If you have asked a franchisor this question, you may not have gotten a straight answer (or one at all). The main reason lies in legalities. The Federal Trade Commission (FTC) has strict requirements for franchisors about how they can present earnings statements to franchisees. If a franchisor chooses to disclose earnings claims (and many franchisors choose not to), they must be provided in writing in the Franchise Disclosure Document (FDD) and all material information must be accurate and substantiated. All assumptions or qualifications of data must be clearly labeled as such in the FDD. Franchisors get nervous when answering questions about earnings because if they misrepresent themselves, even unintentionally, they could get into legal hot water.

Aside from the law, franchisors are in the business of wooing franchisees. Producing earnings projections and statements takes effort and money, time and money not spent on marketing and sales efforts. Also, the honest results may not be attractive enough to help secure franchisees. One way to get a straight answer is to ask current franchisees about earnings potential. Also review the franchisor’s financial statements and compare the income earned by franchisees along with the royalty fee. Generally, you would expect your income to be higher for franchises that require higher investments, but there is no guarantee.