How can I find out the financial performance of franchises?

To their great surprise, prospective franchisees often can’t get an answer to the most basic investment questions: How much money does the average franchisee make, and how much money can I expect to

earn? The reason for this is that about 70 percent of all franchisors choose not to include any sales, costs, or other financial information in their disclosure documents, which is the only way they are legally allowed to provide that information.

There are many valid reasons for franchisors not to provide this basic information. The information they get from their franchisees is unaudited and therefore may not be accurate. The differences in the units themselves, including diversity in size and types of markets, the size of established locations, the differences in maturity of the open locations, variations in the strengths of local competition, impact of brand recognition in new and older markets, and a host of other reasons might make the information misleading. Also, providing the information in public documents would allow their competition to obtain information on their sales, cost of sales, margins, sales mix, and other metrics. And, of course, some franchisors may simply be trying to hide their poor performance.