Item 19

Item 19 is where a franchisor may make a financial performance representation about actual or potential outlet performance. The FTC rule 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 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 and The Halal Guys’ 2025 FDD, then compare the Item 19 language with the complete 2025 Shah’s Halal filing. For each one, write down: metric, period, outlet type, eligible population, included population, exclusions and whether expenses are shown.

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.