The number one question every candidate has in mind: “How much money can I make owning a paint and sip franchise?” We cannot provide estimates of profits or revenue because franchises are independently owned and performance is based on the unique business decisions of each owner.
In fact, the Federal Trade Commission (FTC) prohibits franchisors from disclosing revenue performance except through specific metrics in the Franchise Disclosure Document (FDD). Every franchise is required to publish an annual FDD. Franchise candidates are disclosed with this FDD. One important section of the FDD is Item 19. This is where the franchisor presents “Earnings Claims.” While the earnings claims section is not a guarantee that new franchises will perform the same, it does provide practical information that allows candidates to build a business plan and set financial goals.
Item 19 is an optional section, and 43 percent of service franchises exclude it from their FDD. Pinot’s Palette believes strongly in providing financial transparency for prospective owners.
After consulting with our development director and reviewing our FDD, franchise candidates get the opportunity to contact existing Pinot’s Palette franchisees regarding their experiences. This opportunity is one of the practical benefits of joining a franchise. In talking with our current franchisees, you’ll get a better understanding of the way our successful owners run their businesses and how that influences revenue expectations.
This article offers more information about what franchisors are allowed to publish on financial performance. It also offers suggestions for what to look for when vetting a franchise system, and what questions to ask when reviewing any franchise’s Item 19 in the FDD.