dissenting:
I agree with the majority that the district court erred, but I believe that the majority paints with too broad a brush.1 Instead, I would reverse only the district court’s failure to address the appellees’ *1279compliance with the Franchise Rule’s disclosure requirements, and I would affirm the judgment of the district court both on the FTC’s Section 5 claim and the district court’s refusal to entertain the FTC’s “reasonable basis” Franchise Rule claim.
Section 5 of the FTC Act simply prohibits “unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45(a). Congress must have realized this vague and amorphous standard would require more concrete definition. For that reason, Congress gave the FTC broad authority to define by rule specific acts or practices which are unfair or deceptive. 15 U.S.C. § 57a(a)(1)(B). The FTC is also given authority to bring a civil action in district court for violations of its rules. 15 U.S.C. § 57b(1). Alternatively, the FTC can also bring a direct action for injunctive relief to prevent continued violations of Section 5. 15 U.S.C. § 53(b). The FTC’s determination that a particular practice is unfair or deceptive is entitled to deference from the courts because:
This statutory scheme necessarily gives the Commission an influential role in interpreting § 5 and in applying it to the facts of particular cases arising out of unprecedented situations. Moreover, as an administrative agency which deals continually with cases in the area, the Commission is often in a better position than are courts to determine when a practice is “deceptive” within the meaning of the Act .... the Commission’s judgment is to be given great weight by reviewing courts. FTC v. Colgate-Palmotive Co., 380 U.S. 374, 385, 85 S.Ct. 1035, 1042-43, 13 L.Ed.2d 904, 914 (1965).
The FTC has determined that, as a general matter, making earnings claims in conjunction with the offering of business opportunities constitutes an unfair or deceptive practice unless specific procedures are followed. As Congress intended, those procedures are promulgated in the “Franchise Rule,” 16 C.F.R. § 436.1 (2002).
In this case, Count I of the complaint charges that the appellees violated Section 5 by making “false and misleading” representations regarding the expected earnings for TDC’s business opportunities. The FTC’s requirements for such potential earnings representations are set out in subsections 436.1(b)(2); (c)(2); and (e)(1) of the Franchise Rule: each of these subsections contain the identical operative language that:
At the time such representation is made, a reasonable basis exists for such representation....
That specific violation is also separately alleged as a part of the FTC’s Franchise Rule claim in Count V of the complaint.2 To give appropriate regard to the FTC’s expertise in regulating the business opportunity industry, where the central issue in the case is the basis for earnings claims, I think the correct analysis is to first determine whether the specifics of the Franchise Rule regarding earnings claims have been violated.3 With respect to the al*1280leged Section 5 violation claimed in Count I, this approach allows a focus on the Franchise Rule’s requirement: whether the appellees had a “reasonable basis” for their earnings claims.4 By focusing on the Franchise Rule, the inquiry must shift to hard evidence: the appellees’ preliminary research on the profit potential of calling card vending machines and the basis of the actual representations made. Instead, the trial of this case, conducted under the ambiguous standards of Section 5, amounted to weighing the sometimes suspect and often conflicting testimony of a small percentage of disgruntled customers about their perceptions of the appellees’ representations. I agree that the district court may have misapplied the law to the facts of this case. However, upon careful review of the record, I am compelled to agree with the district court that the FTC faded to meet its burden of proof with respect to the lack of a reasonable basis for the potential earnings representations.
Under the Franchise Rule, any oral or written representation of potential or existing earnings must have a reasonable basis,5 and the franchisor must possess material substantiating the earnings claim which must be provided to the franchisee on request. 16 C.F.R. § 436.1(b)(2), (c)(2), (e)(2). The franchisor must notify the franchisee of the existence of the substantiating materials when making the earnings claim. The Franchise Rule also requires that franchisors provide franchisees with a disclosure document containing numerous required boilerplate provisions.6 16 C.F.R. § 436.1(b)(4), (c)(5), (d)(1). Oral or written representations of potential or existing earnings must contain the number and percentage of customers which the franchisor knows have earned at least the same amounts as those claimed and the time period over which the franchisees have made the claimed earnings. 16 C.F.R. § 436.1(b)(5)(i), (c)(6)(i). If the franchisor has no prior franchising experience in the field, this fact must be disclosed. 16 C.F.R. § 436.1(b)(5)(h), (c)(6).
To violate the Franchise Rule, the appel-lees must have either (1) lacked a reasonable basis for their earnings claims when made, or (2) failed to appropriately disclose the required information. In Count Y of its complaint, the FTC alleges the appellees did both; it did not prove the former, and the record is incomplete as to the latter. The FTC bears the burden of proving by a preponderance of the evidence that the appellees lacked a reasonable basis for their earnings claims or did not properly disclose the required information. See FTC v. Pantron I Corp., 33 F.3d 1088, 1096 (9th Cir.1994). The district court held that the FTC failed to meet its burden under Section 5 because TDC’s customers did not rely on the representa*1281tions as to potential profits in this new and risky industry.7 Both the parties agree that customer reliance is not the controlling inquiry. The district court also overlooked the key inquiry for the kind of alleged violation at issue here: whether the appellees had a reasonable basis for their earnings claims. The majority flatly concludes that the appellees had no basis for their earnings claims. My review of the evidence indicates that, while that may be true, the FTC did not prove it at trial.
Determining the reasonableness of the basis for earnings claims is a highly factual inquiry which I would not reverse unless it appears that the district court was clearly erroneous. See Beneficial Corp. v. FTC, 542 F.2d 611, 617 (3d Cir.1976)(whether misrepresentation has a tendency to mislead is a highly factual inquiry); 62B Am. Jur.2d Private Franchise Contracts § 163 (1990)(“The question of what constitutes a reasonable basis is essentially a factual issue.... ”). A critical determination is what level of substantiation is required in order to constitute a reasonable basis.8 See FTC v. Pantron I Corp., 33 F.3d 1088, 1096 (9th Cir.1994). Determining the quantum of evidence necessary to carry the burden of proof is quintessentially a question for the finder of fact. In this case, the district court made no factual findings with respect to the basis for the appellees’ earnings claims, and with good reason: the FTC presented no credible evidence that the appellees lacked a reasonable basis for their claims.
The record is not nearly as clear as the majority sets it out. The only evidence in the record on which the FTC bases its lack of reasonable basis argument is the testimony of defendant Mishkin. Mishkin, an associate of Tashman, was questioned regarding the “frontera’ ” telemarketing script, used when callers responded to TDC’s advertisements. In relevant part, the script stated:9
We work together getting your machines placed in the best possible locations .... When we speak to the owner of the location we make sure the traffic flow is at least 500 people per day. We believe that up to 2% of the people will *1282buy the pre-paid calling cards. So we’re talking about selling as many as 10 cards per day ... $140 per day.
Let’s say we’re wrong and only 1% of the traffic flow buys the card.... You would gross $140.00 per day for two machines and of course you would make half the amount which would give you your full investment back in one year....
(R-118 Ex. 9)(emphasis added).
Mishkin’s entire testimony on this “reasonable basis” issue is as follows:
Q: Do you know where that number two percent came from?
A: No.
Q: Was that based on any studies that were made by TDC?
A: I was running another operation when this deal started and I had my own terminology, my own profits where people were making.... I don’t know how these numbers really came up.... So I can’t justify those numbers.
Q: So you have no idea?
A: I mean, I know it was in the script. I can’t say how we got it.
Q: The script or a similar script was used right from the beginning, the start of the company TDC?
A: No, it was changed quite a few times.
Q: That was two percent there in the beginning?
A: I’m not positive. It might have been less.
Q: Were you aware of any efforts made by TDC to gather information about the experiences of people who purchased the business opportunity?
A: No, not at the beginning.
Q: You were not responsible for the numbers that went in the script then?
A: No.
Q: .... Where did the numbers come that were used in the script?
DEFENSE COUNSEL: Your honor, he’s testified that he did not know.
THE COURT: He said he did not know, he said some numbers came from a business he had before he merged with them. Is there anything else you want to add, sir, to that?
A: Well, in the beginning, you wouldn’t know the numbers. How would you know numbers? I mean you can’t know them. A lot of it came from another business opportunity I was doing. There’s no way you could justify how much they were going to make in the beginning.
Q: Was the previous business you owned, where some of these numbers came from, was that related in any way to the sale of business opportunities selling ... prepaid phone cards?
A: No. It was completely different. It was a kids [crane] machine.
Q: Sir, do you remember any test marketing of the company when you first started?
A: I think [Tashman] put a machine out locally around here.
Q: Isn’t that, in fact, how you test marketed to get the numbers for the first ads?
A: I would hope not because that didn’t bring any card sales.
*1283Q: But do you believe there was test marketing?
A: Do I? I guess.
(R-189 at 792-814.)
From this exchange, the majority finds, as a matter of fact, that TDC’s basis for its earnings claims came from Mishkin’s prior business and concludes as a matter of law that this basis is unreasonable. The majority also finds as a fact that TDC test marketed a machine that did not sell any calling cards when Mishkin only “thinks” and “guesses” it happened. At best, Mish-kin’s testimony is ambiguous as to the basis for the earnings claims. He does not know whether some of the information came from his prior business. Drawing all reasonable factual inferences in the appel-lees’ favor (as we must), this testimony indicates that Mishkin has no knowledge whatsoever as to the basis for the numbers. I cannot make the majority’s inferential leap from this scant evidence. The FTC, not the appellees, bore the burden of proving that the earnings claims had no reasonable basis. There is no evidence in the record as to what was the basis for the earnings claims. Importantly, there is also no evidence that there was no reasonable basis. A fair reading of Mishkin’s testimony is that he did not make the earnings claims and that he does not know how, or on what basis, they were made. The FTC put on no witnesses who may have had knowledge of TDC’s basis, or lack thereof, for the earnings claims. Mishkin plainly states that he has no knowledge of the basis of the earnings claims. His testimony alone is simply not enough to meet the FTC’s burden. Because this is the only evidence the FTC puts forth as to the basis (or lack thereof) for the appellees’ earnings claims, the district court was correct in finding that the FTC failed to meet its burden of proof. Additionally, after the initial start-up period and during most of the years challenged by the FTC, TDC’s earnings claims were based on actual earnings from existing customers.10 I cannot say 'this was unreasonable.
At this point, I return to the Section 5 claim alleged in Count I of the FTC’s complaint. The FTC alleges that TDC’s representations were “false and misleading and constitute deceptive acts or practices.” Representations violate Section 5 if the FTC proves that, based on a common sense net impression of the representations as a whole, the representations are likely to mislead reasonable customers to their detriment. Removatron Int’l Corp. v. FTC, 884 F.2d 1489, 1497 (1st Cir.1989); Beneficial Corp. v. FTC, 542 F.2d 611, 617 (3d Cir.1976). In the context of a business opportunity offering, both the advertisements and the disclosure documents must be construed together to evaluate the net impression of the representations to consumers. Consumers need not be actually deceived, the representations need only have the tendency or capacity td deceive. Trans World Accounts, Inc. v. FTC, 594 F.2d 212, 214 (9th Cir.1979). Finally, while customer reliance is not controlling, how consumers resolve ambiguities in representations made to them is highly probative of whether the representations have a tendency or capacity to *1284deceive. See FTC v. World Vacation Brokers, Inc., 861 F.2d 1020, 1030 (7th Cir.1988). Here, the district court found that TDC customers were not misled by TDC’s alleged representations and that they had no expectation of achieving the potential profits the FTC alleges TDC made. Many customers testified no earnings promises were made to them. These factual findings are highly probative of whether TDC’s representations had a tendency or capacity to deceive. There is no evidence that the earnings claims were “false.” Most importantly, the FTC has failed to prove that TDC did not have a reasonable basis for its representations (which is the FTC’s own likely-to-mislead “test” for potential earnings representations in business opportunity situations). Therefore, the FTC has also failed to prove a Section 5 violation as alleged in Count I.
However, it appears that the appellees may not have satisfied the Franchise Rule’s disclosure requirements for their earnings claims, which is the second part of the FTC’s claim in Count V. After the initial conversation with a “fronter,” potential customers were mailed a packet that included a disclosure document, which changed several times over the years. The FTC claims that this disclosure document was defective because it failed to substantiate TDC’s statement that two percent of the passers-by would purchase from its vending machines. As the fronter script indicates, TDC represented that it “believed” that “up to two percent” of passers-by would purchase calling cards. This may be construed as a statement of “facts which suggest a specific level” of potential sales, 16 C.F.R. § 436.1(b) (emphasis added), requiring substantiation in the disclosure documents. It appears that TDC may not have disclosed the basis for its potential sales claim, though it was required to disclose “the material bases and assumptions” for its claim. 16 C.F.R. § 436.1(b)(3). The Franchise Rule’s disclosure requirements ensure that prospective franchisees possess all of the information necessary to make an informed judgment about the legitimacy of a franchisor’s earnings claims. The district court made no findings of fact on this disclosure issue, nor did it address it at all. The district court’s failure to address TDC’s Franchise Rule disclosures was error. I would reverse the district court only on this point, and remand in order to give the trial court an opportunity to do so with respect to the second half of the claim in Count V.
. Initially, I acknowledge that Stephen I. Tashman is not a particularly sympathetic party. In this case, the district court ordered him to disgorge more than $420,000 in profits he had received from TDC for his violation of the Franchise Rule by failing to disclose his involvement with TDC and his past litigation history with the FTC, as alleged in Count IV of the complaint. Mr. Tashman does not challenge that ruling on appeal. But that violation does not necessarily mean that he also violated Section 5 of the FTC Act as claimed in Count I. The evidence indicates that TDC retained a compliance attorney and took other steps to attempt to meet the FTC Act’s requirements. TDC's counsel carefully reviewed and monitored TDC’s compliance. He also reviewed "fronters’ ” recorded discussions with customers. Fronters who significantly deviated from the script were fired. Monthly sales and compliance meetings were transcribed by a court reporter and rigid adherence to the script was stressed. While TDC may have tried to stretch the allowable limits in its business opportunity solicitations, I do not believe that the FTC has proved its Section 5 claim in this case.
. The FTC also charged, in Count II of the complaint, that the appellees represented that vending machine purchasers would be given exclusive territories and, in Count III, that TDC, not the purchaser, would place the vending machines in desirable high-traffic locations. After the trial, the FTC acknowledged that neither of these claims was supported by the evidence and that the appellees were properly entitled to judgment on those two counts.
. It is undisputed that the appellees’ offering of business opportunities is subject to the Franchise Rule and that the appellees made earnings claims. The majority relies on the second "element”: whether the representation was likely to mislead customers acting reasonably under the circumstances. As discussed in the text, the "likely to mislead” test, under the FTC's regulations, turns on the more objective "reasonable basis,” which is *1280how I believe the Section 5 violation must be analyzed.
. The Franchise Rule also requires a proper disclosure of the basis for the earnings claims, but that is only alleged in the FTC's Count V claim. It is not alleged as a part of the Section 5 claim in Count I.
. The “reasonable basis” standard codified in the rule is incorporated from the case law interpreting Section 5. A representation is likely to mislead, and thus violates Section 5, if it has the capacity or tendency to deceive; that is, it is either false or lacks a reasonable basis. See, e.g., Thompson Medical Co., Inc. v. FTC, 791 F.2d 189, 193 (D.C.Cir.1986).
.Representations of potential earnings must state: "CAUTION These figures are only estimates of what we think you may earn. There is no assurance you’ll do as well. If you rely upon our figures, you must accept the risk of not doing as well.” 16 C.F.R. § 436.1(b)(4). Representations of earnings of existing franchisees must state: “CAUTION Some outlets have [sold] [earned] this amount. There is no assurance you’ll do as well. If you rely upon our figures, you must accept the risk of not doing as well.” 16 C.F.R. § 436.1(c)(5).
.Unlike the majority, I am not prepared to say the district court so obviously erred in this holding. Whether representations made to customers have a tendency to mislead is more a question of fact than one of law and accordingly, we are required to review the district court’s findings under the clearly erroneous standard of review. Beneficial Corp. v. FTC, 542 F.2d 611, 617 (3d Cir.1976). See also FTC v. Atlantex Assoc., 872 F.2d 966, 969 n. 1 (11th Cir.1989)("[W]e cannot say that the district court's findings — that each of the defendants engaged in deceptive trade practices— are clearly erroneous.”). Viewing the record as a whole, and not in the isolated manner in which the majority presents it, I am not "left 'with the definite and firm conviction that a mistake has been made' after making all credibility choices in favor of the fact-finder’s choice, in light of the record as a whole.” Meek v. Metro. Dade County, Fla., 985 F.2d 1471, 1481 (11th Cir.1993). Count I of the FTC’s complaint only alleges that the appel-lees violated Section 5 by falsely claiming that purchasers could make a specified level of earnings through purchasing and operating the appellees' calling card vending machines. The district court found that "some customers here failed and some succeeded, greatly as a result of their respective work, business sense, and luck,” (R-183 at 3), and not as a result of the appellees' misrepresentations. I cannot say this finding is clearly erroneous, but as discussed in the text, the fact that most of the customers admitted that they did not rely on the representations is probative (but not determinative).
. For a list of relevant factors in considering whether a potential earnings representation has a reasonable basis, see 62B Am.Jur.2d Private Franchise Contracts § 164 (1990). See also 44 Fed. Reg. 49982.
. Apparently the script was modified several times over the years. It is unclear as to what time period the quoted script was employed.
. The FTC argues that the customers cited by the district court and TDC were neither "typical” nor "average.” Neither Section' 5 nor the Franchise Rule constrains business opportunity offerors' earnings claims to typical or average customers. In fact, the Franchise Rule's requirement that earnings claims be accompanied with a percentage of franchisees who obtained those earnings contemplates that a claim may have a reasonable basis though based on a small sample as long as this fact is adequately disclosed. TDC disclosed that its earnings claims were "from some of our most successful distributors which comprise less than 1% of our customers."