Growing a Franchise
The strongest development teams know how to talk about financial performance without crossing legal lines. Here’s how the smartest franchisors navigate Item 19 conversations the right way.
When candidates reach the financial portion of the discovery process, emotions run high. They’re imagining their investment, their livelihood and their future. Naturally, the biggest question follows: “How much money am I going to make?” And as every development leader knows, that’s exactly the question you cannot directly answer.
In 2026, transparency matters more than ever — but so does compliance. The art of discussing Item 19 is understanding how to provide clarity without making promises or predictions.
“The most important thing about Item 19 is making sure the franchisor has given you enough information to make a sound decision,” said Jeff Brazier, chief development officer at Kiddie Academy. “When a franchise candidate asks how much money you are going to make, most Item 19s can’t answer that question. Every location is going to be different.”
While you cannot forecast performance, Item 19 is designed to help candidates understand the economics of running the business. Brazier says the key is focusing on the major financial drivers that every prospective franchisee must evaluate.
“In Kiddie Academy, we ask about average gross revenue and the three big pieces of a location: labor, occupation and miscellaneous funds,” he said. “At least it gives them a generalized idea of what those expenses are.”
Giving candidates this structured framework helps them understand the cost centers that matter. It also keeps the conversation grounded in factual, disclosed information instead of hypotheticals.
Candidates often want to skip ahead and compare mature units only, but Brazier says that doesn’t reflect the real experience of opening a new franchise.
“We list all of those mature academies so they can see all of those locations and it gives them a general idea on how certain locations are operating,” he said. “It’s also important for franchisors, especially in our case, to show ramping academies, because it’s helpful to show someone who is getting into a business for the first time to see what those first 12 to 24 months are going to look like, as those will be the crucial years for bringing in cash.”
Ramping data shows the reality of startup growth, not just long-term potential — and it keeps the franchisor firmly within compliant boundaries.
No matter how well you explain Item 19, nothing replaces hearing the experience directly from franchisees themselves.
“The other thing too when folks ask questions is that validation is key in the process,” Brazier said. “At the end of the day, the actual zees can typically speak a bit more openly and freely about their own financials if they are open to do that. Validation is very important in the process.”
This shift — from franchisor explanation to franchisee firsthand experience — reduces legal risk and builds far more trust with candidates. Franchisees speak from lived reality, not theoretical projections.
Even the best Item 19 cannot predict a candidate’s future. “Franchisors should not guarantee performance or tell them what they should expect because every location is going to be different,” Brazier said. This is true across the franchising world. Whether it’s labor, real estate, minimum wage laws or local competitive dynamics, the financial profile of each location is unique.
“It does take some time to open a brick-and-mortar, ground-up location, so what you see in these numbers could change by the time you get open,” Brazier said. “Could something change in labor if California changes their minimum wage, for example? Is that going to impact you in that particular state, as opposed to a different state? The labor expense will typically be your largest expense, so understanding what that means for your market is critical.”
Candidates need to understand performance in the context of total investment. “You also have to relate all of this back to Item 7,” Brazier said. “What is your overall investment? How long will it take you to recoup that initial cash outlay?”
This reframes the question from “How much will I earn?” to “How does the financial model function?” — a far safer and more constructive conversation.
Many prospective franchisees skim Item 19 tables without reading the narrative explanations. Brazier says this is where the most important context lives.
“Looking at any additional notes on the Item 19 are also important, so you can see the commentary and really understand what the numbers are reflecting,” he said. “That will also help you with your long-term goals.”
Those notes explain atypical units, outliers, ownership circumstances and any assumptions behind the data — all critical to setting accurate expectations.
A strong Item 19 should empower candidates without ever straying into promises. Brazier says the role of the franchisor is to give clarity — and the role of the candidate is to pair that information with validation, market research and their own due diligence.
“Item 19 should be made for an entry to show that it is a business strength, to show the revenue or EBITDA,” he said. “But then you need to hear it specifically from someone who is living it every day.”
When development teams get Item 19 conversations right, they build confidence without overcommitting — and they set franchisees up for a far healthier relationship from day one.
Want to learn more about how 1851 helps franchisors grow their franchises with confidence? Visit www.1851growthclub.com and see what we can do for you.
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