No one wants to air their dirty laundry in public, but having an accurate Financial Performance Representation in your Franchise Disclosure Documents will help your franchise rather than hurt it. You don’t need to fudge the numbers and make everything look perfect; that is simply not realistic. Certainly there are gray areas in an Item 19, and that is where Drumm Law can help, as we specialize in telling your story. Having a clearly written FPR in your FDD will help match you up with the right franchisees, and give you a stronger chance to sell your franchise to the right people.

Why have an Item 19?

  1. Item 19 shows the dollars and cents of the franchise.
    You need to include the good, the bad, and the ugly. For instance, no one expects a business to get 5 star ratings in every franchise in every location and during every transaction. That is just not realistic. Showing some quality franchise numbers and some that are not so stellar will show potential buyers that the location of the store and the business acumen of the particular owner all matter to the bottom line.
  2. The Item 19 will tell your story.
    There are many nuances to running a franchise, and at Drumm Law we can help you tell your story. There is more to Item 19 than just a profit line. The FPR can help a potential buyer to understand the full scope of the business. Do you really want to hustle for your money day in and day out? Or do you want to work a few hours a week for a side gig? The FPR will help you match the business style of the franchise with the business style of your potential buyers.
  3. This document helps you sell your franchise to the right people.
    When prospective franchisees read your FPR, they will be able to see the amount of blood, sweat, and tears it would take to run this particular franchise. For example, if you have a busy fast food restaurant with 30 employees that would be a very different experience than having a sandwich shop with 3 workers. You definitely want to get the right franchisor for the job, and if your FPR tells the whole story, you are better able to match a buyer with your store.

Sometimes people are tempted to finagle the numbers on the Item 19 to place their franchise in a more favorable light. But in the long run, allowing a potential franchisor to see your story at the outset will help everyone to be on the same page and ultimately lead to the right franchisees buying into your business.