Financial Performance Representation (Item 19)

My Podner in this episode is Cheryl Mullin and she’s going to talk with us today about Financial Performance Representation! Man, if that doesn’t make you salivate then you are no franchisor in my books. This can be a very dense topic but I am confident that Ms. Cheryl help us demystify this topic and maybe even help us pull our heads out from underneath the covers every time it is mentioned. But who knows, she may even have us running for the hills even faster.

Cheryl Mullin is the founding partner of Mullin, PC. Her practice focuses on assisting commercial clients to achieve their growth objectives through franchising, joint ventures, acquisition, and private investment.

She also provides intellectual property protection services to small and mid-size enterprises, business transition planning services for closely-held businesses, and commercial litigation support on business issues.

Cheryl earned her J.D. from Widener University School of Law in 1995, and her LL.M , which is a graduate taxation program from Southern Methodist University’s Dedman School of Law in 2013.

She is ranked by Chambers and Partners for her work in franchise law (since 2020), is recognized for her work in franchising by International Who’s Who of Franchise Lawyers (since 2013), Texas Super Lawyers (since 2012), and Best Lawyers in America (since 2007). Cheryl also has been recognized since 2007 by “D” Magazine as one of the best lawyers in Dallas, and by Franchise Times magazine since 2004 as a “Legal Eagle.” Cheryl lectures frequently on corporate and franchise-related topics and is AV-rated by Martindale-Hubbell.

Today, Cheryl is based in her, Pennsylvania office, and splits her time with the Dallas, Texas office.

Time Stamps
Cheryl Mullin Intro	00:00:30
Segment 1	00:02:46
Get to know Cheryl Mullin
Segment 2	00:20:21
Topic Segment – The Franchise Expo
Segment 3	00:57:45
Quickdraw Questions

Topics Discussed in this Episode

Why the FDD exists: history from UFOC to FDD, FTC rule (1979), NASAA’s role, 2008 FTC update.
What a Financial Performance Representation (FPR) is under Item 19 (formal definition vs. “how much can a franchisee make?”).
Rule that any financial performance info must be in Item 19 (oral, written, or visual).
Historical vs. projected numbers in FPRs and that both are allowed with different rules.
FPRs are optional: you can leave Item 19 blank with a negative statement.
Why many franchisors now include FPRs (prospects need numbers for a major investment).
Legitimate reasons not to include an FPR:
- Weak or unflattering numbers
- No reliable sales data (e.g., flat royalty, no POS)
- Units too new
- Very mature or unique flagship store whose results don’t translate
- Territorial and online differences between franchisor and franchisees
Risks of DIY FDDs and why non-lawyers often mis-handle Item 19.
High-level overview of how FPRs are presented(averages, medians, ranges, percentages; special NASAA rules in registration states).