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More Scrutiny for Item 19 Disclosures
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As more franchisors make an Item 19 disclosure ( commonly referred to as a Financial Performance Representation (FRP) ) there is an increased possibility that some franchisors will provide either inaccurate or limited information. To that end the next Top 500 Franchise rankings compiled by will include a value for an FPR. For example, a franchisor that provides an FPR will get 5 points while no FPR will result in 0 points for that franchisor. More importantly as a franchisor provides more information such as a franchisee P&L in addition to revenues it will receive more points and could be graded as A+ for its FPR. The important point; is that franchisors that provide limited information such as average revenues and nothing else will be graded much lower than the franchisor that discloses more complete data.
 In addition to franchise system growth, franchisee turnover and franchisee/franchisor litigation a detailed FPR is meaningful and necessary information for a prospective franchisee.
The next Top 500 will reflect this fact.
Posted on September 20, 2015 at 8:17 PM
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