Can You Use Item 19 Financial Performance Numbers in Franchise Ads?

What counts as a financial performance representation in an ad?

Any statement, image or chart that states or implies a specific level or range of sales, income, gross profit or net profit counts. The rule's definition covers oral, written and visual representations, including those in the general media.

The FTC's compliance guide says "general media" is read broadly: radio, TV, print, billboards, franchisor websites, broker and third-party websites, banner and pop-up ads, and bulk email, even email to people who asked for franchise information.

NASAA adds that expenses shown as a percentage of a stated revenue level are a financial performance representation and may be given only in compliance with Item 19.

What must the ad itself say?

The ad must carry three disclosures alongside the number. Under 16 CFR 436.9(c) and the FTC's guide, a general media earnings claim must state:

1. The number and percentage of outlets from the supporting data that actually reached or beat the stated figure.
2. The time period when those results were achieved.
3. A clear and conspicuous admonition that a new franchisee's results may differ.

The FTC's own sample ad pairs a "$50,000 a year" headline with a footnote explaining how many franchisees were surveyed, how many hit the figure, the dates, and "There is no assurance, however, that you will do as well."

NASAA's 2017 commentary recommends this admonition for historical figures: "Some outlets have earned this amount. Your individual results may differ. There is no assurance that you'll earn as much." In Item 19 it must be a separate paragraph in bold type, not capitalized, underlined or larger than the surrounding text. NASAA does not allow extra disclaimers that undercut the figure.

Does the number have to be in Item 19 first?

Yes. The FTC requires that a seller making a general media earnings claim ensure a full disclosure of it, including material bases and assumptions, appears in Item 19.

The guide adds three practical rules:

• While the ad runs, prospects must receive the matching Item 19 disclosures.
• After the ad stops, keep that Item 19 disclosure for a reasonable period, which the FTC says is not less than six months.
• If you replace the ad with updated figures, Item 19 must carry the updated figures. Several ads with different types of claims mean each type must be in Item 19.

The FTC excludes some statements, such as SEC filings and bona fide news coverage. But a press release figure that you repeat in franchise marketing becomes a general media claim.

What does NASAA require of the numbers themselves?

NASAA's commentary, which state examiners apply when reviewing FDDs, limits how Item 19 figures can be cut. That limits what you can quote in an ad:

• Averages need medians. An average must be paired with the median, and for gross sales, the high and low. A median needs the average.
• No cherry-picked subsets. A subset must be described, and a franchisor with fewer than 10 substantially similar outlets is presumed to have too few to use a subset.
• Company-owned data has limits. If you have operating franchise outlets, a gross sales figure cannot rest on company-owned outlets alone.
• Projections need history. Forecasts must be based on historical data, not hypotheticals.

So "Top 10 locations average $1.2M" pulled from a 40-unit system is a problem unless that exact subset, with its median and its range, is in Item 19.

Do states review earnings claims in ads?

Yes, in practice. California, Maryland, Minnesota, New York, North Dakota and Washington require franchise ads to be filed before first use, and examiners read earnings claims closely. Build in the review period before launch. The full state list is in What rules apply to franchise development advertising?

Should you put Item 19 numbers in ads at all?

Sometimes. A strong, well-supported Item 19 is one of the best sales tools a franchisor has, and many candidates screen for it. But in a short ad, the required disclosures take up most of the space, and Meta and Google ad formats leave little room for them.

Our usual approach is to say the FDD includes financial performance data, with no figures in the ad, and present the actual Item 19 on the landing page or in the sales process with the FDD. That keeps ads simple and puts the full context in front of the candidate. Thin or company-only Item 19 data also affects broker economics; see How do emerging franchisors sell their first franchises?

This page is general information, not legal advice; have franchise counsel approve any earnings language before it runs.

Common questions

Figures labeled as ours come from Lead PPC's franchise development campaigns; your results depend on your brand, budget, territory availability and sales follow-up. Rules and platform policies change, so confirm anything legal with your franchise counsel.

Related answers

• ComplianceWhat Rules Apply to Franchise Development Advertising?The FTC Franchise Rule, state registration laws, six ad pre-filing states and TCPA consent rules for texting leads. What applies and what to do about it.
• Sales ProcessHow Do Emerging Franchisors Sell Their First Franchises?Founder-led selling, your own network and tightly targeted PPC usually beat waiting on brokers. Here is the order we would do it in, and what it costs.
• ChannelsWhat Should a Franchise Opportunity Website Include?Show the investment, the ideal owner, the support and the steps, capture leads with a short tracked form, and keep earnings claims inside Item 19.