What is Item 19 of an FDD, and can you trust a franchise's earnings claims?
Item 19 of a Franchise Disclosure Document (FDD) is generally the required place for a franchisor to tell you how much money you might make — and disclosing it is optional, so many franchisors leave it blank. Under the FTC Franchise Rule (16 CFR 436.5(s)), a franchisor does not have to give you any financial performance numbers at all. But if it does make a sales or earnings claim, that claim generally must appear in Item 19, must have a reasonable basis, and must be backed by written substantiation the franchisor will provide on your reasonable request. The FTC recognizes narrow exceptions for actual records of a specific existing outlet you are considering buying and for compliant supplemental financial performance representations tied to an Item 19 disclosure (FTC Consumer's Guide). So you can give far more weight to a number printed in Item 19 than to anything a salesperson tells you on a call — and any income promise made outside Item 19 that does not fit one of those narrow exceptions is a red flag the FTC explicitly warns about.
Why Item 19 is optional — and what a blank one means
The Franchise Rule permits, but does not require, a franchisor to disclose the actual or potential financial performance of its outlets. As the FTC puts it, Item 19 "contains claims the franchisor chooses to make about sales or earnings. The Franchise Rule doesn't require a franchisor to provide that information" (FTC, Franchise Fundamentals).
A blank or thin Item 19 is not automatically a scam — some legitimate franchisors choose to make no claims to limit their legal exposure, since anything they put there must be substantiated and defensible. But it does mean you get no official profit numbers, so the burden shifts to you to estimate revenue and costs yourself using franchisee interviews (more on that below) and your own market research. Be especially wary if Item 19 is empty and a salesperson is verbally quoting you exciting income figures. That combination is the classic pattern the FTC warns about.
Verbal earnings claims are a red flag — by law
This is the single most important thing to understand before you sign. The FTC is blunt: "if the claims aren't in Item 19, the franchisor – as well as brokers, dealers, or other sellers – can't make any spoken or written financial performance claims." The narrow exceptions are not a license for sales hype: the franchisor may provide actual records for the specific existing outlet you are buying, or it may provide a written supplemental representation that adds to a compliant Item 19 disclosure. If a recruiter, broker, or "successful franchisee" tells you "most owners clear six figures" and that number is nowhere in Item 19 or a compliant supplemental disclosure, the FTC says that should "set off your baloney detector" (FTC deep dive into the FDD).
Watch for a related trap. Franchisors often ask you to sign a closing acknowledgment or "disclosure questionnaire" stating you received no earnings representations. If a seller gave you income figures verbally and then asks you to sign a form saying they didn't, that contradiction is itself a warning sign — and signing such a statement can later make it harder to hold the franchisor accountable for what it promised. Don't let anyone pressure you into certifying something you know isn't true.
How to read the numbers that are in Item 19
When a franchisor does make claims, the Rule (16 CFR 436.5(s)) requires it to show its work. A trustworthy Item 19 will tell you:
- Whether the figures cover all outlets or only a cherry-picked subset — for example, only the top quartile of stores, or only outlets open more than three years. "Average" revenue from the best locations is not what a new owner should expect.
- The time period and the number of outlets the data is based on, including how many of them actually achieved the stated result.
- Whether the number is gross sales or net profit. A high "average unit volume" (gross sales) figure says nothing about what's left after rent, royalties, labor, and supplies. It is easy to mistake one for the other.
You also have the right to ask for the written substantiation and the assumptions behind any claim — the Rule says it must be made available to you on reasonable request. Ask for it. A franchisor that hesitates to hand over the basis for its own published numbers is telling you something.
Cross-check Item 19 against Item 20 and current franchisees
Item 19 is most powerful when you verify it against Item 20 (16 CFR 436.5(t)), which lists outlet counts and turnover for the last three fiscal years and includes contact information — names, addresses, and phone numbers — for current franchisees and for those who left the system in the most recent fiscal year. Call them. The FTC specifically recommends tracking down current and former franchisees and asking whether they made a profit and why they left. If Item 19 paints a rosy picture but Item 20 shows lots of closures and transfers, those two items are in conflict, and the franchisees themselves are your ground truth.
Use the 14-day rule to actually do this homework
The Franchise Rule gives you time on purpose. You must receive the complete FDD at least 14 calendar days before you sign any binding agreement or pay any money to the franchisor or its affiliate (FTC Consumer's Guide to Buying a Franchise). That waiting period exists so you can read Item 19, request substantiation, and call franchisees. Anyone rushing you to sign before 14 days is acting against the Rule — another red flag. Use the full window; there is no prize for signing early.
When you are staring at a dense FDD and trying to spot whether Item 19 quietly limits its numbers to top performers, or whether the franchise agreement's fee and termination clauses match what the recruiter promised, an AI tool can flag the specific passages worth a second look. BizLeaseCheck reviews your uploaded FDD and surfaces clauses to question — see our franchise disclosure document review guide or compare options in our roundup of the best AI franchise FDD review tools. It is a fast first pass, not a substitute for a franchise attorney on a six-figure commitment.
Frequently asked questions
Does a blank Item 19 mean the franchise is a bad investment?
Not necessarily. Many established, reputable franchisors leave Item 19 blank to limit legal exposure, since any claim they make must be substantiated and defensible. A blank Item 19 simply means you get no official earnings data and must build your own revenue and expense projections from franchisee interviews and market research. It becomes a warning sign mainly when the franchisor's salespeople are verbally promising income that the document conspicuously omits.
Can a franchise legally tell me how much I'll make if it's not in Item 19?
Generally, it must be in Item 19 or in a narrow FTC-recognized exception. Under the FTC Franchise Rule, financial performance claims — spoken or written — generally need to appear in Item 19 with a reasonable basis, but the FTC allows actual records for a specific existing outlet being purchased and compliant supplemental financial performance representations that add to Item 19. A franchisor, broker, or seller casually quoting income or sales figures outside those channels is a serious red flag. Get any such claim in writing, ask for the substantiation, and don't sign a questionnaire stating you received no representations when you actually did.
What's the difference between "average unit volume" and profit in Item 19?
Average unit volume (AUV) is typically gross sales — total revenue before any expenses. Profit is what remains after rent, royalties, marketing fees, payroll, inventory, and other costs. An Item 19 can show an impressive AUV while owners take home very little. Always check whether a figure is gross or net, and whether it reflects all outlets or only a high-performing subset, before treating it as what you would earn.
How do I verify an Item 19 earnings claim?
Three steps: (1) Request the franchisor's written substantiation and underlying assumptions, which it must make available on reasonable request. (2) Read the fine print in Item 19 to see exactly which outlets and time period the numbers cover. (3) Call current and former franchisees from the Item 20 list and ask about their real revenue, costs, and whether they'd buy in again. Use your mandatory 14-day review window to do all three before signing anything.
This article is general information, not legal or financial advice. Franchise law and the FTC Franchise Rule can change and some details vary; verify the current rule and consult a qualified franchise attorney before signing.