Whether you’re just starting to explore franchise opportunities or in the final stages of your decision-making process, Item 19 of the Franchise Disclosure Document is vitally important to review thoroughly and understand. Today, we’re breaking down everything you need to know about Wed Society’s Item 19 and why it’s important.
What is a Franchise Disclosure Document?
A Franchise Disclosure Document, commonly referred to as an FDD, is a legal document the Federal Trade Commission (FTC) requires that franchisors provide to prospective franchisees before selling them a franchise. The FDD consists of twenty-three different sections, called Items, to help prospective franchisees make a well-informed decision. It’s important to note that the Franchise Disclosure Document must be renewed annually, and in most franchise systems, renewal occurs in April.
What is Item 19?
Item 19 of the Franchise Disclosure Document contains Wed Society’s financial performance representations. While Item 19 is not required, Wed Society has chosen to provide this helpful information to prospective franchisees so they can better understand what other franchise markets have accomplished and make their own projections based on proven, historical data. We want to be as transparent as possible and have decided to share a very detailed Item 19.
Why is Item 19 so Important?
Because franchisors aren’t allowed to answer questions like “How much money am I going to make?” or “When will I be profitable?”, Item 19 is the mechanism franchisors, such as Wed Society, can use to share historical financial information. You can use Item 19 to see how much revenue the existing Wed Society franchise owners have generated! It’s important to note that if the financial performance data is not published in Item 19, the franchisor (Wed Society) cannot share it.
What type of information will I find in Wed Society’s Item 19?
Wed Society reports on both “New Markets” and “Mature Markets” in our Item 19. A mature market is defined as a market that’s been open for at least three years. New markets are those in their first year of operation. Remember that the FDD is renewed annually to ensure you have the most up-to-date information, but generally, Wed Society’s Item 19 shares Gross Revenue, Number of Paying Advertising Members, and Total Value under Contract.
We hope this has been helpful in providing a general overview of Item 19 and why it’s so important to your discovery and consideration process.
