How to interpret Item 19 financials

Item 19 is the section of an FDD where franchisors can share historical sales or earnings. It helps you estimate what a location might produce, but only if you understand what is being shown—and what is missing.

What Item 19 typically includes

Brands may present:

Average or median sales
Quartiles or performance bands
Store counts and sample sizes
Time periods and definitions

A strong Item 19 explains exactly which units were included and how the numbers were calculated.

Key questions to ask

Check:

How many units were in the sample?
Did they include only mature units?
Were corporate stores mixed with franchise stores?
Were underperformers excluded?

A small or selective sample limits how useful the data is.

Medians vs averages

Medians often give a clearer picture of typical performance because a few high performers can skew averages.

Example:
If five stores make $700k and one makes $2.5M, the average looks inflated compared to the real-world experience of most operators.

Missing data to watch for

Item 19 often leaves out:

Profit or margin data
Labor costs
Occupancy costs
Owner payroll
Marketing spend

Without these, you should not assume high sales equal high profit.

Red flags in Item 19

Be cautious if you see:

Extremely wide performance ranges with no explanation
Year-over-year declines with no commentary
Small sample sizes in large systems
Selective inclusion of only top-performing units

How to use Item 19 properly

Use it as one input in your decision-making. Compare:

Actual unit sales
Local market demand
Your own operating plan
Conversations with existing franchisees

Takeaway:
Item 19 helps frame expectations, but it is not a forecast. Treat it as a starting point and cross-check with operators who live the numbers every day.