A defensible 2025 scenario range for a reporting-franchisee-sized 1-800-PACKOUTS business is about $136,000 to $250,000 in estimated pre-tax owner earnings, with a $189,000 base scenario. The estimate is per franchisee operating entity, not per location: the 2026 Franchise Disclosure Document reports revenue per franchisee, and the reporting group averaged 2.24 locations/units.
Median 2025 revenue
Per reporting franchisee, before any operating expenses.
Average 2025 revenue
Only 23% of the reporting franchisees exceeded this average.
Observed revenue range
The very wide spread makes the average a weak typical-owner anchor.
Full-year reporters
Item 19 Table 1 says 22; Table 2 separately lists 21 for 2025.
Average locations/units
Per reporting franchisee; the FDD does not publish median per-unit revenue.
Company-controlled NOI margin
$730,166.83 of Net Operating Income on $2,461,000.46 of 2025 income.
What does the 2026 FDD actually measure?
Item 19 officially measures 2025 revenue per reporting franchisee and the Profit-Loss Report of one company-controlled franchise; it does not disclose annual earnings for franchised owners. The franchisee table covers full-year operators and defines revenues as all sales or revenues received without deductions. That is Gross Sales-style revenue, not owner salary, business profit, or take-home pay.
The central franchisee figure is the $637,709 median, because the $1,871,033 average is pulled upward by a small number of much larger operators. Five of 22 reporting franchisees, or 23%, exceeded the average. The cohort operated an average of 2.24 locations/units, so the table cannot be read as single-location economics.
| Item 19 measure | 2025 value | What it means for an earnings decision |
|---|---|---|
| Median revenues | $637,709 | Best disclosed central revenue anchor; still per franchisee, not per location. |
| Average revenues | $1,871,033 | Highly skewed upward; only 23% exceeded it. |
| Low / high revenues | $196,578 / $11,027,444 | Shows substantial scale variation, not a promised range. |
| Reporting franchisees | 22 | Full-year 2025 operators; nine franchisees not open for the full year were excluded. |
| Average locations/units | 2.24 | Prevents a clean conversion from per-franchisee revenue to per-unit revenue. |
How skewed were reported franchisee revenues?
Official 2025 per-franchisee values on a logarithmic dollar scale.
Interpretation: the average sits far above the median because the reported population includes operators of very different scale. The median is therefore the more conservative central anchor for an owner-earnings scenario.
Source: 1-800-Packouts Holdco, LLC, 2026 Franchise Disclosure Document, Item 19, pp. 19-3 to 19-4. Values are official revenues, not earnings.
How was the $136,000–$250,000 owner-earnings range calculated?
The range multiplies a median-centered revenue scenario by a same-brand company-controlled Net Operating Income margin proxy. The result is estimated pre-tax owner earnings after normal operating expenses represented in the proxy P&L, but before personal income taxes and financing principal payments.
- Revenue anchor: $637,709, the official 2025 median per reporting franchisee. Conservative and Upside revenue use 80% and 120% of the median—an editorial sensitivity, not FDD-reported quartiles.
- Margin anchor: 29.7%, derived from $730,166.83 of company-controlled Net Operating Income divided by $2,461,000.46 of income. Conservative and Upside margins are three percentage points below and above the proxy.
- Fee treatment: the company-controlled margin is treated as an all-in operating proxy, so the 7% Royalty Fee and 3% Marketing Fee are not subtracted a second time. The FDD does not explicitly map those fees to a P&L line.
- Excluded from the published range: personal income tax, financing principal, owner distributions, discretionary capital spending, and future remodel or vehicle replacement. Interest and depreciation are not separately identified in the disclosed P&L.
| Scenario | Revenue | Operating margin | Estimated pre-tax owner earnings |
|---|---|---|---|
|
Conservative 80% of FDD median; proxy margin minus 3 points |
$510,167 | 26.7% | $136,000 |
|
Base FDD median; reported company-controlled margin |
$637,709 | 29.7% | $189,000 |
|
Upside 120% of FDD median; proxy margin plus 3 points |
$765,251 | 32.7% | $250,000 |
What does the three-scenario earnings model produce?
Estimated annual pre-tax owner earnings, rounded to the nearest $1,000.
Interpretation: both revenue and operating margin matter. The $189,000 base is a modeling center, not a forecast or the most likely result.
Sources and formulas: 2026 FDD Item 19, pp. 19-1 to 19-4; scenario revenue = 80%, 100%, and 120% of $637,709; scenario margin = 26.7%, 29.7%, and 32.7%. Calculations use full precision before rounding.
Why is the evidence-confidence label LIMITED?
Confidence is limited because franchised-owner profit is not reported, and the margin proxy comes from one company-controlled operation with disclosed comparability problems. The estimate is anchored to same-brand FDD evidence, but it is not a broad franchised-unit profit sample.
- Ownership mismatch
- The Profit-Loss Report covers a company-controlled franchise, while the revenue table covers independently owned franchisees.
- Location and purpose
- The operation is in the San Diego area, provides training services, and is used for pilot programs and development of system standards.
- Maturity bias
- The disclosed P&L is for an established outlet operating throughout 2025 and excludes ramp-up, startup, and similar early-stage effects.
- Accounting ambiguity
- The narrative says the P&L was prepared on an accrual basis, while the report footer says “Cash Basis.” Buyers should ask for the written substantiation and an accounting reconciliation.
- Population inconsistency
- Item 19 Table 1 describes 22 reporting franchisees; Table 2 lists 21 franchisees reporting 2025 systemwide sales.
- Per-owner scale
- The 2.24 average locations/units means the median revenue is not a verified one-unit or one-facility result.
The FTC Franchise Rule in 16 CFR Part 436 defines financial performance representations broadly, while the FTC Consumer's Guide to Buying a Franchise emphasizes reviewing the FDD and speaking with current and former franchisees. Those steps are particularly important here because the FDD provides revenue distribution but no franchised-owner earnings distribution.
How does owner involvement change the result?
Owner involvement changes the economic interpretation, but the FDD does not provide enough manager-pay detail to publish a reliable fixed uplift. Item 15 requires direct daily involvement by an individual franchisee or an Operating Principal and continuous full-time, best efforts. A trained Manager may supervise day-to-day operations, so this is not documented as a passive-ownership model.
Manager-run economics
Residual business profit is what remains after normal manager compensation and payroll burden. The company-controlled P&L contains aggregate payroll expenses, but it does not identify a general manager's salary, benefits, bonus, or whether an owner's compensation is embedded.
Owner-operator benefit
If the owner personally replaces a paid Manager, the economic benefit can be higher by the avoided market cost of that role. That added amount compensates the owner for labor performed; it is not pure business profit and should not be described as passive income.
A buyer should benchmark local manager wages with the BLS Occupational Employment and Wage Statistics tables and include benefits and payroll burden using the BLS Employer Costs for Employee Compensation. A national wage alone is not enough: facility size, territory scale, insurance-claim workflow, travel, staffing responsibility, and local labor markets can materially change the replacement cost.
How do royalty, marketing, and territory fees affect owner earnings?
The FDD requires a 7% Royalty Fee and a 3% Marketing Fee on Gross Sales, plus a population-based National/Regional Opportunity Protection Fee. At the $637,709 median revenue anchor, the two percentage fees equal about $63,771 annually before any territory fee. The scenario does not subtract them again because it treats the company-controlled Net Operating Income margin as an all-in proxy.
| Recurring obligation | FDD rate or amount | At $637,709 revenue | Scenario treatment |
|---|---|---|---|
| Royalty Fee | 7% of Gross Sales | $44,640 | Assumed embedded in the all-in margin proxy; not deducted twice. |
| Marketing Fee | 3% of Gross Sales | $19,131 | Assumed embedded in the all-in margin proxy; not deducted twice. |
| Combined percentage fees | 10% of Gross Sales | $63,771 | Material reconciliation item for any franchisee P&L. |
| NROP Fee | Population based | Not separately modeled | Item 6's table says $500–$2,000 monthly; Note 2's standard schedule shows $1,000–$2,000 up to 1,000,000 people. |
The company-controlled P&L lists $261,852.93 of “Dues & subscriptions,” equal to about 10.6% of its income. That is directionally close to the 10% Royalty Fee plus Marketing Fee burden, but the FDD does not state that the line is a direct mapping. Treating the reported Net Operating Income margin as all-in avoids obvious double counting, but the buyer should verify every fee line in the Item 19 substantiation.
What should a buyer verify before relying on this range?
A buyer should verify the revenue denominator, manager compensation, fee mapping, and comparable franchisee P&Ls before treating the scenario as a personal income expectation. Item 20 ended 2025 with 61 franchised outlets after 14 openings and six terminations; it also reports five transfers during 2025. Those system movements make current and former franchisee interviews a necessary part of the earnings analysis.
- Request the written Item 19 substantiation. Reconcile the 22 reporting franchisees in Table 1 with the 21 reporters in Table 2 and confirm the exact number of locations/units represented.
- Ask for the full distribution, not only the average and median. Quartiles or anonymized franchisee P&Ls would show whether the median revenue is associated with one location, several locations, or different territory sizes.
- Separate owner labor from business profit. Identify owner salary, owner draw, distributions, retained earnings, and the cost of a trained Manager in each comparable franchisee interview.
- Map every recurring fee. Confirm where Royalty Fee, Marketing Fee, NROP Fee, bookkeeping, accounting software, conference, cooperative advertising, and other required charges appear in the P&L.
- Compare mature and ramp-up operators. The company-controlled P&L excludes startup and early-stage effects, while the franchisee revenue cohort excludes nine operators not open throughout 2025.
- Model financing separately. Item 10 states that the franchisor does not offer or guarantee financing. Loan interest may reduce accounting profit, and principal payments reduce owner cash flow even though principal is not an operating expense.
- Interview current, transferred, terminated, and former franchisees. Ask specifically about sales mix, claim-payment timing, labor utilization, insurance expense, warehouse occupancy, working capital, capital replacement, and owner hours.
What is the most defensible earnings takeaway?
The strongest defensible answer is a scenario-based $136,000–$250,000 in annual pre-tax owner earnings, centered on $189,000, for a business operating at roughly 80% to 120% of the FDD's $637,709 median per-franchisee revenue. It is not an official franchised-owner profit result. The largest earnings driver is revenue scale combined with labor and facility cost control; the largest unresolved uncertainty is whether one company-controlled San Diego P&L—with training, pilot, maturity, accounting-basis, and fee-mapping issues—represents an independently owned franchisee.
Before using the range in a purchase decision, the buyer should obtain Item 19 substantiation, reconcile the reporting population and fee lines, and test the model against comparable current and former franchisees. Personal taxes, debt principal, owner draws, and the market value of owner labor must remain separate from the operating-earnings estimate.