Franchisors who provide Item 19 (Financial Performance Representations) in the FDD (Franchise Disclosure Document) show earnings claims that can be backed up by actual results of their franchisees; therefore, you can know what to expect when starting your business.
This is regulated by the Federal Trade Commission (FTC) and enforced by a number of state regulatory agencies.
I know that some people in franchising are nervous about providing that kind of detail to candidates- I personally think that it sets up reasonable expectations.
We may not award the most franchises on an annual basis...but we have happy franchisees who are meeting their expectations and have never had any litigation in over 30 years of franchising. (Check our item 3 in our FDD.)
Wild Birds Unlimited actually provide a significant amount of data in our Item 19 that provides information on top line sales and Bottom Line 'Owner's Cash Flow" data that is pulled from our franchise store owner's annually submitted financial statements.
We also provide data from our customer loyalty program so that prospective franchisees can determine system wide KPI's regarding average ticket and # of annual visits to our stores.
We give ranges, averages, medians, % & # of stores that exceed the averages and break down both top and bottom line metrics into quartiles.
This along with requiring that each and every candidate develops a Business Plan and projections (which we cannot review, of course) provides the candidate with information that they need to make the most informed business decision that they can make given the fact that no one has that crystal ball that we all would like to have.
I personally would find it hard to award franchises if we didn't have such a complete Item 19 as I wouldn't be able to sleep at night if our candidates didn't have historical numbers to use in their decision making process.
Transparency in our process allows me to sleep through the night...every night.
