# Item 19 Item 19 is where a franchisor may make a financial performance representation about actual or potential outlet performance. The [FTC rule](https://www.law.cornell.edu/cfr/text/16/436.5) requires a reasonable basis, written substantiation and specified context for a representation. A franchisor may instead state that it makes none. That yes-or-no result is only the start. Two brands can both have an Item 19 and disclose fundamentally different evidence. ## Five common shapes **No representation.** The Item contains the prescribed notice rather than sales or earnings data. That is lawful. It means the buyer must not treat an informal revenue, income or payback claim from the sales process as a substitute. The [FTC's buyer guidance](https://www.ftc.gov/business-guidance/blog/2023/05/franchise-fundamentals-taking-deep-dive-franchise-disclosure-document) advises that financial claims made by a seller should appear in Item 19, subject to narrow exceptions. **A limited outlet example.** A young system may have only one mature franchised outlet or a handful of company stores with enough history. The result can be accurate but not representative of a new market, different format or owner-operated unit. Record the denominator before recording the revenue. **An average or median.** An average can be pulled upward by a few large stores. A median describes the middle observation but says nothing about the width of the range. Look for the number and percentage of outlets that met or exceeded each statistic. **Subsets or quartiles.** A table may divide outlets by geography, format, age or performance band. That can add useful detail, but only if the selection rule and excluded population are clear. Do not apply the top quartile to an ordinary projection. **Company-store data.** Affiliate outlets may have different leases, management depth, purchasing arrangements or maturity from franchised stores. Company results are evidence about those stores, not automatic evidence about a franchisee's costs. ## A worked comparison The brand set on this site illustrates why labels are insufficient. The 2023 filing used here for The Great Greek Mediterranean Grill reports revenue, food-cost and payroll information for affiliate restaurants and selected franchise restaurants. Mad for Chicken's 2024 filing reports revenue for affiliate and franchised outlets but not a complete profit measure. The 2024 filings used for Shah's Halal and The Halal Guys make no financial performance representation. Each result answers a different question; “has Item 19” is not a quality score. For a current-document exercise, open the regulator pages for [GDK's 2025 FDD](https://apps.dfi.wi.gov/apps/FranchiseSearch/details.aspx?id=639752&hash=370187205&search=external&type=GENERAL) and [The Halal Guys' 2025 FDD](https://apps.dfi.wi.gov/apps/FranchiseSearch/details.aspx?id=639117&hash=921753141&search=external&type=GENERAL), then compare the Item 19 language with the complete [2025 Shah's Halal filing](https://cards.web.commerce.state.mn.us/documents/%7B9078B29B-0000-C21E-982F-C2FDAFB07783%7D/download?contentSequence=0&documentClass=FRANCHISE_REGISTRATIONS). For each one, write down: metric, period, outlet type, eligible population, included population, exclusions and whether expenses are shown.
Line chart titled Sales per labor hour, one series running about $90 to $115 and a peer series about $70 to $85 across a year
A performance chart from franchise marketing, shown as a worked example: no axis definitions, no sample size, no store count. It is a claim about labour productivity, and it is not an Item 19 representation.
A marketing chart is not transformed into an Item 19 merely because it uses a business metric. The chart above omits the definitions needed to reproduce the comparison: which sales, which labor hours, which outlets and which period. It can prompt a question, but cannot answer one. ## Turn disclosure into a model carefully Begin with the represented population, not the best result. Match your intended format, market, opening age and ownership model as closely as the data allows. Revenue is not profit; subtract independently researched occupancy, labor, food, delivery, insurance, debt service and the Item 6 obligations. If an Item shows selected costs, confirm which costs are omitted and whether the accounting treatment matches your model. Finally, use Item 20's contact lists. Ask operators how long ramp-up took, what changed after the represented period and whether their format resembles yours. Do not ask them to validate a single sales target; ask for the conditions that produced a range of outcomes. ## The set, as disclosed — not as ranked | Brand | Item 19? | What the record actually says | Source | | --- | --- | --- | --- | | GDK | Yes | One franchised outlet at American Dream Mall, East Rutherford, the only unit open for the full year. 2023 gross $1,383,053 | FDD issued 3 September 2024 | | The Great Greek Mediterranean Grill | Yes | Gross revenues, COGS and payroll for six affiliate restaurants, plus high and low of six franchise restaurants open two years | FDD issued 17 August 2023 | | Mad for Chicken | Yes | Unaudited 2022–2023 gross revenue for twelve affiliate outlets and three franchised outlets. Revenue only | FDD issued 3 May 2024 | | 375° Chicken 'n Fries | Yes | Unaudited affiliate income statement, 2020–2023. 2023 sales $3,782,437 across two corporate shops | FDD issued 30 April 2024 | | Döner Haus | Yes | Figures for a short operating history, corporate and early franchised units | 2026 Franchise Disclosure Document | | Dog Haus, Capriotti's, Pepper Lunch, Wienerschnitzel | Yes | A representation is made; read the cited source for metric and sample | May 2024 comparative study of published FDDs | | Shah's Halal Food | No | The filing states that no financial performance representation is made | FDD issued 10 April 2024 | | The Halal Guys, Crave Hot Dogs and BBQ, bluTaco | No | No representation is made | May 2024 comparative study of published FDDs | A "yes" is not a quality score. GDK's yes is one mall unit. Mad for Chicken's yes is revenue without costs. 375°'s yes is two corporate shops. Great Greek's yes is the rare cost-inclusive sample in this set, and it is still partly affiliate. Döner Haus's 2026 FDD discloses figures for a short operating history, corporate and early franchised units. Read that Item in the filing for the metric and the sample. Shah's "no" is lawful. It means the [FTC walkthrough](https://www.ftc.gov/business-guidance/blog/2023/05/franchise-fundamentals-taking-deep-dive-franchise-disclosure-document)'s advice applies with extra force: if a seller quotes sales anyway, ask for the Item 19 page. There is not one. ## Subset traps, worked **Full-year filter.** GDK's 2024 table required a full year of operations. Shops that opened mid-year were out. A new suburban inline is not the mall unit that remains. **Affiliate costs.** Great Greek shows COGS and payroll for affiliates. Franchisees pay royalties (6%), brand fund (3%, raisable to 4%), and 1% local — FDD issued 17 August 2023 — which affiliates may not bear in the same way. Subtract the Item 6 stack before treating affiliate payroll as yours. **Revenue-only.** Mad for Chicken's three franchised outlets in the 2024 sample cannot support a profit claim. Ask those three operators about occupancy and labor; do not invent a margin. **Corporate income statement.** 375°'s $3,782,437 is two corporate shops in 2023, unaudited. It is not a franchisee pro forma. Item 20 that year: 5 total, 2 franchised. **International mix-in.** Pepper Lunch's 2024 comparative record discloses 6 US units and an Item 19 in that US filing. An operator website claiming 500+ locations across fifteen countries is not the sample.
Before a number enters the model - Metric, period, outlet type, eligible vs included vs excluded. - Whether expenses are shown, and which expenses are omitted. - Whether the shop you would build matches format, age and channel. - Item 20 contact list used to test ramp-up, not to bless a single target. - Empty Item 19 left empty.
## What a "yes" still forces you to build Even a cost-inclusive Item 19 is not a turnkey model. Great Greek's 2023 filing gives COGS and payroll for affiliates. You still have occupancy for *your* lease, delivery commissions for *your* mix, the 6% / 3% / 1% stack, a $2,500 renewal fee decades out, and a transfer fee that can be 10% of sale price. The Item does not contain those as a single "net to owner" line. Do not invent one. GDK's $1,383,053 is gross at one mall in 2023. American Dream is not a suburban inline. Subtract nothing from it and call the remainder yours. Use it, if at all, as a ceiling on curiosity: what would have to be true locally to approach that volume, and which of those conditions Item 20 and the lease actually support. 375°'s $3,782,437 across two corporate shops in 2023 is an affiliate income statement, unaudited, covering 2020–2023. Corporate occupancy, labor mix and lack of royalty are the first three adjustments an accountant should refuse to skip. Two shops are not a distribution. If the May 2024 comparative study only records that Dog Haus, Capriotti's, Pepper Lunch or Wienerschnitzel "make a representation," stop at that fact in this guide and open the filing for the metric. Do not recall a number from a broker one-pager. ## Related reading - [Item 20 outlet tables](/item-20-outlet-tables/) — whether the sample could even exist - [Validation calls](/validation-calls/) — how to ask without turning a call into a fake FPR - [Red flags in franchise marketing](/red-flags-in-franchise-marketing/) — charts that are not Item 19 - [Attorney and accountant](/attorney-and-accountant/) — who builds the model from a subset - [Comparison worksheet](/comparison-worksheet/) — population fields, not the highlight figure --- HTML: https://qsrfieldguide.com/item-19/