FDD Item 19 Earnings Claims
Financial performance representations in the FDD, and how to read what the franchisor is and is not telling you.
- Disclosure population (top quartile, all units, by age)
- Use of average vs median vs range
- Revenue, gross profit, or net profit
- Geographic and time period scope
If this clause already feels aggressive in isolation, upload the full contract and see how it combines with payment terms, liabilities, and exit rights.
Analyze My ContractWhat this clause actually does
FDD Item 19 is the only place in the FDD where the franchisor can make financial performance representations. Disclosure is voluntary: about 70% of franchisors include some Item 19, but the depth and methodology vary widely. What is excluded from the disclosure often matters more than what is included.
Why people get burned by this clause
Franchisees often base buy decisions on Item 19 numbers without understanding the disclosure population, geography, age, and exclusions. A median revenue figure that excludes the bottom quartile is useless for buy-decision math.
What should make you slow down
- Disclosure includes only top performers (cherry-picked subset)
- Average rather than median (skewed by top performers)
- Revenue without expense or profit data
- No breakdown by location age (new units vs mature units)
- Geographic limitation that excludes your market
Where you usually see it
- Franchise Disclosure Document Item 19
What the platform checks in the live contract
- Disclosure population (top quartile, all units, by age)
- Use of average vs median vs range
- Revenue, gross profit, or net profit
- Geographic and time period scope
- Material assumptions and exclusions
What stronger language usually looks like
- Median (not average) for entire population
- Quartile breakdown
- Revenue and net profit (not just revenue)
- Breakdown by location age and geography
- All material assumptions disclosed
Definitions worth opening next
No glossary cross-links are set for this clause yet.
Articles that go deeper
Item 19 is voluntary disclosure. The structure of what is disclosed (and what is excluded) often tells you more than the headline numbers.
See how this clause behaves in the real contract.
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