What Financial Documents Should a Franchisee Review Before Investing?
If you’re thinking about investing in a franchise, one of the most important things to do is take a close look at the financials.
But where do you even start?
Start With Item 19 in the FDD
The Franchise Disclosure Document (FDD) is a long, detailed document every franchisor has to provide.
Inside it, there’s a section called Item 19 — and it’s gold.
Item 19 shows how current franchisees are performing financially.
This might include:
Average sales
Typical expenses
Profit margins
Looking at this will help you understand if the business model is really working.
Why Item 19 Matters So Much
Not every franchisor includes Item 19.
Some skip it, which can be a red flag.
Having financial performance data shows transparency — and helps you make an informed decision.
It’s one of the best ways to get a peek behind the curtain.
Franchisor Financial Stability
You also want to know that the franchisor is financially solid.
Franchisors are audited every year to ensure they have the resources to support their franchisees.
That means they can keep training, marketing, and helping new owners grow.
If the franchisor struggles financially, it could affect your business down the line.
Other Financial Documents to Review
Besides Item 19, the FDD includes financial statements from the franchisor.
These show the company’s overall health.
It’s good to review these to understand the bigger picture — like:
Revenue trends
Profitability
Liabilities
So… What Financial Documents Should a Franchisee Review Before Investing?
Start with Item 19 in the FDD.
Look for financial performance representations of current franchisees.
Check the franchisor’s audited financial statements for stability.
These documents aren’t just paperwork.
They’re your best tools to make a smart, confident investment.
*This is not an offer to sell a franchise. Franchise offerings are made only through the delivery of a Franchise Disclosure Document (FDD)*
