FDD guide

FDD Item 19 Guide: Financial Performance Representations & Missing FPRs

Item 19 is where franchisor performance claims live when they are made. Learn what the disclosure can and cannot prove.

Last reviewed: May 26, 2026 by the BizLeaseCheck Editorial Team

General information, not legal advice.

Overview

Item 19 covers financial performance representations. Under the FTC Franchise Rule, a franchisor is not required to make an Item 19 representation, but if it does, the representation must have a reasonable basis and written substantiation.

An Item 19 can be useful, but it is not a promise that your unit will perform similarly. The practical review is about who is included, who is excluded, whether the numbers are gross or net, whether averages hide dispersion, and whether your site and operator assumptions match the sample.

Topics to check

Item 19 is optional, but claims must be supportableHigh confidence

The FTC materials describe financial performance representations as optional. When a franchisor chooses to make one, it must have a reasonable basis and written substantiation for the representation when it is made.

Ask for the substantiation if the Item 19 numbers drive your decision. The issue is not only whether numbers appear; it is whether the support matches the claim being made.

FTC Amended Franchise Rule FAQs

Averages can hide the unit-level storyHigh confidence

An average revenue figure may be pulled upward by a small number of high-performing units. A median, quartile, store-count table, or percentage meeting the stated result can be more useful for estimating a conservative case.

Read the notes. Look for exclusions, mature-unit filters, company-owned-unit treatment, geographic limits, nontraditional locations, closed units, and whether the figures are gross sales, net sales, EBITDA, cash flow, or another metric.

16 CFR 436.5 — Item 19

No Item 19 is a diligence issue, not automatic proof of a bad dealHigh confidence

The absence of Item 19 means the franchisor is not making a financial performance representation in the FDD. It does not prove the system is weak, but it leaves the buyer with less standardized performance information.

If there is no Item 19, call current and former franchisees, build a conservative unit model, and ask your accountant to pressure-test rent, labor, royalties, brand-fund fees, debt service, and working capital.

FTC Consumer Guide to Buying a Franchise

Tie Item 19 back to your actual cost stackHigh confidence

Performance claims are only part of the economics. Item 5, Item 6, Item 7, Item 8, lease costs, financing terms, payroll, and local ramp timing can turn similar sales into very different owner outcomes.

Do not use Item 19 as a standalone investment thesis. Use it as one input in a model that includes royalties, required advertising, supplier costs, occupancy cost, debt service, and exit assumptions.

16 CFR 436.5 — disclosure items

Key takeaways

Item 19 financial performance representations are optional under the FTC Franchise Rule.
If made, an Item 19 claim needs reasonable basis and written substantiation.
Averages, medians, sample selection, and exclusions can change the story.
No Item 19 increases diligence burden but is not automatic proof the franchise is bad.
Always connect Item 19 to fees, investment, rent, debt, and working-capital assumptions.

Official resources

FTC Franchise Rule landing page 16 CFR Part 436 — Franchise Rule FTC Franchise Rule Compliance Guide FTC Consumer Guide to Buying a Franchise FTC Amended Franchise Rule FAQs 16 CFR 436.5 — Item 19 in disclosure items

Legal-review notes

Guide confidence marker: High confidence.

Have counsel review any franchisor sales statement that appears to be a financial performance representation outside the written FDD.
Any claim about whether a particular Item 19 is adequately substantiated requires document-specific legal review.

Frequently asked questions

Is a franchisor required to provide Item 19 financial performance numbers?

No. Item 19 financial performance representations are optional, but if the franchisor makes one it must have a reasonable basis and written substantiation.

Is an Item 19 average enough to underwrite a franchise?

No. Ask for the sample size, exclusions, median or distribution data when available, and the cost assumptions needed to convert sales into owner economics.

What should I do if the FDD has no Item 19?

Build a more conservative model, call current and former franchisees, and ask qualified advisors to review the economics. Do not rely on oral performance suggestions outside the FDD.