Revamping Your Item 19 for Franchise Success

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Key Takeaways:

[0:22] Josh introduces the show as a solo episode.

[0:34] One of the most important things for franchisors to get right is the Item 19 section of the Franchise Disclosure Documents.

[1:08] Item 19 includes a franchisor’s financial performance representation.

[1:30] Several years back, franchisors didn’t provide financial performance representation out of fear that it would be misinterpreted and lead to false accusations. However, this has changed over time.

[2:15] One of the biggest questions a franchisee can ask is “how will this business do financially?”

[3:37] To lay the foundation for a strong franchise system, you will have to provide your prospective franchisees with a fair representation of what the opportunity is from a financial perspective.

[4:30] When creating or revising your Item 19, you have to be aware of the difference between corporate owned stores and franchised locations.

[5:35] The key is finding the balance between being transparent while not being misleading.

[6:10] Under the new franchise guidelines, you can categorize your different outlets, but you have to do so in a fair and responsible way.

[7:25] If you can come up with an Item 19 that gives a global representation of your franchise system, which may mean including the bad locations too, you can overcome a lot of the objections many franchisees have.

[8:15] You should revisit your Item 19 on an annual basis so that it is consistently updated.

[9:05] As one of the most highly litigated items in franchising, be sure that you always consult a franchise professional before revising or drafting an Item 19.

[9:35] Thanks for listening, and please, reach out to Josh anytime through email at If you enjoyed this interview, please leave us a review on iTunes.


Mentioned in This Episode:

About the author, Josh

Josh Brown is a franchise and entrepreneurial attorney that helps buyers, owners, and expansion-minded businesses find success through franchising. When not working on his two businesses, you can find him on the golf course or spending time with his wife and three beautiful daughters.

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