Franchise development is more competitive than ever. With aggressive lead-generation goals, expanding pipelines, and mounting pressure to stand out, many franchisors, along with their sales teams, brokers, FSOs, PR firms, and marketing agencies, are deploying Financial Performance Representations (FPRs) across dozens of digital and in-person marketing channels.
Used responsibly, FPRs are tools for transparency and qualification. Used improperly, they expose your brand to regulatory violations, legal risk, and reputational damage.
The FTC continues to increase scrutiny of how franchisors market their opportunity, including the use of FPRs. Simultaneously, the International Franchise Association (IFA) has launched its Responsible Franchising initiative to reinforce ethical franchise development practices. It is clear: franchisors must ensure compliance across all channels.
This article outlines how to properly present earnings data throughout your franchise recruitment process, while staying within regulatory limits and maintaining trust.
What Counts as an FPR?
A common misconception among franchise sellers, especially CEOs, is that if the franchisor includes an Item 19 FPR in their FDD, they are then free to speak casually or confidently about unit-level P&L performance beyond what is specifically disclosed in that Item 19. This has always been wrong and remains one of the most persistent non-compliant practices in franchising. The FPR must stay within the bounds of what is disclosed, supported, and properly disclaimed in Item 19. Anything else is a violation of the FTC Franchise Rule.
Any specific statement about a franchise owner’s past or potential financial performance is a Financial Performance Representation. That includes:
- Gross revenue
- Net profit
- Average ticket size
- EBITDA
- Cost of goods sold
- Payback periods
- “Break-even in X months”
- “Top quartile earns X”
- “Multi-unit operators average $X”
Unless this exact data appears in Item 19 of your Franchise Disclosure Document (FDD), you cannot use it, not in sales calls, not in marketing, not even in passing.
Yes, that includes verbal statements. If it is said aloud, at a Discovery Day, in a webinar, in a podcast, or over coffee, it is still an FPR and must be fully supported by your FDD.
Franchisors: you cannot outsource your FPR liability. If your brokers, FSOs, consultants, PR firms, or even offshore lead generation vendors are making non-compliant earnings claims-including using an offshore Philippines-based army of LinkedIn spambots to make your direct message unlawful FPRs-you are still responsible. Franchise sellers are legally considered agents of the franchisor, and their words and actions are treated as if you made them yourself.
Even on platforms like Substack, Reddit, Discourse, and niche forums, internal and external sellers often make casual but non-compliant FPRs. Regulators do not care where the claim appeared, only that it was made.
And no, a simple “Please see our FDD” at the bottom of a page or ad does not meet the standard for compliance. Disclaimers must include all required elements and be presented clearly, at the point of the claim.
Franchise marketers and sellers are deploying FPRs across a growing mix of paid and earned media. Here’s where these earnings claims are showing up, and where they must include proper disclaimers and be backed by your current Item 19.
Video Marketing
Facebook and Instagram Ads
Twitter/X Promotions
TikTok and Short-Form Video Platforms
Text Message Campaigns
Voicemail Drops and Follow-Ups
Social Media Ads
LinkedIn Organic Posts
Press Releases and Newswires
Trade Magazines and Editorials
Webinars, Podcasts, and Live Events
Trade Show Booths and Printed Materials
Email Marketing Campaigns
White Papers and Lead Magnets
Franchise Websites and Landing Pages
Franchise Brochures and Sales Decks
Online Communities (Reddit, Discourse, Substack)
Real Examples: What You Can and Can’t Say
Non-Compliant Claims
1. Facebook Ad
“Earn $1,000,000+ a year as a franchise owner with us! Low investment, fast ROI!”
What is wrong:
- No data source cited.
- No number of units or supporting data.
- No disclaimer or reference to the FDD.
2. Franchise Opportunity Website
“Our top-performing franchise owner made $2.4 million last year!”
What is wrong:
- Cherry-picks top performer without context.
- No average, no performance distribution.
- No disclaimer or tie to Item 19.
3. LinkedIn Post by Sales Rep
“Just helped a new franchise owner join a $1.3M/year brand! Who’s next?”
What is wrong:
- Implies a guaranteed result.
- No data, no Item 19 reference.
- No compliant disclaimer.
4. Discovery Day Slide Deck
“Most franchise owners are profitable by month six.”
What is wrong:
- No definition of “profitable.”
- No percentage disclosed.
- No support from Item 19.
5. Franchise Broker Website
“Franchisees earn back their investment in less than a year!”
What is wrong:
- Claims ROI timeframe without substantiation.
- No averages or data.
- Brokers may not invent claims not in the franchisor’s FDD.
6. Podcast Interview
“Our franchise owners typically generate over $1 million a year.”
What is wrong:
- Broad, unqualified claim.
- No percentages, data, or disclaimer.
- Verbal claims are regulated just like written ones.
7. Trade Show Booth Sign
“Six-figure income potential with a $50,000 investment!”
What is wrong:
- Vague and unverified.
- No tie to Item 19 or specific unit performance.
- Lacks required disclaimers and substantiation.
Each of these examples lacks the required elements: substantiation from Item 19, number of units, percentage achieving the result, and a proper disclaimer.
Risky Recognition Programs: “Millionaire Clubs”
Promoting that franchise owners are part of a “Millionaire Club,” “$1M Club,” “Top Performers Club,” or “President’s Circle” strongly implies a financial benchmark, usually $1 million or more in revenue or income. That makes it an FPR, even if the dollar figure is not explicitly stated.
If you are using this type of recognition publicly, it must:
- Be supported by Item 19 data
- Define the financial threshold (for example, gross sales over $1 million)
- Disclose how many units met the threshold and what percentage they represent
- Include a compliant disclaimer:”These results are not typical. Your individual performance may vary. See Item 19 of our Franchise Disclosure Document (FDD) for full financial performance details.”
It is often better to keep these programs for internal recognition only. Promoting them externally without full disclosures is risky and often non-compliant.
Compliant Claim Templates
Example: Gross Sales Disclosure
“The average gross sales for our franchise locations in 2024 was $1,250,000. This average is based on the performance of 50 franchised locations, of which 30 locations (60%) achieved or exceeded this average. Individual results may vary. A complete breakdown of this financial performance information, including factors that may affect these results, can be found in Item 19 of our Franchise Disclosure Document (FDD). You should review the FDD carefully before investing.”
This example includes specific results, the sample size, the percentage that achieved the result, and proper disclaimers and references to the FDD.
Example: Food and Labor Cost Disclosure
“Based on data from 40 franchised restaurants operating for the full 2024 calendar year, the average cost of goods sold (COGS) was 29.4% of gross sales, and the average labor cost was 26.1% of gross sales. These averages reflect reported data from franchise locations in a variety of markets and with varying operating models. Of the 40 restaurants, 22 (55%) had food costs equal to or lower than 29.4%, and 18 (45%) had labor costs equal to or lower than 26.1%. Your individual performance may vary significantly based on location, local wage laws, supplier pricing, and your management practices. See Item 19 of our Franchise Disclosure Document (FDD) for full financial performance data. A copy is available upon request.”
This example provides transparency, accountability, and a clear invitation to examine the full FDD for context.
Example: Revenue Per Job Disclosure (Home Services)
“In 2024, the average revenue per completed job across 75 franchised home service locations was $487. This average was based on a total of 183,000 completed jobs reported by those locations. Of the 75 locations, 41 (55%) achieved or exceeded the average revenue per job. These results vary by territory, service mix, pricing model, and operator experience. Individual results are not guaranteed. See Item 19 of our Franchise Disclosure Document (FDD) for full details and supporting data. A copy is available upon request.”
This provides a compliant way to discuss unit economics in a home services context.
Example: EBITDA Disclosure (Service/Retail/Quick Serve Restaurant Franchise)
“In 2024, the average EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for 28 franchised quick-serve restaurants operating the full year was $142,500, or approximately 19% of average gross sales. These figures are based on unaudited financial statements submitted by franchise owners. Of the 28 units, 15 (53.6%) reported EBITDA equal to or greater than this average. Your individual results may vary based on local market conditions, labor efficiency, occupancy costs, and management practices. See Item 19 of our Franchise Disclosure Document (FDD) for complete supporting data. A copy is available upon request.”
This provides a compliant example of an earnings-based performance claim for franchise systems in food service or retail.
Why Responsible FPRs Build Better Pipelines
Where FPRs Are Being Used (and Often Misused)
As covered earlier, franchise marketers are deploying FPRs across an expanding range of digital and in-person platforms—from social media ads to voicemail drops. Every channel that contains a performance claim must meet disclosure standards and reference your current Item 19.
Social Media Ads
LinkedIn Organic Posts
Press Releases and Newswires
Trade Magazines and Editorials
Webinars, Podcasts, and Live Events
Trade Show Booths and Printed Materials
Email Marketing Campaigns
White Papers and Lead Magnets
Franchise Websites and Landing Pages
Franchise Brochures and Sales Decks
Online Communities (Reddit, Discourse, Substack)
Serious candidates want substance, not hype. When your FPRs are accurate, consistent, have a reasonable basis with backup and presented transparently across all marketing and sales channels, you:
- Attract more qualified leads
- Reduce legal risk and broker misrepresentation
- Set better expectations for new franchise owners
- Build long-term brand trust
In franchising, the pre-sale franchise rules can seem like a lot to navigate, and this FPR compliance work is no exception. We help franchisors break this down in practical ways: getting a compliant FPR in place, using it the right way in marketing, and training franchisor teams to apply it as an advantage in franchise recruitment.
The Bottom Line
It is almost always best and worth it to run your FPR marketing utilization and compliance disclaimers by your franchise attorney for review. It is a minor cost, so do not be cheap or careless and try to do it yourself. I get an attorney to review it first.
Whether it is your CDO giving a podcast interview, a broker running Facebook ads, or a PR team publishing a press release, your Item 19 is the rulebook. If the earnings claim did not come from it, it does not belong in your marketing.
Franchise success depends on mutual trust. Use your FPRs not as bait, but as facts. Done correctly, they reflect the real performance of your system.
If you need help reviewing your FPRs, updating your disclaimers, or training your sales team and marketing partners to stay compliant, do not hesitate to reach out.
For further reading and guidance, see these trusted sources:
- FTC Franchise Rule Compliance Guide (2020)
https://www.ftc.gov/system/files/documents/plain-language/bus70-franchise-rule-compliance-guide.pdf - FTC Franchise Rule – 16 CFR Part 436
https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436 - NASAA Franchise Disclosure Guidelines
https://www.nasaa.org/industry-resources/franchise/ - International Franchise Association (IFA) – Responsible Franchising
https://www.franchise.org/responsible-franchising
Need help reviewing your FPRs, updating your disclaimers, or training your sales team and marketing partners to stay compliant? Let us have a conversation about how to do this right, build confidence with franchise buyers, and keep your brand protected and respected.
About Franchise Info Advisory Partners Franchise Info Advisory Partners is led by Joe Caruso, Ned Lyerly, and Michael (Mike) Webster, PhD, three deeply experienced franchise executives who have built, scaled, and supported some of the most respected brands in the industry. Together, they combine boardroom credibility with real-world operating insight.
They’re known not just for their strategic insight and systems thinking, but for being easy to talk to, honest in their feedback, and genuinely enjoyable to work with. Clients often say, “they make the hard stuff feel easier.”
Take Action Today Avoid the costly mistakes of trial-and-error franchising. Get the right strategy, tools, and systems in place from the start.
Email me at joe@franchisorsales.org or Connect and DM me on LinkedIn to schedule a free consultation.
Let’s build a smarter, stronger franchise system, one designed for sustainable, profitable growth.
