How to Buy a Franchise: Exploring Item 19 of the FDD

When conducting franchise research, the most effective way to grasp your potential earnings as a franchisee is to carefully review Item 19 in the Franchise Disclosure Document (FDD). But what exactly is Item 19 and why is it so important? 

In this episode of the “How to Buy a Franchise” Masterclass, 1851 Franchise publisher Nick Powills elaborates on everything you need to know about Item 19. 

Understanding Item 19 

Item 19 is a section toward the end of the FDD that focuses on the financial performance of the franchise. It covers aspects such as the average unit volume and the highest and lowest unit volumes for franchises within the system. Item 19 is an extremely resourceful tool for potential franchisees as it allows them to gauge the business’s overall profitability based on historical data. 

Item 19 is not only beneficial to potential franchise candidates, but it can also serve as a powerful tool for franchisors to market their business. By providing transparent and detailed financial information, franchisors can effectively communicate the business’s strengths and help potential franchisees make well-informed decisions. 

However, not all franchisors choose to disclose their Item 19. As Powills notes, a business that does not include an Item 19 should be approached with caution. 

“They want to give you the right information so that you can make your decision,” said Powills. “Now, if there is nothing disclosed, that’s a giant red flag in today’s world.” 

But just because the brand doesn’t disclose its financial performance doesn’t mean it’s not a viable or successful opportunity. It’s possible that the business is still relatively new to franchising and in the process of compiling its financial information. For more clarity, we recommend contacting the franchisor directly. 

It can also be immensely beneficial to reach out to both current and former franchisees within the system. Franchisees are often more willing to share their experience and offer insights that go beyond what the franchisor may provide. 

Are you in the process of seeking out franchise opportunities? We can help! Check out https://1851growthclub.com/ for more information.