How Much Does a 1st Class Real Estate Franchise Owner Make?

Official Item 19 measures brokerage activity and Total Gross Commissions, not owner profit. For January 1 through December 31, 2025, it reports 63 full-year franchised outlets in three groups of 21. The disclosure does not separate Standard Model, Virtual Model, or Powered By Option results.

The FDD defines Total Gross Commissions as commission dollars generated from closed real estate transactions before any deductions. Those deductions can include agent commission splits, payroll, occupancy, insurance, marketing, technology, franchise fees, interest, depreciation, and other operating expenses. Calling Total Gross Commissions “owner income” would therefore overstate what an owner may keep.

The Item 19 population is broad but not fully segmented. It includes full-year franchised outlets and excludes seven outlets opened during 2025, yet it does not show results separately for the Standard Model, Virtual Model, Powered By Option, office age, owner-operated offices, or manager-run offices. The franchisor also states that the franchisee-reported figures were not audited.

The modeled owner-operator range runs from an operating loss to about $387,000, with a central scenario near $59,000. These are independent estimates for a 2025 full-year franchised outlet across the FDD’s combined, unsegmented formats, not amounts reported by the franchisor.

The base calculation uses the IRS 2023 aggregate for 1,046,471 sole-proprietorship returns classified as “Offices of real estate agents, brokers, property managers and appraisers”: $66.261 billion of business receipts and $23.168 billion of net income less deficit, equal to a 34.96% margin. That benchmark is available in the IRS 2023 sole-proprietorship income-statement workbook and described on the IRS nonfarm sole-proprietorship statistics page.

The IRS grouping is broader than franchised residential brokerages and its net income includes the economic value of work performed by sole proprietors. For that reason, the 35% figure is used as an owner-operator benefit proxy, not a pure passive-profit margin. The conservative and upside scenarios use 32% and 38%, respectively—approximately three percentage points below and above the benchmark—as explicit sensitivity assumptions. Because IRS net income is an all-in accounting measure after reported business deductions, the positive-revenue scenarios do not subtract FDD fees a second time.

Accounting treatment: the IRS figure is net income less deficit, not cash flow. It reflects industry-reported business deductions, including interest and depreciation in aggregate; owner draws are not modeled as a separate wage. Capital expenditures, acquisition-financing principal, and personal income taxes are not separately calculated.

Active owner operation can change the estimated result by roughly the cost of a hired Principal Broker. This role adjustment applies to the 2025 full-year franchised-outlet scenarios across the combined formats. The 2026 FDD, Item 15, p. 28, does not require personal owner supervision, although it recommends it, and every outlet must have a Principal Broker who can be a non-owner.

The U.S. Bureau of Labor Statistics real estate broker profile reports a May 2024 median wage of $71,990 for brokers in real estate and rental and leasing. The model subtracts that amount from the owner-operator benefit to illustrate a manager-run structure. It does not add employer payroll taxes, benefits, bonuses, or recruiting costs, so a fully loaded hired-broker cost may be higher.

For the 2025 full-year outlet scenarios, the model uses official FDD recurring fees as a fit check and to establish the zero-revenue floor, but it does not subtract them again from positive-revenue scenarios. The IRS proxy is already an all-in net-income margin after business deductions, so a second subtraction would risk double counting. Item 7 initial investment is not treated as an annual expense, and optional services are excluded. Sources: 2026 FDD, Item 6, pp. 5–8; Item 7, pp. 8–13; Item 11, p. 21.

• Fee structure: Item 6 does not list a sales-percentage royalty. Instead, it lists a $150 Closed Transaction Fee for each represented buyer or seller transaction and each referral fee received. At the FDD median transaction counts of 0, 24, and 102, this equals $0, $3,600, and $15,300 before any referral-fee adjustment.
• Office Fee: $150 per month, or $1,800 annually.
• Technology Plus Fee: $50 per person per month. Assuming the owner plus the FDD median agent count remains onboarded for all 12 months gives 1, 6, and 18 total users, or $600, $3,600, and $10,800 annually. Buyers should confirm whether the current billing also adds a separate business-level charge.
• Advertising Fund: Item 11 states that the franchisor currently has no Advertising Fund and collects no Advertising Fee. Local marketing and other owner-selected advertising remain separate operating costs.
• Disclosed-fee fit check: Office, transaction, and assumed Technology Plus fees total about $2,400, $9,000, and $27,900 across the three bands. These amounts are not separately deducted from the positive-revenue all-in margin scenarios.
• Margin sensitivity: 32%, 34.96%, and 38%. The outer values are analytical assumptions around the IRS benchmark, not FDD-reported margins.
• Excluded optional charges: Technology Premium, website, accounting, payroll and human-resources services, and other elective programs are not modeled.
• Taxes and financing: personal income taxes are not estimated. Debt principal is excluded from operating earnings and must be evaluated separately.

The 2026 FDD, Item 10, p. 19, states that qualified buyers may finance up to 80% of the initial franchise fee at 12% for 36 months, with terms varying by creditworthiness and experience. The FDD’s $20,000 example is about $664 per month, or roughly $7,971 per year of cash payments. No specific acquisition-debt service is deducted from the scenarios: the broad IRS margin already reflects industry-reported business interest in aggregate, while this buyer’s principal payments would separately reduce cash available to the owner.

Total Gross Commissions

Official Item 19 commission revenue before deductions.

Owner-operator benefit

Estimated pre-tax accounting-income proxy that may include both residual business income and the value of work performed by the owner; it is not a cash-flow or passive-income measure.

Manager-run residual

Owner-operator benefit less the BLS broker-wage proxy; employer payroll burden is excluded, and acquisition-financing principal and personal taxes remain separate.

After-tax take-home pay

Not calculated because entity structure, state, deductions, and owner circumstances differ.

Confidence is limited because the 2025 full-year revenue evidence is same-brand and current, but the owner-benefit margin is an external proxy applied across unsegmented formats. Item 19 does not disclose agent commission splits, payroll, occupancy, operating profit, owner compensation, debt, or cash flow.

The outlet decline does not prove why individual offices left or whether remaining offices were profitable. It does make direct franchisee interviews more important. The FTC Franchise Rule overview explains that the disclosure document is intended to provide material information for weighing risks and benefits, while the current text of 16 CFR Part 436 contains the governing disclosure requirements.

Because the scenario remains uncertain, a buyer should replace every proxy with office-level evidence wherever possible. The highest-value diligence is to reconcile 2025-style full-year gross commissions to owner cash for comparable Standard or Virtual offices in the intended market.

• Request Item 19 written substantiation and confirm how the top, middle, and bottom thirds were calculated.
• Ask for separate economics for Standard Model, Virtual Model, and Powered By Option offices, because Item 19 combines or does not identify them.
• Interview current and former franchisees about agent splits, desk fees, lead costs, occupancy, broker compensation, staffing, insurance, technology, and local marketing.
• Ask what percentage of owners personally serve as Principal Broker and how manager-run offices perform after broker payroll burden.
• Reconcile the $150 transaction fee and per-person technology fees to the intended agent count and transaction volume.
• Investigate the 2025 terminations, non-renewals, and other cessations in Item 20 without assuming a single cause.
• Build a local monthly cash-flow model that keeps business profit, owner wages, debt service, capital spending, and personal taxes separate.

The defensible answer is a scenario range from an operating loss to roughly $387,000 of annual owner-operator benefit, with a central scenario near $59,000. It is not an official profit claim. It is a limited-confidence estimate for a 2025 full-year franchised outlet across the FDD’s unsegmented formats, anchored to official Total Gross Commissions and adjusted with external industry and wage benchmarks.

The largest earnings driver is the office’s gross commission production, which varied from a $0 bottom-third median to a $1.018 million top-third median. The largest unresolved uncertainty is the actual expense structure—especially agent commission splits, broker labor, occupancy, and format differences. A buyer should verify those items through Item 19 substantiation, comparable-office financial statements, and interviews with current and former franchisees before treating any point in the range as decision-ready.