What is Item 19 in a franchise disclosure document?
Item 19 (Financial Performance Representation) · Ítem 19 (representación de desempeño financiero) · البند 19 (بيان الأداء المالي) · 第19项（财务业绩陈述）
Item 19 is the only place in a US franchise disclosure document where a franchisor may make claims about how much franchisees earn. Any financial performance representation must have a reasonable basis and written substantiation; outside Item 19, earnings claims by franchisors, brokers or sellers are prohibited.
Under 16 CFR 436.9, unsubstantiated earnings claims violate the FTC Franchise Rule — which is why credible platforms never advertise franchisee income figures that are not backed by a brand's Item 19. Roughly speaking: if an income promise is not in Item 19, treat it as a red flag.
In practice
Item 19 content varies widely between brands. Some publish average or median sales across outlets, some show only a subset, some add costs and profit, and others make no representation at all, in which case the section must say so. When figures appear, experienced buyers read the footnotes first: which outlets were included or excluded, the period covered, and whether company-owned units are mixed in. A frequent misunderstanding is that a historical Item 19 figure predicts your own unit's results.
Not to be confused with
Item 19 is the section; a financial performance representation is the statement inside it. An earnings claim is the everyday name for such a statement wherever it is made, which is why one outside Item 19 is the problem. Unit economics is broader: your own model of revenue, costs and payback, which Item 19 can inform but not replace.
What to check before you sign
- How many outlets are included in each Item 19 figure, which were excluded, and what was the reason for leaving them out?
- Are company-owned and franchised outlets reported separately, and are the outlets comparable in age and location to the one you plan?
- If Item 19 shows sales but not costs, what cost information can current franchisees share to turn those sales into a profit estimate?
Questions to raise with the franchisor and your own adviser — general information, not legal advice. Rules differ by country.
📌 Also sourced from
- 16 CFR 436.5 — Disclosure items (Legal Information Institute) ↗ — inPractice: a franchisor making no financial performance representation must include the prescribed statement in Item 19
- FTC — A Consumer's Guide to Buying a Franchise ↗ — checks[0]–[1]: advises checking whether figures represent typical franchises, noting an average may make a system look more successful than it is
Related terms
See it in practice
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