For a home-based Drama Kids International standard territory operating at least one year, the strongest defensible scenario range is approximately $24,000 to $124,000 before personal income taxes. A manager-run structure is materially different: under the stated part-time manager assumption, residual pre-tax owner earnings range from an estimated loss of about $18,000 to positive earnings of about $82,000. The 2026 Franchise Disclosure Document reports Gross Sales, not profit or owner compensation. Bottom-quartile sales show that owner benefit can be materially lower, while paid management can produce an operating loss.
This range is an independent analytical scenario, not an Item 19 financial performance representation by Drama Kids International, Inc. It combines identified 2026 FDD facts with an IRS industry benchmark and explicit modeling assumptions. Actual results can differ materially because of territory demand, enrollment, pricing, school and community-site arrangements, teacher payroll, owner workload, manager hours, financing, and execution.
Legal franchisorDrama Kids International, Inc., a Florida corporation
Official Item 19 evidence2025 Gross Sales for 40 franchised businesses open at least one year
Official operating modelHome office; classes typically delivered in schools and community facilities
Earnings benchmarkIRS 2023 nonfarm sole proprietorship data for Educational Services
Owner-role benchmarkBLS May 2025 median hourly wage for general and operations managers
Date checkedJuly 20, 2026
FDD references in this article are to the 2026 Franchise Disclosure Document: Items 6–7, Item 15, Item 19, and Item 20. No matching public 2026 FDD hosted on an official franchise-controlled domain was verified, so those page citations are intentionally unlinked.
The sales distribution is current and same-brand, but the franchisor does not disclose unit profit, owner compensation, teacher labor, facility costs, or a system-wide median. The earnings conversion therefore depends materially on a broad federal Educational Services benchmark and a separate manager-hours assumption.
DERIVED. Equal-weight calculation from the four 10-owner Item 19 quartile averages.
OFFICIAL. 95.2% of franchised businesses operating on December 31, 2025; each had at least one year of operation.
OFFICIAL. 8% royalty plus 1% National Advertising and Promotional Fund contribution, subject to minimum royalty rules.
BENCHMARK. IRS 2023 net income less deficit divided by business receipts for nonfarm sole proprietorships.
SCENARIO. $50.85 per hour × 15 hours per week × 50 weeks, plus a 10% payroll-load assumption.
What does Drama Kids Item 19 actually report?
Item 19 officially reports Gross Sales, not annual owner earnings. The population consists of 40 franchised Drama Kids Businesses that had operated for at least one year as of December 31, 2025, divided into four equal quartiles of 10 franchise owners each. The data cover calendar-year 2025 sales reports submitted to the franchisor.
The FDD defines Gross Sales as revenue from services and products after excluding specified taxes, bona fide refunds, allowances, and discounts. It explicitly states that payroll, cost of sales, facility expense, office costs, depreciation, taxes, and debt service still must be deducted to reach net income or profit. See 2026 FDD, Item 19, pp. 28–29.
| Item 19 quartile | High Gross Sales | Low Gross Sales | Average | Median | Owners above average |
|---|---|---|---|---|---|
| Group One — top quartile | $737,583 | $268,249 | $396,461 | $382,192 | 3 of 10 |
| Group Two — second quartile | $268,342 | $136,096 | $175,882 | $167,266 | 5 of 10 |
| Group Three — third quartile | $126,115 | $68,153 | $94,559 | $89,025 | 5 of 10 |
| Group Four — bottom quartile | $60,132 | $3,042 | $32,058 | $31,557 | 5 of 10 |
Median 2025 Gross Sales within each equal-sized Item 19 quartile
Interpretation: The top-quartile median was more than 12 times the bottom-quartile median. That spread is the clearest same-brand evidence that territory development and enrollment scale can dominate the earnings outcome.
Source: 2026 Franchise Disclosure Document, Item 19, pp. 28–29. Values are official Gross Sales, not profit.
A buyer cannot apply the Item 19 sales figures directly to personal take-home pay. The FDD supplies no teacher-pay ratio, facility-use ratio, operating-profit margin, owner salary, distributions, or net-income table. The Federal Trade Commission likewise cautions that gross sales can look strong while overhead and other expenses leave far less profit.
How were the annual owner-earnings scenarios calculated?
The scenarios apply a federal sole-proprietor Educational Services net-income benchmark to three transparent same-brand revenue anchors. They estimate pre-tax economic benefit to an active owner, not after-tax take-home pay and not a franchisor-reported profit figure.
Because each Item 19 quartile contains exactly 10 reporting owners, the compatible reporting-group average is reproduced as ($396,461 + $175,882 + $94,559 + $32,058) ÷ 4 = $174,740. This is a derived average, not a franchisor-stated system median.
Estimated manager-run owner earnings = owner-operator benefit − illustrative manager compensation.
The IRS reported $16.808 billion of business receipts and $4.943 billion of net income less deficit for 2023 nonfarm sole proprietorships in Educational Services, an all-return ratio of approximately 29.4%. The conservative and upside margins are a sensitivity band of three percentage points below and above that benchmark: 26.4%, 29.4%, and 32.4%. The Census definition of NAICS 611610 Fine Arts Schools specifically includes drama schools and performing-arts schools, but the IRS table is broader than that six-digit industry and therefore remains a proxy.
| Scenario | Revenue anchor | Margin assumption | Owner-operator benefit | Manager-run residual |
|---|---|---|---|---|
| Conservative | Group Three median Gross Sales | 26.4% | $23,503 | −$18,449 |
| Base | Derived average for all 40 reporting franchises | 29.4% | $51,374 | $9,422 |
| Upside | Group One median Gross Sales | 32.4% | $123,830 | $81,879 |
Estimated annual pre-tax benefit by scenario and operating role
Interpretation: At the base revenue and margin assumptions, replacing the owner’s management labor with paid management reduces modeled annual owner earnings from about $51,000 to about $9,000.
Sources and formula: 2026 FDD Item 19 revenue anchors; IRS 2023 Educational Services sole-proprietorship net-income ratio; BLS May 2025 general and operations manager median hourly wage. Rounded to the nearest dollar.
The Group Four median Gross Sales figure was only $31,557. The main conservative scenario uses the Group Three median because the year-three minimum royalty and fixed recurring fees become unusually burdensome at bottom-quartile sales, making a broad industry margin increasingly incompatible. The official bottom quartile is still direct evidence that actual owner benefit can fall well below the published scenario band and that a paid-manager structure may be uneconomic at low enrollment.
Why is “owner-operator benefit” different from business profit?
The owner-operator figure includes both residual business economics and the market value of management work performed by the owner. It is not passive profit. Item 15 requires the franchisee either to operate the Drama Kids Business directly or to designate an approved manager with day-to-day responsibility who completes required training.
The IRS Schedule C benchmark is particularly relevant to an active owner because a sole proprietor does not deduct personal owner wages from business income. It is less suitable for a manager-run structure, so the model separately subtracts an illustrative management cost.
- Manager wage: $50.85 per hour, the May 2025 national median for general and operations managers reported by the Bureau of Labor Statistics Occupational Employment and Wage Statistics table.
- Manager schedule: 15 hours per week for 50 weeks is an editorial assumption; the FDD does not specify manager hours.
- Payroll load: 10% above wages is an editorial allowance for employer-side payroll costs and related burden.
- Resulting cost: $41,951 annually. At 10 hours per week, the same method would be about $27,968; at 20 hours, about $55,935.
What is included and excluded from the estimate?
The estimate is pre-tax and period-matched to one year of operation. Its treatment of expenses follows the selected broad IRS net-income ratio, with separate disclosure of the owner-role adjustment.
- Personal income taxes: excluded. Entity choice, state, deductions, and owner circumstances make after-tax take-home pay non-comparable.
- Owner compensation: not deducted in the owner-operator scenario; that is why the result is labeled benefit rather than pure business profit.
- Manager compensation: deducted only in the manager-run scenario using the stated wage and hours.
- Interest and depreciation: embedded in the broad IRS net-income benchmark because the underlying income statement includes those reported business deductions.
- Financing principal and capital expenditures: excluded from annual operating earnings; principal repayment is a cash-flow use, not an operating expense.
- Debt service: not standardized. A financed buyer must subtract actual interest and principal payments separately from available cash.
Which franchise fees can materially change owner earnings?
The most material recurring franchise charges are an 8% royalty and a 1% National Advertising and Promotional Fund contribution. The royalty is also subject to a minimum of $200 per month in year two and $500 per month in year three and later. Fixed technology, social-media, and registration-software charges add roughly $2,244 to $2,844 annually at the disclosed 2026 rates.
| Recurring item | 2026 FDD amount | Annualized treatment | Earnings relevance |
|---|---|---|---|
| Royalty Fee | Greater of 8% of Gross Sales or minimum royalty | Year 3+: at least $6,000 | Creates a disproportionate burden when sales are low |
| National Advertising and Promotional Fund | 1% of Gross Sales | Variable with sales | Raises the disclosed variable system burden to 9% |
| Technology Fee | $50 per month | $600 | Fixed operating charge |
| Social Media Management Fee | $261 per calendar quarter | $1,044 | Fixed operating charge at the stated current rate |
| Class scheduling and registration software | $50–$100 per month | $600–$1,200 | Varies with student volume |
| Manager retraining trigger | Currently $1,200 per person in specified circumstances | Not treated as recurring | May apply when the owner stops managing or a new manager requires training |
The scenario engine does not subtract these fees again from the IRS all-in net-income ratio because the federal source does not isolate franchise fees from other business deductions. Subtracting both an all-in margin and the full fee schedule would risk double counting. The table instead serves as a compatibility check: buyers should obtain actual teacher payroll, location payments, marketing spend, software costs, and franchise fees from comparable existing owners and rebuild the model line by line.
What could move the earnings range most?
Enrollment scale is the largest visible earnings driver, while labor structure is the largest unresolved operating-cost variable. Item 19 shows a very wide sales distribution, but it does not explain how many classes, students, teachers, facilities, or owner hours produced each result.
| Variable | Why it matters | What the current evidence reveals |
|---|---|---|
| Enrollment and pricing | Drive Gross Sales and teacher utilization | Only total annual Gross Sales by quartile |
| Teacher payroll | Can convert owner time into scalable capacity, but reduces residual margin | No Item 19 expense ratio |
| School and community-site payments | Revenue-sharing or facility fees can vary by local agreement | No disclosed system average |
| Owner management hours | Determine how much of owner benefit is compensation for labor | Item 15 defines responsibility, not workload |
| Business maturity | New territories may need time to build school relationships and enrollment | Item 19 excludes the two franchises open less than one year |
| Financing | Principal and interest reduce cash available to the owner | No standardized buyer financing assumption |
Item 20 shows franchised outlets declining from 52 at the start of 2023 to 41 at the end of 2024, then increasing to 42 at the end of 2025. During 2025, two franchised outlets opened and one ceased operations for other reasons. Those figures describe outlet population changes, not profitability, but they reinforce the need to interview both continuing and former franchisees.
What should a buyer verify before relying on this range?
The most useful verification is a cohort-matched operating statement from several current and former owners, reconciled to the definitions in Item 19. Written substantiation for the Item 19 sales disclosure is available to prospective franchisees upon reasonable request.
- Ask for Item 19 written substantiation and confirm how Gross Sales reports were tested, corrected, and grouped.
- Interview owners near the Group Three, derived-average, and Group One revenue levels—not only high performers selected as references.
- Separate owner teaching, owner management, and paid-teacher hours so labor value is not mislabeled as passive profit.
- Obtain actual annual teacher payroll, payroll taxes, contractor costs, school revenue shares, facility rentals, insurance, software, and local marketing.
- Confirm whether the territory is a standard territory and whether its school count, household profile, and travel pattern resemble the reporting businesses.
- Recalculate cash available after the buyer’s actual loan interest, principal payments, and recurring capital needs.
- Review Item 20’s current and former franchisee list and ask former owners why they left the system.
What is the strongest defensible earnings range?
The strongest defensible published range is approximately $24,000 to $124,000 of annual pre-tax owner-operator benefit, with a base scenario near $51,000. It is scenario-based, not official owner-profit data. Under the illustrative paid-manager structure, modeled residual owner earnings move to approximately −$18,000, $9,000, and $82,000 across the conservative, base, and upside cases.
The most important earnings driver is annual Gross Sales, whose official quartile medians range from $31,557 to $382,192. The largest unresolved uncertainty is the relationship among teacher payroll, site arrangements, owner workload, and paid management. A buyer should verify Item 19 substantiation, obtain comparable owner income statements, and use Item 20 interviews to determine how much of reported economic benefit is business profit versus compensation for the owner’s labor.
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