1. Pinpoint the Difference between the Sales Pitch and Item 19
Identify the statement that influenced your purchase: who made it, when, and whether it concerned sales, profit, or projected income. Compare it with the Franchise Disclosure Document you received before committing.
The Federal Standard
The FTC Franchise Rule prohibits covered sellers from contradicting required disclosures. Financial performance representations generally require inclusion in Item 19, a reasonable basis, and written substantiation when made, subject to specific exceptions.
Discrepancies Worth Examining
Different figures may reflect different periods or accounting measures. Closer review is warranted when a seller presents gross sales as take-home income or uses established outlets to suggest what a new operator will earn. Poor results alone do not establish that the original claim lacked support.
2. Compare the Figures and Their Assumptions
Use the FDD version you received before signing. A later version may contain different figures or qualifications.
Build a Comparison Record
| Comparison Point | What to Check | Records to Preserve |
|---|---|---|
| Earnings measure | Sales, profit, or owner compensation | Emails and calculation sheets |
| Reporting period | Historical results or forecasts | Dated FDD and presentations |
| Included outlets | New, established, franchised, or company-owned | Sample descriptions and exclusions |
| Operating conditions | Size, experience, staffing, owner involvement | Assumptions and sales communications |
| Achieved results | Average figures and outlets reaching them | Supporting calculations |
Check the Basis Behind the Numbers
Historical representations require disclosures about the outlet population, reporting period, data used, and outlets achieving the stated results. Material differences between included outlets and the offered outlet also matter. Forecasts require material bases and assumptions. A mathematically accurate average may still raise questions about how the seller presented its relevance.
3. When Different Information May Be Permitted
Information outside Item 19 is not automatically prohibited. The federal rule recognizes specific circumstances allowing different financial information.
Actual Records for an Existing Outlet
A franchisor may provide actual operating results for a specific existing outlet to potential purchasers of that outlet. This exception does not authorize using those results indiscriminately to market new locations.
Written Supplemental Representations
A franchisor providing an Item 19 representation may furnish a supplement for a particular location or variation. It must be written, explain the departure, and satisfy specified requirements concerning its basis and disclosures. A verbal assurance does not qualify simply because the seller calls it location-specific.
4. Find Out What Supported the Claim
Ask the franchisor to identify the source data, calculations, assumptions, and outlet characteristics behind the disputed statement.
Check When the Records Existed
The federal rule requires a reasonable basis and written substantiation when the representation is made. Check whether a later explanation identifies records that existed then and whether those records address the claim you received.
Access to Supporting Records after Signing
The rule’s substantiation provisions expressly address prospective franchisees and the FTC. Existing ownership does not automatically provide unrestricted access to internal records. After signing, access may depend on the contract, applicable law, voluntary disclosure, or discovery.
5. Preserve the Sales Record
Keep original files and complete message threads with attachments and available metadata. Screenshots may omit dates, recipients, or qualifications.
Materials to Keep
- The delivered FDD, amendments, supplements, and receipt.
- Emails, texts, advertisements, slides, and worksheets.
- Existing recordings and contemporaneous notes identifying speakers.
- Signed questionnaires, acknowledgments, and agreements.
- Investment budgets, financing records, and operating statements.
Timeline and Contract Terms
Connect the claim, FDD delivery, signing, payment, and discovery of the discrepancy in a dated timeline. Label later recollections clearly. Keep your franchise agreements alongside it; notice, arbitration, forum, and acknowledgment provisions may affect the next steps.
6. What the Ftc’S October Materials Illustrate
The FTC’s October 2026 materials show why comparison outlets’ characteristics matter when evaluating earnings explanations.
Complaint and Follow-Up Guidance
The October 5 complaint against Premier Franchising Group and Franchise Fastlane alleged material differences between established operators and new franchisees undermined earnings representations. Those allegations were not findings of liability. The October 19 consumer alert provided follow-up guidance; it did not announce a new complaint or amend Item 19 requirements.
7. Separate Federal Standards from Individual Remedies
The FTC Franchise Rule does not itself create a private right of action. Individual claims may depend on applicable state statutes, misrepresentation law, or contractual rights.
Facts Needed for a Claim Review
Organize what you received, how it affected your investment decision, and what losses followed. Reliance requirements, remedies, and deadlines vary by claim and jurisdiction. An apparent disclosure problem does not automatically authorize stopping royalties or terminating the agreement.
8. Frequently Asked Questions
What if Item 19 says no earnings representations are made?
Preserve that statement alongside the disputed claim. Identify who made the statement, whether it is attributable to a covered franchise seller, and whether an exception applies.
What if I denied receiving earnings claims in a signed statement?
Keep that statement with the relevant communications. It may create an evidentiary issue, but its wording and legal effect require individual review. It does not necessarily defeat a claim.
9. Preparing for Legal Review
Bring your comparison table, timeline, and records to a franchise dispute review. Counsel can assess potential claims, deadlines, and contract requirements before you send a demand, sign a release, or change your contractual performance.
28 Oct, 2026
