Every franchise buyer wants the same number: what will I make? Item 19 of the franchise disclosure document is the only place a franchisor is allowed to answer, and many choose not to. This guide covers the rules behind it, what a good Item 19 contains, how to read one without being misled, and what to do when a system leaves it blank.
The Rule in One Paragraph
Under the Federal Trade Commission’s Franchise Rule, any statement to a prospective buyer about what outlets earn, sell, or cost to run is a financial performance representation. A franchisor may make one only if it appears in Item 19, has a reasonable basis, and is backed by written substantiation. Including an Item 19 is optional. If a franchisor leaves it out, neither the franchisor nor anyone selling for it may make earnings claims at all, in writing or out loud.
There are two narrow exceptions. A franchisor may give you the actual records of a specific existing outlet you are considering buying. And it may supplement its Item 19 with information about a particular location or set of circumstances, as long as that supplement has the same reasonable basis.
The rule is enforced. In March 2026 the FTC settled with a fitness franchisor for $17 million over disclosure failures.
What an Item 19 Can Contain
There is no single format. Item 19s come in roughly five shapes, often combined.
Average or median gross sales. The most common. Useful, but only as good as the group it averages.
Quartiles or tiers. Sales broken into top, middle and bottom groups. Better, because it shows the spread.
Cost and profit lines. Some filings go past sales to show costs and a profit measure, usually EBITDA. These are the most useful and the least common.
Subsets. Model units, units over a certain age, units over a certain size, or company-owned units. Each tells you about that group only.
Ramp data. First-month, first-quarter or first-year sales for newer units. Rare, and valuable for working-capital planning.
Seven Questions to Ask of Every Item 19
1. How many units are included, out of how many open? A table of 31 model parks from a system of several hundred tells a different story from a table of every park.
2. Why were the others left out? The filing has to say what the basis is. Common exclusions are units open less than a year, units below a size, and units that closed. Closed units leaving the sample is the one to watch.
3. Franchised or company-owned? Company-owned units often perform differently, sometimes better because they are the original locations in the best sites.
4. How long was each unit open during the period? Partial years make sales look smaller and margins look different. Look for weeks-open or months-open columns.
5. Gross sales or profit? A sales figure says nothing about what you keep. If there is a profit figure, find out which costs it leaves out.
6. Audited or not? Most Item 19 figures are unaudited franchisee-reported numbers. That is normal, but it is worth knowing.
7. Average or median? Averages are pulled up by a few strong units. If both are given, the gap between them tells you how uneven the system is.
The Costs a Profit Line Usually Leaves Out
When an Item 19 shows EBITDA, it is showing earnings before interest, taxes, depreciation and amortization. For a buyer, four things usually sit outside that number:
Debt service on what you borrow to open.
Your own salary, if you run the unit yourself.
Depreciation, which is real once equipment needs replacing.
The replacement itself, which is capital spending rather than an operating cost.
Put those back in before you compare a profit line against what the money would earn elsewhere.
A Worked Example
Funbox’s 2026 filing shows how much an Item 19 can carry when a system chooses to publish in full. It reports summary income statements for four indoor parks in 2025: one company-owned park open all year and three franchised parks that opened during the year. It gives sales, cost lines as a share of sales, EBITDA, average weekly revenue and first-month, first-quarter and first-half ramp figures.
Run it through the seven questions and the limits show up straight away. Four parks is a small sample. Only one ran a full year, and it is company-owned. The figures are unaudited. And the EBITDA line excludes debt, owner pay and the equipment replacement cycle the franchise agreement requires. None of that makes the data less useful. It tells you exactly how to use it. The full read of those numbers is in a worked example from a kids-franchise filing.
Some outlets have sold and earned this amount. Your individual results may differ. There is no assurance that you’ll sell or earn as much.
Comparing Item 19s Across Systems
Item 19s are not standardized, so side-by-side comparisons need care. One system may publish model parks, another quartiles, another every unit. One may define EBITDA after rent, another before. Before comparing any two numbers, line up the basis: which units, which period, which costs. The three-system comparison of trampoline and inflatable park franchises shows what that looks like in practice.
When There Is No Item 19
Plenty of systems leave Item 19 blank. That is legal, and it is not automatically a warning sign, since some franchisors are cautious or too new to have meaningful data. But it changes your homework.
Expect no numbers from the sales team. If anyone offers earnings figures anyway, in a meeting, a spreadsheet or a casual estimate, that is a red flag. Ask why the figures are not in the document.
Build the numbers yourself. Item 7 gives you startup costs. Item 6 gives you ongoing fees. Franchisee calls give you the rest. Ask current and former owners what their sales, rent, labor and margins look like.
Check Item 20. Unit openings, closures and transfers are not earnings figures, but they are the closest thing to a track record a blank Item 19 leaves you.
Red Flags
Earnings figures offered verbally that do not appear in Item 19.
A sample so small, or so selective, that it describes only the best units.
Closed units missing from the data without explanation.
Profit figures with no list of what they exclude.
A projection presented as if it were a historical result.
Frequently Asked Questions
What is Item 19 in a franchise disclosure document?
It is the section where a franchisor may disclose financial performance figures, such as sales, costs or profits of existing outlets. It is optional, and it is the only place a franchisor may make earnings claims.
Is a franchisor required to include Item 19?
No. But if it leaves Item 19 out, it may not make earnings claims to prospective buyers in any other way.
Can a franchisor tell me what I will earn?
Not as a promise. An Item 19 shows historical results or a projection with a stated basis, and it must carry a statement that your results may differ.
Are Item 19 figures audited?
Usually not. Most are based on franchisee-reported or company records. The filing says which.
What should I do if there is no Item 19?
Build your own estimates from Items 6 and 7 and from calls with current and former franchisees, and treat any verbal earnings claims as a warning sign.
Put Item 19 to Work
Item 19 is the most useful page in a franchise disclosure document when it exists, and the most misread. Read its basis before its numbers, add back what the profit line leaves out, and compare like with like. Then take your questions to the owners. The guide to reading a franchise disclosure document covers the rest of the filing, and the due-diligence checklist turns it into a worksheet.
If an inflatable park is on your shortlist, ask the Funbox franchise team for the current FDD and read its Item 19 for yourself.
Sources
1. Federal Trade Commission, Franchise Rule, 16 CFR 436.5(s) (Item 19), eCFR. https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436/subpart-C/section-436.5
2. Federal Trade Commission, "FTC Secures Settlement Against Xponential Fitness for Franchise Rule Violations," March 2026. https://www.ftc.gov/news-events/news/press-releases/2026/03/ftc-secures-settlement-against-xponential-fitness-franchise-rule-violations
3. Funbox Franchise, LLC, 2026 Franchise Disclosure Document, issued 2 April 2026, Item 19. https://dfpi.ca.gov/search-result-detail/?id=564837&type=org
