"What's this brand's earning potential and return on investment?" is one of the first questions in analyzing American franchises. The way to get that answer in the US has its own rules — and understanding them avoids frustration and poorly grounded decisions.
Since franchise selection and analysis is our specialty, we help you interpret these numbers in the right context. Here's how it works.
The only authorized channel: Item 19 of the FDD
In the United States, franchises follow specific legislation, and a brand can only present financial performance information in one specific place: Item 19 of the FDD (Franchise Disclosure Document). An important detail — Item 19 is the document's only optional item.
Some brands publish average revenue there; others also include average profit or several result ranges; and there are those that present nothing.
Not publishing Item 19 doesn't mean the franchise is unprofitable. It can be a young brand without a relevant data base; there can be difficulty collecting franchisees' sales; or it can be legal caution. Every case is different.
Information arrives as you advance
Whatever the brand publishes in Item 19, every candidate gets grounding to evaluate the return as they progress. Franchisors open up more information as the candidate advances — often after a pre-approval, sometimes under a confidentiality agreement.
So at the start, it makes sense to choose franchises whose business model attracts your profile; then, as you advance with franchisors, the data for projections and financial conclusions will come.
The best validation: talking to franchisees
The moment everything becomes clearer is when you validate the assumptions with the network's current franchisees. They have no legal restriction on sharing their real experience — the first months, the first year, the franchisor's support — and can confirm (or adjust) the financial expectation and any other aspect of the business.
That validation usually happens further along, when the franchisor tells its franchisees a certain candidate is pre-approved. The American system favors validating everything before deciding — a level of transparency that surprises investors from many other countries.
One final caveat: Item 19 numbers are generally averages or ranges — and often of revenue, not profit. Results vary considerably between units, with location, management, and time in operation. See our article on why same-brand franchisees profit so differently.
Where Unike comes in
We help you read Item 19 in context, prepare the right questions for franchisors and franchisees, and compare opportunities within your budget — so the decision rests on real numbers and a model suited to your profile.