Franchise Item 19 Comparisons: What to Look For

Running a franchise Item 19 comparison across multiple Franchise Disclosure Documents (FDDs) isn't as simple as lining up numbers side by side. One franchisor might disclose average gross sales for every outlet in the system. Another might show Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for a subset of top-performing locations. A third might skip Item 19 entirely. None of those numbers mean the same thing, and treating them as equivalent is how prospective franchisees end up making decisions on bad data.

Here's how to actually compare Item 19 disclosures, what to look for, and where else in the FDD to dig when Item 19 doesn't give you enough information to make an informed decision.

Why a Franchise Item 19 Comparison Isn't Apples-to-Apples

The FTC Franchise Rule makes Item 19 data optional, and it doesn't require a standardized format. Franchisors choose what to disclose, which outlets to include, and how far down the P&L to go. That flexibility is why two FDDs can look completely different even in the same industry.

Common sources of mismatch:

• Different metrics. One brand reports gross sales only. Another includes the cost of goods sold and operating expenses. A third goes as far as EBITDA.
• Different subsets. Some disclosures cover the full system. Others cover a specific region, unit type, or a handful of top performers.
• Different time periods. A one-year snapshot tells you less than three to five years of trend data.
• Different unit maturity. A system with mostly five-year-old locations will show different numbers than one that is still ramping up new units.

For example, take two franchisors reporting the identical headline number:

While they begin with the same number, the two examples paint completely different pictures.

Positive Signals to Look For

The strongest Item 19 disclosures share a few traits regardless of industry: they draw on the whole system rather than a slice of it, hold up across multiple years rather than a single good stretch, and report on revenue and owner earnings.

Specifically, look for:

• Full-system data, not a cherry-picked group of outlets
• Multiple years of figures instead of a single year
• Expense data alongside revenue, not just top-line sales
• A clear methodology, including how many outlets are included and what percentage hit or beat the stated numbers
• Explained subsets, where a franchisor breaks out data by location type or market and tells you why

Red Flags Worth Slowing Down For

Most misleading Item 19 disclosures aren't fabricated; they're technically accurate but may often be incomplete. What you need to look out for is data narrowed just enough, by outlet, by year, by metric, to look better than the full system would support.

That can show up as:

• Revenue-only figures with no expense data. Sales volume alone says nothing about whether the business is profitable.
• Small samples relative to system size, such as data drawn from 15 of 300 locations, with no explanation for the other 285.
• Outdated data, especially anything more than a year or two old.
• No down years or lower performers, which usually means the disclosure was built around a favorable slice of the system.
• Verbal numbers from a broker or sales rep that aren't printed in Item 19. The FTC rule bars franchisors and their agents from making financial claims outside Item 19, so any numbers from the franchisor's own reps must already be disclosed there. Independent brokers occupy more of a legal gray area, but either way, a figure you can't find in Item 19 isn't one you can verify.

The Metric That Actually Standardizes a Franchise Item 19 Comparison

Raw revenue numbers are the easiest to disclose and the least useful for comparing brands. The most useful franchise Item 19 comparison focuses on ratios and percentages, not just dollar figures. EBITDA and, increasingly, EBITDAR (EBITDA plus rent) strip out the financing and real estate variables that differ from one franchisee to the next, making them far more useful for comparing unit economics across brands.

For example, a 2026 FDD for a major quick-service chain disclosed a systemwide average EBITDAR margin and an average unit volume near $1.9 million for its standard restaurant format, reported separately from a different location format that posted a lower margin, along with a full cost breakdown by category.

That level of detail, multiple formats broken out separately, several cost categories (not just one blended number), is what actually lets a prospective franchisee model expected cash flow instead of guessing at it.

When There's Nothing in Item 19 at All

Roughly 40% of FDDs contain no financial performance representation. More disclosure is generally better than none, since it gives you something concrete to work from instead of relying entirely on sales conversations and independent research.

That said, an empty Item 19 isn't automatically a warning sign. Franchisors early in their growth cycle, particularly those with a small number of open units, often don't have enough verified data yet to make a defensible claim. A brand two years into franchising with 15 locations skipping Item 19 is a different situation from an established brand with hundreds of units that still discloses nothing. In the second case, it's worth asking directly why.

Where Else in the FDD to Look

Item 19 is only one section that can reveal system health. Several others add context that shapes how those numbers should be read, even though none of them substitute for unit-level earnings data:

• Item 20 shows outlet counts, transfers, terminations, non-renewals, and closures. A high churn rate is often a stronger warning sign than a missing Item 19.
• Item 7 provides the initial investment range, which you'll want to weigh against any existing revenue or profit data to gauge a realistic payback period.
• Item 6 covers royalties and ongoing fees, which affect margin regardless of what Item 19 shows.
• Item 21 includes the franchisor's audited financial statements, a signal of whether the parent company itself is financially stable enough to support the system in the long term.
• Item 3 covers litigation history, including any disputes specifically tied to earnings claims.

Beyond the FDD Itself

No FDD section, including Item 19, captures what it's actually like to run the business day-to-day. That perspective typically comes from three primary sources:

• Call current and former franchisees. Ask about actual performance, not just what Item 19 stated, and ask directly about any closures.
• Ask the franchisor's development team to clarify anything unclear in Item 19. They can't legally give you new numbers, but they can walk you through the ones that have already been disclosed.
• Look at how the underlying business model performs outside the franchise system, whether that's company-owned locations or comparable independent businesses in the same category. It gives you a sense of the concept's true ceiling and floor, independent of franchise-specific variables.

From Comparison to the Right Match

A careful comparison of franchise item 19 won't give you a guaranteed number, and it isn't meant to. It shows which franchisors are being straightforward and which are working around the edges of what the rule requires. Read the data critically, use the rest of the FDD and conversations with franchisees to fill in what Item 19 can't, and lean on Franchise.com to help, from making sense of the FDD to finding franchise opportunities that fit what you're looking for.

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