What financial performance data can I legally disclose? It’s a critical question for franchisors navigating franchise sales. It’s also one that carries legitimate legal risk when mishandled. While transparency can help attract qualified potential franchise owners, the Federal Trade Commission (FTC) places clear limits on what financial information can actually be shared and how. Understanding where the lines are drawn is critical when it comes to protecting both the brand and franchisees. Understanding the Legal Guardrails The FTC’s Franchise Rule closely regulates Financial Performance Representations (FPR). Therefore, according to franchise attorney  Mario Herman , most financial data will be found within Item 19 of the  Franchise Disclosure Document (FDD) .  “Under the FTC’s Franchise Rule, codified in 16 CFR Part 436, franchisors are generally prohibited from making FPRs outside of  Item 19 of the FDD unless specific conditions are met,” Herman said. There are limited circumstances where sharing financial information outside Item 19 is allowed. “There are two permissible instances where financial information may be shared outside of Item 19,” Herman said. “First, when it concerns actual records of an existing outlet a prospective franchisee is considering purchasing. Second, when the information supplements the information already provided in Item 19 by providing more detailed information about performance at a particular location.” Where Franchisors Can Get Into Trouble Even without sharing hard numbers, franchisors can accidentally create prohibited financial performance representations. “The gray area where potential legal disputes could arise includes statements akin to promissory fraud about the prospective franchisee's potential earnings,” Herman said. Phrasing matters. And potentially misleading statements like, “you will double your investment in a year” or “you are guaranteed to make a profit” should be watched closely. Practical Takeaways for Franchisors So, what financial performance data can I legally disclose? Five considerations: Anchor all earnings discussions to Item 19 before providing any supplemental detail. Avoid promises, projections or guarantees (even without numbers). Use caution with comparisons that imply potential financial success. Educate sales teams and franchisees alike on  what constitutes an FPR . Monitor public statements made by franchisees that could be reflective of more systemwide claims. Bottom line: You can share less than many expect, and only under certain specific conditions. By paying particular attention to  FDD Item 19 and avoiding implied earnings claims, franchisors can stay compliant while building trust with potential franchisees. Handled correctly, transparency and compliance don’t have to be at odds. But the margin for error is slim. Want to learn more about franchise opportunities on 1851 Franchise? Be sure to visit our  Power Rankings to read more on brands making moves.