Franchise Disclosure Documents: What Item 19 Does and Does Not Promise

Item 19 of a franchise disclosure document is where a franchisor may state what its outlets earn. It is optional. A franchisor that includes one has to have a reasonable basis and written substantiation for every figure; a franchisor that leaves it blank is generally barred from making financial performance claims anywhere else. So the page is informative either way — including when it is empty. The disclosure requirement itself is federal, set by the FTC's Franchise Rule, while registration and franchise relationship rules are state law and vary sharply.

The document and the fourteen-day clock

The Franchise Rule requires a franchisor to give a prospective franchisee a disclosure document at least 14 calendar days before the buyer signs a binding agreement or pays any money in connection with the franchise. The point of the period is to give a reader time to read.

The document runs to 23 numbered items in a fixed order, so the same information sits in the same place across every system. If a franchisor unilaterally and materially changes the agreements after the disclosure, the Rule requires the revised agreements to be provided a further period before signing. The FTC's own the FTC Franchise Rule compliance guide sets out the current requirements.

Watch out: No federal agency reviews, approves or verifies a disclosure document. Receiving one means the franchisor produced it, not that anyone checked it. A salesperson who says the document is "FTC-approved" has said something that is not true.

What Item 19 actually is

A financial performance representation is any statement — oral, written, or visual — that states or suggests a specific level or range of actual or potential sales, income, gross profit or net profit. Under the Rule, the only place a franchisor may make one is Item 19.

If a franchisor makes an Item 19 claim, it must describe the basis and assumptions, state whether the figures are for company-owned outlets, franchised outlets, or both, and make written substantiation available to the prospective buyer on request. Asking for that substantiation is the single most useful thing a reader can do with the item.

Note what Item 19 is not. It is history, not forecast. Figures drawn from existing outlets say nothing about a new location, a different market, a different operator, or a different cost structure. A franchisor is not promising the reader will match them, and the document will say so.

How to read the figures that are there

Two Item 19s can present the same system very differently. The variables to check are always the same, and they are usually disclosed in the fine print beneath the tables.

Practical step: Read Item 19 next to Item 20, which lists outlet counts including openings, closures, transfers and terminations, and gives contact details for current and former franchisees. Strong revenue figures alongside heavy closures and transfers is a pattern worth understanding before signing.

What an empty Item 19 tells you

Roughly speaking, a franchisor that omits Item 19 has decided not to put numbers on the record where they can be tested. There are legitimate reasons — a very new system, extreme variation between markets, a recent change in model — and a franchisor may say so in the item.

What follows from the omission is concrete. If there is no Item 19, financial performance claims are generally off limits in the sales process too. If a development agent, broker or existing franchisee tells a prospect what a store "typically does" while Item 19 is blank, that is a problem with the sale, not a helpful data point, and the Rule's prohibition is enforceable by the FTC under its authority in 15 U.S.C. § 45.

• A spreadsheet or pro forma handed over "unofficially" by a salesperson.
• A verbal range offered in answer to "what do these usually make?"
• A screenshot of another franchisee's point-of-sale totals.
• A lender's model prepared from figures the franchisor supplied.

Each of those is a financial performance representation in substance. Prospective buyers should keep the document, note the date and the person, and ask why the figure does not appear in Item 19.

The state layer sitting on top

Federal law sets the disclosure floor. States add two further systems, and they are separate from each other.

A group of states requires a franchisor to register or file the disclosure document with a state agency before offering a franchise there — as of mid-2026, California, New York, Illinois, Maryland, Minnesota, Virginia and Washington are among them, and each state's process and content requirements differ. Some of those states require the document to carry state-specific addenda that change the terms.

A different, partly overlapping group has franchise relationship laws that limit termination, non-renewal and transfer, often requiring good cause and notice with a chance to cure. Those statutes matter after the deal closes, and they are frequently the reason two identical franchise agreements produce different outcomes in different states.

A franchisee also inherits the ordinary obligations of any business. It will need its own entity in good standing, its own operating permissions — see our guide to finding every licensing layer that applies — and, where it trades under the brand rather than its corporate name, an assumed name filing, which our guide to DBA registration and publication explains. Multi-state operators face the additional step described in our explainer on registering to do business in another state.

Common questions

Can I negotiate the franchise agreement, or is it take it or leave it?

It varies by system and by leverage. Many franchisors keep core terms uniform because inconsistency creates problems across the network, and some registration states require disclosure of negotiated changes. Territory, development schedules, personal guarantees and transfer terms are the areas where movement is most often possible. Ask early, because the disclosure period runs while negotiation happens.

If the numbers I was told turn out to be wrong, can I sue the franchisor?

The federal Franchise Rule is enforced by the FTC rather than through a private federal claim. Buyers usually rely instead on state franchise statutes, many of which do create private remedies, and on ordinary state-law claims such as misrepresentation. The practical difficulty is proof, which is why keeping every spreadsheet, email and note from the sales process matters more than most buyers expect.

Does the 14-day period restart if the franchisor sends a new version?

It depends on what changed. A revised document generally starts the disclosure period again, while unilateral material changes to the agreements themselves trigger a separate waiting period before signing under the Rule. Franchisors sometimes ask buyers to acknowledge receipt on a date that suits a closing schedule. The receipt page is evidence, so it should reflect what actually happened.

Is a business opportunity the same as a franchise?

No, though the sales pitch can sound identical. The FTC administers a separate Business Opportunity Rule with its own, much shorter disclosure form, and many states regulate business opportunity sales under their own statutes. Whether an arrangement is a franchise turns on the substance — a trademark license, significant control or assistance, and a required payment — not on what the seller calls it.

Working through a disclosure document

Read Item 19 and Item 20 together first, then Item 21's audited financial statements, then Items 5, 6 and 7 for the fees and the estimated initial investment. That order tells you quickly whether the economics are plausible.

Request the Item 19 substantiation in writing and note the response. Call franchisees from the Item 20 list, including former ones, and ask about revenue, hours, support and why they left.

Compare the disclosure document against the agreements themselves, because the agreements control. Where they differ, the agreement wins, and state addenda can override both.

Use the disclosure period rather than waiving it in practice by signing early. General preparation material for prospective owners is collected by the Small Business Administration and by the FTC's business guidance library. And where the system imposes restrictions on where and to whom a franchisee may sell, our analysis of antitrust rules on collaboration explains how those restraints are assessed.