How Much Does a Five Star Bath Solutions Franchise Owner Make?

Officially, Item 19 shows $1,202,303 of Adjusted EBITDA on $11,650,542 of Total Income for the Macomb Controlled Location during January-December 2024. That is a 10.32% disclosed margin for the combined operation of six territories, not a typical result for one independent owner or one territory.

The FDD describes the operation as owned and managed by the brand manager, a full-time employee of the franchisor. It is not an affiliate and is not directly company-owned, but the FDD treats it as indirectly controlled. The location also supports training, development, and pilot marketing initiatives. Item 19 says its reporting was adjusted to remove owner add-backs and certain atypical inventory and marketing entries, while warning that staffing decisions can create significant variation. These facts make the Profit and Loss statement useful, but not directly representative of a new franchisee.

What does “Adjusted EBITDA” mean here?

It is an official operating-profit measure, not cash in the owner's pocket. The scenario treats Adjusted EBITDA as cash-generating operating profit before interest, income taxes, depreciation, amortization, capital expenditures, financing principal, and personal taxes. The FDD does not enumerate every adjustment or disclose a separate owner salary. Payroll and other staffing costs appear in the Profit and Loss statement, but manager compensation is not isolated.

The range is estimated by allocating the controlled operation equally across six territories, then varying both revenue and margin. The base territory-equivalent revenue is $11,650,542 divided by six, or $1,941,757. The base margin is the disclosed 10.3197% Adjusted EBITDA margin. Conservative and Upside cases use 80% and 120% of base revenue, with margins three percentage points below and above the official margin.

• Equal-share allocation: $11,650,542 of Total Income and $1,202,303 of Adjusted EBITDA are divided by six territories. The FDD does not state that each territory contributes equally.
• Revenue sensitivity: 80%, 100%, and 120% of the equal-share revenue are editorial assumptions, not Item 19 quartiles or probabilities.
• Margin sensitivity: 7.32%, 10.32%, and 13.32% are the disclosed margin minus three points, the disclosed margin, and the disclosed margin plus three points.
• Fee treatment: The controlled Profit and Loss statement already includes Royalties Expense, Ad Fund Expense, advertising, software/office costs, payroll, commissions, and other operating expenses. Franchise fees are not subtracted a second time.
• Excluded from earnings: Personal income tax, financing principal, capital expenditures, and working-capital changes are outside the scenario. Interest, depreciation, and amortization are excluded by the EBITDA framework.

Officially, nearly half of 2024 Total Income went to Cost of Goods Sold, while advertising and marketing were the next-largest disclosed category. The chart below uses the disclosed dollar amounts rather than the printed percentage column because several printed percentages do not recalculate exactly from Total Income.

Owner involvement changes the composition of the economic benefit more than the official profit measure. Item 15 recommends full day-to-day participation but allows a franchisee to appoint a trained Manager. Item 7 assumes the owner is the salesperson for a single-location startup, while the multi-location estimate assumes a hired salesperson. The FDD does not disclose a standard manager or salesperson salary, so no unsupported labor add-back is included in the earnings range.

The largest uncertainty is whether one-sixth of a six-territory controlled portfolio resembles a standalone U.S. franchise territory. Shared management, marketing, call-center capacity, warehouse use, sales staffing, and purchasing scale may make the combined operation materially different from a new single-territory business.

• Portfolio allocation: Item 19 gives one combined Profit and Loss statement for six territories. It does not provide territory-by-territory revenue, expense, or Adjusted EBITDA.
• Controlled-operation differences: the Macomb operation supports pilot marketing, training, and development activities, and its accounting includes stated adjustments.
• Franchisee profit gap: the 2025 franchisee tables report sales and key performance indicators only. They expressly exclude the cost of services and franchisee expenses.
• Geographic scope: the FDD's system tables include U.S. states and Canadian provinces, while the Item 19 franchisee sales tables do not separately identify a U.S.-only reporting population. Those sales figures are therefore not used as the revenue anchor for this U.S. earnings scenario.
• Reporting cohort: Item 19 says 62 non-company-controlled franchisees reported a full 2025 calendar year and 34 with fewer than 12 months were excluded. Mature, established, and first-full-year cohorts differ, but none reports franchisee profit.
• Expense volatility: materials, installation labor, sales commissions, online lead generation, local advertising, insurance, and payroll can change faster than the royalty schedule.
• Debt and tax: financing principal and personal income taxes are not operating expenses in this scenario. Borrowing terms, entity structure, jurisdiction, and deductions can materially change cash available to the owner.

Why not use the reported franchisee sales averages as owner earnings?

Because they measure Gross Sales, not profit, and their U.S.-only scope is not isolated. For example, Item 19 reports $1,947,044 of Average Annual Sales and a $1,375,385 median among 62 non-company-controlled reporting franchisees, with an average of four locations per franchisee. Those figures are useful evidence about scale and dispersion,but applying the Controlled Location margin to them would silently combine a geographically unspecified franchisee population with one U.S. controlled portfolio. This article avoids that blend.

A buyer should verify the territory-level Profit and Loss mechanics, owner labor treatment, and current fee burden with written substantiation and franchisee interviews. The scenario is most useful as a set of questions and sensitivity boundaries, not as a forecast.

• Request the written substantiation for the Item 19 Controlled Location representation and ask for the exact definitions and adjustments behind Adjusted EBITDA.
• Ask whether the six territories share a warehouse, sales team, manager, call center, advertising budget, or installation crews, and quantify the costs that would not scale linearly to one territory.
• Obtain territory-level monthly Gross Sales, materials, installer labor, sales commissions, marketing, payroll, insurance, software, rent, refunds, warranty costs, and consumer-financing fees.
• Ask current U.S. franchisees to separate business profit from owner salary, draw, distributions, retained earnings, and any add-back for owner-performed sales or management work.
• Confirm the current Royalty Fee tier, National Marketing Fee, Territory Marketing Requirement, software charges, bookkeeping, call-center costs, and applicable monthly minimums in Items 6 and 11.
• Review Item 20 contacts across first-full-year, established, and mature U.S. operators, including owners with one territory and owners with multiple territories.
• Model debt service separately using the buyer's actual financed amount, rate, amortization term, fees, and working-capital needs. Do not convert the operating estimate into after-tax take-home pay.

The strongest defensible estimate is approximately $114,000 to $310,000 of annual pre-tax owner earnings per territory-equivalent, with a $200,000 base case. It is a scenario, not an official franchisee earnings result. The strongest official evidence is $1,202,303 of 2024 Adjusted EBITDA from one U.S. six-territory Controlled Location. The most important earnings driver is the interaction between sales volume and project-delivery and marketing costs. The largest unresolved uncertainty is how shared six-territory overhead and scale translate to a standalone territory. Before treating the range as decision-ready, a buyer should reconcile Item 19 substantiation to territory-level financial statements and test the owner-role assumptions in interviews with current U.S. franchisees.