law LLC, we do not automatically view the absence of Item 19 as a disqualifying red flag — but we do advise clients to exercise additional due diligence when evaluating a franchise without Item 19 data.

How to Get Financial Data Without Item 19

If the FDD does not include Item 19, there are other ways to obtain financial performance data:

• Contact existing franchisees. Item 20 of the FDD lists every current and former franchisee with contact information. At Lopes Law LLC, we advise clients to contact at least 10 to 15 current franchisees to ask about revenue, expenses, and profitability. Franchisors cannot prevent franchisees from sharing their own financial data.
• Request validation calls. Many franchise systems facilitate “validation calls” where prospective franchisees speak with existing operators. At Lopes Law LLC, we provide a list of specific financial questions to ask during validation calls.
• Review third-party benchmarks. Industry associations, franchise consultants, and financial databases publish franchise performance benchmarks. These can provide context even if the specific franchise system does not disclose Item 19 data.
• Examine the franchisor’s public filings. If the franchisor is publicly traded, its SEC filings contain financial data that can inform your analysis. At Lopes Law LLC, we review public filings when available.

Item 19 Red Flags

At Lopes Law LLC, we have identified specific red flags in Item 19 disclosures that franchise buyers should be aware of.

1. Cherry-Picked Data

Some franchisors include only the best-performing units in their Item 19 sample while excluding underperformers. If the sample includes only “mature” units open for 3+ years, or only units in “standard” formats, the excluded units may tell a very different story. At Lopes Law LLC, we compare the Item 19 sample size against total unit counts in Item 20 to identify exclusion patterns.

2. Revenue Without Expenses

An Item 19 that shows only gross revenue — without disclosing cost of goods, labor, occupancy, or other expenses — tells you almost nothing about profitability. A franchise that generates $800,000 in gross revenue but has $780,000 in expenses produces only $20,000 in operating income. At Lopes Law LLC, we flag revenue-only Item 19 disclosures and advise clients to seek expense data from existing franchisees.

3. Mean Without Median

As discussed above, mean averages can be heavily skewed by outliers. An Item 19 that reports only mean averages without providing the median or a distribution breakdown may overstate typical performance. At Lopes Law LLC, we calculate estimated medians whenever the raw data allows it.

4. Outdated Numbers

Item 19 data should reflect the most recent fiscal year. If the FDD was updated in March 2026 but the Item 19 data is from fiscal year 2023, the data is 2+ years old and may not reflect current market conditions. At Lopes Law LLC, we verify that Item 19 data is current and flag outdated disclosures.

5. Company-Owned Unit Data Only

Some franchisors base their Item 19 on company-owned units rather than franchised units. Company-owned units may benefit from advantages that franchised units do not have — such as lower supply costs, preferential locations, and more experienced management. At Lopes Law LLC, we distinguish between company-owned and franchised unit data and advise clients that company-owned performance may not be replicable.

6. Missing Expense Categories

Even when an Item 19 includes some expense data, key categories may be missing. Common omissions include owner’s salary, debt service (loan payments), depreciation, and franchise-specific costs like grand opening marketing. At Lopes Law LLC, we identify missing expense categories and estimate the full cost structure using industry benchmarks.

How Item 19 Connects to Other FDD Items

Item 19 should never be evaluated in isolation. At Lopes Law LLC, we cross-reference Item 19 data against three other critical FDD items to build a complete financial picture.

Item 6 — Fees That Reduce Revenue

Item 6 discloses all ongoing fees: royalties, advertising fund contributions, technology fees, and other charges. These fees are deducted from gross revenue. At Lopes Law LLC, we calculate net revenue after Item 6 fees and compare it against Item 19 data. If Item 19 reports $500,000 in average gross revenue and Item 6 fees total 10% of gross revenue, the franchisee keeps $450,000 before paying operating expenses.

Item 7 — Investment That Determines Breakeven

Item 7 discloses the estimated initial investment. At Lopes Law LLC, we compare Item 19 returns against Item 7 investment levels to calculate the breakeven timeline. If Item 7 shows a $300,000 initial investment and Item 19 suggests $60,000 in annual net income, the breakeven timeline is approximately 5 years. We advise clients on whether this return is acceptable relative to the risk and alternative investment opportunities.

Item 8 — Sourcing Costs That Affect Margins

Item 8 discloses restrictions on where franchisees can purchase products and services. If the franchisor requires purchasing from designated suppliers, those costs may be higher than open-market alternatives. At Lopes Law LLC, we evaluate whether restricted sourcing increases the franchisee’s COGS and, if so, how that affects the profitability projections suggested by Item 19 data. Some franchise systems generate significant revenue from supplier rebates — revenue that benefits the franchisor, not the franchisee.

Frequently Asked Questions About FDD Item 19

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Last updated: March 17, 2026