What is the FTC's rule regarding financial performance representations for Mr. Sandless franchises?

According to Mr. Sandless's 2025 Franchise Disclosure Document, the FTC's Franchise Rule allows franchisors to provide information about the actual or potential financial performance of their franchised or company-owned outlets, provided there is a reasonable basis for the information and it is included in the disclosure document. This means Mr. Sandless is permitted to share data about how its franchises have performed financially. However, this information must be grounded in factual data.

The FDD states that financial performance information that differs from what is included in Item 19 is only allowed under specific conditions. These conditions are: (1) if Mr. Sandless provides the actual records of an existing outlet that a prospective franchisee is considering buying, or (2) if Mr. Sandless supplements the information provided in Item 19 with additional details, such as potential performance at a specific location or under particular circumstances. This ensures that any additional financial information provided is relevant and specific to the franchisee's situation.

This rule aims to protect potential franchisees by ensuring they receive reliable and substantiated financial information. By adhering to the FTC's guidelines, Mr. Sandless provides transparency and allows prospective franchisees to make informed decisions based on factual performance data. Franchisees should be wary of any financial performance claims made outside of Item 19 unless they meet the specific conditions outlined in the FDD, such as reviewing the records of an existing outlet or receiving supplemental information about a particular location.