This is an independent estimate of annual pre-tax residual business profit for one U.S. 1-800 WATER DAMAGE territory. The 2026 Franchise Disclosure Document reports Gross Sales, not profit or owner compensation. For an active owner who performs the general-management role, estimated total owner-operator benefit rises to about $116,600-$147,500, but most of that difference represents pay for the owner's labor rather than passive business profit.
This range is an independent analytical scenario, not an Item 19 financial performance representation by 1-800 WATER DAMAGE International, LLC. It combines identified facts from the 2026 Franchise Disclosure Document with an Internal Revenue Service industry margin benchmark and explicit modeling assumptions. Actual results can differ materially by market, service mix, job volume, labor, occupancy, referral costs, financing, owner involvement, collections, insurance relationships, and execution.
Data basis
- Legal franchisor
- 1-800 WATER DAMAGE International, LLC, a Delaware limited liability company; parent: BELFOR Franchise Group, LLC.
- Current disclosure
- 2026 Franchise Disclosure Document, issued March 30, 2026. The reviewed document did not present a later amendment date.
- Item 19 evidence
- Unaudited 2025 Gross Sales reported by 78 franchisees operating 148 franchised businesses for the full calendar year.
- Primary cohort
- 46 owners with one territory; official median revenue per owner was $353,606.73.
- External benchmark
- IRS Statistics of Income, tax year 2022, “Construction of buildings”: $73.690 billion of net income on $1.077 trillion of business receipts, a calculated 6.843% ratio.
- Date checked
- July 17, 2026.
Official sales, estimated earnings
Item 19 supplies same-brand Gross Sales by owner and territory count. It does not disclose payroll, direct job costs, operating profit, EBITDA, Net Income, owner salary, draws, or distributions.
Limited
The revenue anchor is strong and current, but the profit margin comes from a broader government industry proxy rather than 1-800 WATER DAMAGE franchisee profit-and-loss statements.
What does the 2026 FDD actually report?
Officially, the FDD reports 2025 Gross Sales, not owner earnings. Across all 78 reporting franchisees, average Gross Sales were $770,375.03 and median Gross Sales were $481,891.35. Those owner-level figures combine franchisees with one, two, and three or more territories, so they should not be treated as a one-unit income figure.
For the most comparable single-territory population, 46 owners reported average annual revenue of $512,050.52 and median annual revenue of $353,606.73. The median is the central revenue anchor used below because it is less affected by the highest-performing operators than the average.
One-territory owners, calendar 2025. Revenue, not earnings.
The most relevant Item 19 owner cohort for a first-territory analysis.
Scenario: official median sales multiplied by the 6.843% IRS proxy margin.
Benchmark: May 2025 national median hourly wage for general and operations managers, annualized.
Derived: 10% royalty, 2% Brand Marketing Fund, and $13,788 annual technology and software fees.
The 2026 FDD says the Item 19 figures omit complete operating costs, including Royalty Fees, Technology Fees, Software Fees, local advertising, Brand Marketing Fund contributions, rent, inventory and job costs, payroll, payroll taxes, owner compensation, employee benefits, professional fees, interest, depreciation, and amortization. A $353,607 median revenue figure therefore cannot be presented as owner income.
| 2025 Item 19 population | Owners | Median revenue per owner | Average revenue per territory |
|---|---|---|---|
| One territory | 46 | $353,606.73 | $512,050.52 |
| Two territories | 15 | $469,803.38 | $312,374.52 |
| Three or more territories | 17 | $1,392,920.93 | $377,273.51 |
| All reporting franchisees | 78 | $481,891.35 | Not stated as one combined figure |
Source: 2026 Franchise Disclosure Document, Item 19, pp. 54-57. The franchisor states that franchisees supplied monthly Gross Sales reports and that the data were not audited. One single-territory franchisee that operated during 2025 did not report sales; the franchisor listed that owner's revenue as unresolved.
How is the owner-earnings range calculated?
The estimate applies a transparent revenue spread and margin sensitivity to the official single-territory median. Because Item 19 provides no single-territory quartiles or expense statement, Conservative, Base, and Upside revenue are set at 80%, 100%, and 120% of the $353,606.73 median. That spread is an editorial assumption, not a franchisor forecast.
The margin anchor is the IRS 2022 “Construction of buildings” net-income-to-business-receipts ratio of 6.843%. The U.S. Census Bureau classifies fire and flood restoration of buildings in NAICS Subsector 236, while mold remediation sits in NAICS 562910. The construction benchmark is therefore relevant to a core service line, but it is not a perfect match for a mixed water, fire, mold, odor, and reconstruction business.
- Revenue: 80%, 100%, and 120% of the official 2025 one-territory median Gross Sales.
- Margin: IRS benchmark minus 3 percentage points, benchmark, and benchmark plus 3 percentage points: 3.843%, 6.843%, and 9.843%.
- Fee treatment: the IRS ratio is an all-in net-income proxy, so the FDD royalty, marketing, technology, and software fees are not subtracted a second time.
- Taxes and financing: personal income tax and financing principal payments are excluded. Interest and depreciation may be embedded in the IRS tax-return measure and can vary materially by business.
- Capital spending: vehicle replacement, equipment replacement, unusual remediation claims, and growth capital are not modeled as separate annual cash-flow deductions.
| Scenario | Revenue anchor | Margin assumption | Estimated pre-tax residual profit |
|---|---|---|---|
| Conservative | $282,885 | 3.843% | $10,871 |
| Base | $353,607 | 6.843% | $24,197 |
| Upside | $424,328 | 9.843% | $41,767 |
Estimated annual residual business profit
One-territory scenarios; before personal income tax and financing principal payments
Interpretation: the scenario range is wide because both revenue and margin are uncertain. It should not be read as a probability distribution or as a franchisor-endorsed forecast.
Sources: 2026 Franchise Disclosure Document, Item 19, pp. 54-57; IRS Corporation Income Tax Returns Complete Report, 2022 Table 1.
How does active owner involvement change the result?
Active involvement can increase the owner's total economic benefit, but it does not create passive profit. Item 15 requires the franchisee to devote full time and personal best efforts to day-to-day operations and to be available around the clock for emergency service requests. Item 7 also describes a low-cost startup staffing case in which the Managing Owner works with the full-time Service Technician.
To value that labor separately, the model uses the May 2025 national median hourly wage of $50.85 for General and Operations Managers from the Bureau of Labor Statistics. Annualized at 2,080 hours, the labor proxy is $105,768. Adding that amount to residual business profit produces “estimated owner-operator benefit,” which combines profit and the market value of work performed by the owner.
Business profit versus owner-operator benefit
The distance between markers is the $105,768 annualized owner-labor proxy
Interpretation: the owner-operator figure is not pure business profit. It includes $105,768 of imputed management labor and assumes the owner replaces a paid general and operations manager role.
Sources: 2026 Franchise Disclosure Document, Items 7 and 15, pp. 19-24 and 48-49; BLS May 2025 national occupational wage table.
A prospective buyer should separate three amounts in every franchisee interview: salary paid through payroll, distributions or draws taken as an owner, and earnings retained in the company. Adding them without checking definitions can double count compensation or confuse labor income with investment return.
How much do FDD fees weigh on the earnings model?
At the modeled revenue levels, required recurring system fees equal roughly 15.2%-16.9% of Gross Sales before ordinary operating costs. Each scenario remains below $500,000, so the applicable Remediation Services royalty tier is 10%. The model also includes the 2% Brand Marketing Fund contribution and current fixed Technology and Software Fees of $750 and $399 per month.
| Scenario | 10% royalty | 2% brand fund | Technology + software | Total / revenue |
|---|---|---|---|---|
| Conservative | $28,289 | $5,658 | $13,788 | $47,734 / 16.9% |
| Base | $35,361 | $7,072 | $13,788 | $56,221 / 15.9% |
| Upside | $42,433 | $8,487 | $13,788 | $64,707 / 15.2% |
The declining percentage burden is caused by fixed monthly technology and software charges being spread across higher sales. The FDD also recommends local marketing spending above 3% of Gross Sales, but does not state a required monthly minimum. Optional referral fees can run approximately 0%-10% of an invoice when the franchisee accepts work from a source that charges such a fee. Those amounts are not included in the required-fee table because actual use and job mix are unknown.
Source: 2026 Franchise Disclosure Document, Item 6, pp. 12-19, and Item 11, pp. 31-38. Because the IRS benchmark is an all-in net-income ratio, these fees are shown to explain thestructural burden but are not deducted again from scenario earnings.
What makes the earnings range uncertain?
The largest unresolved issue is the absence of same-brand expense and profit data. The revenue population is broad: 78 of 86 franchisees, or 90.7%, and 148 of 160 franchised businesses, or 92.5%, were included because they operated for the entire 2025 Measurement Period. Yet the FDD does not show the direct labor, subcontractor, material, equipment, vehicle, insurance, occupancy, referral, bad-debt, or owner-compensation mix behind those sales.
Cohort and system movement
Item 20 shows that traditional franchised outlets declined from 175 at the start of 2025 to 160 at year-end, a net change of -15 outlets, or -8.6%. The table records 10 openings and 25 terminations during 2025. This does not prove why any outlet left or predict a new owner's result, but it is a material diligence signal when interpreting a full-year survivor cohort that excludes new and temporarily closed transferred businesses.
Benchmark fit
The IRS data cover active corporations in “Construction of buildings,” not only restoration franchises. The category may include larger and differently capitalized companies, different service mixes, and different accounting choices. The Census NAICS definition for Remediation Services confirms that mold remediation is placed in NAICS 562910 while fire and flood restoration of buildings are cross-referenced to Subsector 236. A mixed-service franchise can span both economic profiles.
The 2022 Annual Business Survey table for NAICS 562910 reports 5,012 employer firms, $26.625 billion in revenue, 102,204 employees, and $7.021 billion in annual payroll. Those figures show the scale and labor intensity of the broader remediation market, but the high relative standard error on sales and the absence of unit-level profit prevent their use as the primary earnings margin.
The Item 19 sales table excludes 8 franchisees operating 12 franchised businesses that were not open for the entire year. Full-year reporting improves comparability, but it also means the table does not describe ramp-up economics for a new opening or the financial effect of transfer-related downtime.
What should a buyer verify before relying on this range?
Verify actual unit economics with written substantiation and franchisee records rather than relying on the scenario midpoint. The Federal Trade Commission explains that Item 19 claims should disclose their source, limitations, and assumptions, and that prospective franchisees may request written substantiation.
- Request the Item 19 written substantiation and reconcile the 46 single-territory owners to the stated median, average, high, low, and non-reporting treatment.
- Ask current one-territory owners for trailing-12-month profit-and-loss statements that separate Remediation Services and Reconstruction Services revenue, direct job costs, payroll, subcontractors, referral fees, bad debt, and insurance-related collection delays.
- Identify owner salary, owner distributions, retained earnings, and any family labor separately. Ask how many weekly hours the owner works and who covers 24/7 emergency response.
- Confirm the actual royalty tier, Brand Marketing Fund contribution, Technology Fee, Software Fee, local marketing budget, vehicle cost, facility rent, insurance, and service-technician staffing for the target territory.
- Compare mature and recently opened businesses. Ask former franchisees about terminations, transfers, staffing, collections, and capital requirements without assuming that Item 20 movement had one common cause.
- Model debt service separately using the buyer's financed amount, rate, term, and vehicle obligations. Do not treat personal income tax or debt principal as part of operating profit.
What is the strongest defensible annual earnings view?
For one U.S. territory, the strongest defensible estimate is about $10,900-$41,800 in annual pre-tax residual business profit, with a Base scenario of about $24,200. This is scenario-based, not an official Item 19 earnings result. An active owner who replaces a general-management employee may receive total economic benefit of roughly $116,600-$147,500, but that figure includes the estimated market value of the owner's work.
The most important earnings driver is the combination of revenue volume and labor-efficient job execution. The largest unresolved uncertainty is the lack of same-brand operating-cost and owner-compensation data. Before making a decision, a buyer should verify Item 19 substantiation, obtain comparable franchisee profit-and-loss statements, distinguish owner labor from distributions, and reconcile recurring fees, staffing, collections, capital spending, and financing to the intended territory.