A manager-run U.S. Happy Lemon store may produce roughly $6,000 to $68,000 in annual pre-tax owner earnings under the independent scenarios below, with a base scenario near $27,000. If the owner personally replaces one paid Store Manager, the corresponding estimated owner-operator benefit is about $69,000 to $131,000, including the market value of the owner’s labor rather than pure passive profit.
Item 19 reports average, median, low, and high Gross Revenues by quartile. It does not report store-level profit, EBITDA, Net Income, owner compensation, or cash flow.
The revenue anchor is current same-brand FDD evidence, but the profit margin is a broad government industry proxy and Item 19 combines franchised and company-owned stores without a format split.
- Legal franchisor
- Yummy-town USA LLC, a Delaware limited liability company.
- Current disclosure
- 2026 Happy Lemon Franchise Disclosure Document, issued March 9, 2026. No verified public copy was available on the official franchise-controlled website, so FDD references below are plain-text Item and page citations.
- Item 19 population
- 117 company-owned and franchised Happy Lemon stores in the United States operating for the entire 2025 calendar year, except temporary closures of less than seven days.
- Store formats
- The FDD describes a preferred 500–1,000 square-foot store and notes food-court, kiosk, and other nontraditional formats. The official U.S. franchise page separately describes 400–700 square-foot kiosks, 700–1,000 square-foot take-out stores, and 1,000-plus square-foot dine-in stores. Item 19 does not separate their economics.
- Benchmark sources
- IRS Statistics of Income corporate returns for Food services and drinking places; U.S. Census NAICS 722515 classification; BLS Food Service Manager wage data.
- Date checked
- July 21, 2026.
Average across all 117 reporting HL Stores; revenue, not owner earnings.
A mixed population of company-owned and franchised U.S. stores.
6% Royalty Fee plus 1% Marketing Fund Fee on Gross Revenues.
$350 minimum monthly maintenance annualized; upgrades can add cost.
2022 all-corporation Food services and drinking places aggregate.
May 2024 median wage for Food Service Managers in food services and drinking places.
What does Happy Lemon’s 2026 Item 19 actually measure?
It measures Gross Revenues, not owner earnings. This is an official 2025 sales disclosure for 117 U.S. HL Stores, combining franchised and company-owned outlets that operated for the full year except short temporary closures. The FDD defines Gross Revenues as operating charges and revenue after sales tax, refunds, adjustments, and credits, before cost of goods, payroll, rent, franchise fees, and other operating expenses.
The $472,451 all-store average cannot be treated as salary, cash flow, or profit. Item 19 expressly states that its Gross Revenues figures do not reflect the costs required to reach Net Income or profit. Source: 2026 Happy Lemon FDD, Item 19, pp. 35–36.
Official median Gross Revenues by performance quartile; quartiles describe the historical reporting population, not probabilities for a new store.
Interpretation: the top-quartile median was about 3.6 times the bottom-quartile median, demonstrating that location and operating execution can overwhelm a single systemwide average.
Source: 2026 Happy Lemon FDD, Item 19, p. 36. Official quartile medians. The all-store average was $472,451.
| 2025 Item 19 quartile | Stores | Average Gross Revenues | Median Gross Revenues | Stores meeting quartile average |
|---|---|---|---|---|
| Top 25% | 29 | $861,412 | $776,164 | 41% |
| 2nd quartile | 29 | $501,460 | $493,144 | 45% |
| 3rd quartile | 29 | $336,956 | $345,552 | 59% |
| Bottom 25% | 30 | $199,383 | $214,516 | 60% |
The disclosed quartile ranges were $654,842–$1,551,272, $394,357–$653,250, $260,862–$389,830, and $83,692–$259,135, respectively. Results came from POS reports for franchised stores and internally prepared financial statements for company-owned stores; neither data stream was independently audited or verified for Item 19 purposes.
How was the annual owner-earnings range estimated?
The estimate applies a government industry margin to three FDD revenue anchors. It is a scenario calculation for a single U.S. store, not an official Happy Lemon profit result. Conservative revenue uses the bottom-quartile median, base revenue uses the all-store average, and upside revenue uses the top-quartile median. Those observations are analytical anchors, not predicted outcomes.
The benchmark margin is 5.7129%, calculated from 2022 IRS Statistics of Income figures for active corporations in Food services and drinking places: $35.281 billion of Net Income (less deficit) divided by $617.565 billion of total receipts. The conservative and upside margins are the benchmark minus and plus three percentage points. Results are rounded to the nearest $1,000.
Estimated pre-tax owner earnings after the broad industry benchmark’s aggregate operating costs, interest, depreciation, wages, and officer compensation; before personal income taxes and financing principal.
Interpretation: the revenue distribution and operating margin jointly determine the result. A high-sales store can still underperform if labor, occupancy, ingredients, promotions, or required purchases consume more than the benchmark assumes.
Sources: 2026 Happy Lemon FDD, Item 19, p. 36; IRS Corporation Income Tax Returns Complete Report, 2022 Table 5.1. Scenario margins are editorial assumptions around the 5.7129% IRS aggregate.
| Scenario | Revenue anchor | Margin assumption | Manager-run pre-tax owner earnings |
|---|---|---|---|
| Conservative | $214,516 | 2.7% | $6,000 |
| Base | $472,451 | 5.7% | $27,000 |
| Upside | $776,164 | 8.7% | $68,000 |
What is included and excluded from the estimate?
The manager-run figure is intended as pre-tax residual business earnings, not after-tax take-home pay. The IRS proxy is an all-in aggregate Net Income measure, so it reflects reported cost of goods sold, salaries and wages, officer compensation, rent, interest, depreciation, advertising, taxes and licenses, and other deductions across the benchmark population. Capital expenditure cash outlays and financing principal are not modeled, and personal income taxes are excluded.
- Included through the proxy: normal unit operating costs, manager compensation, interest, depreciation, and typical business deductions in aggregate.
- Not deducted again: the 6% Royalty Fee and 1% Marketing Fund Fee, because the IRS margin is treated as an all-in benchmark. Subtracting them again would risk double counting.
- Excluded from annual operating earnings: Item 7 startup investment, build-out, opening inventory, initial fees, financing principal, owner personal taxes, and discretionary distributions.
- Unresolved: the IRS data do not identify franchise status, Happy Lemon purchasing economics, kiosk versus dine-in mix, or the exact proportion of owner compensation embedded in the aggregate.
How does active owner involvement change the result?
Active operation can add about $63,000 of labor value if the owner replaces one paid Store Manager. This is an estimated owner-operator benefit, not pure business profit. The 2026 FDD requires the franchisee or Designated Owner to supervise and personally participate in direct operation, and each store must have at least two Store Managers; one may be the Designated Owner.
| Scenario | Manager-run residual | One manager wage proxy | Estimated owner-operator benefit |
|---|---|---|---|
| Conservative | $6,000 | +$63,040 | $69,000 |
| Base | $27,000 | +$63,040 | $90,000 |
| Upside | $68,000 | +$63,040 | $131,000 |
The $63,040 increment uses the May 2024 median wage for Food Service Managers in food services and drinking places from the U.S. Bureau of Labor Statistics. It assumes the owner replaces one manager while the store retains the second manager required by the FDD. It does not mean the owner receives a guaranteed salary, and it does not value payroll taxes, benefits, overtime, or the owner’s hours.
The operating model therefore is not a clean passive-income structure. The official U.S. franchise materials also tell prospective franchisees to be prepared for an active role. A manager-run structure can reduce the owner’s daily labor, but the FDD still places supervision and direct participation responsibilities on the franchisee or Designated Owner. Source: 2026 Happy Lemon FDD, Item 15, pp. 27–28, and Item 11, pp. 20–23.
Which recurring fees can move Happy Lemon owner earnings most?
The clearest disclosed recurring burden is 7% of Gross Revenues plus at least $350 per month for POS maintenance. This is official FDD evidence for a franchised store. Local advertising of another 1% to 2% of Gross Revenues is recommended rather than stated as a fixed monthly fee, but required campaigns and promotions may create additional expense.
| Scenario revenue | 6% royalty + 1% fund | Minimum annual POS | Recommended local ads at 1%–2% |
|---|---|---|---|
| $214,516 | $15,016 | $4,200 | $2,145–$4,290 |
| $472,451 | $33,072 | $4,200 | $4,725–$9,449 |
| $776,164 | $54,331 | $4,200 | $7,762–$15,523 |
Source: 2026 Happy Lemon FDD, Item 6, pp. 5–12; Item 7, pp. 12–15; Item 11, pp. 22–23. Dollar amounts are derived from the disclosed percentages and scenario revenue anchors. These fees are shown for visibility and are not subtracted a second time from the all-in IRS margin model.
The FDD estimates that required purchases and leases represent approximately 75% of ongoing purchases and leases. That does not mean 75% of revenue or 75% of total expenses. It means supplier restrictions can materially affect ingredient and operating economics, while Item 19 does not disclose the resulting store-level gross margin. Source: 2026 Happy Lemon FDD, Item 8, pp. 15–16.
Why is the reasonable earnings range so wide?
The largest uncertainty is the missing same-brand expense statement. Item 19 gives strong revenue distribution evidence but no cost of goods, labor, occupancy, operating profit, or owner compensation. The resulting owner-earnings estimate is therefore sensitive to both store sales and the margin proxy.
- Mixed ownership: the 117-store Item 19 population combines franchised and company-owned outlets. Company-operated purchasing, staffing, and overhead allocation may differ from a franchisee’s economics.
- Mixed formats: kiosks, take-out stores, dine-in stores, mall units, strip-center units, and nontraditional formats are not separated in Item 19.
- Broad benchmark: IRS Food services and drinking places includes businesses beyond snack and nonalcoholic beverage bars. The U.S. Census definition of NAICS 722515 is operationally closer to a bubble-tea store, but available Census data do not provide a complete store-level owner-profit margin for this calculation.
- Historical cohort: Item 19 excludes stores that did not operate for the full 2025 calendar year, other than temporary closures shorter than seven days. New-store ramp-up economics are therefore not represented.
- System movement: Item 20 reports 106 franchised outlets at both the start and end of 2025, alongside seven openings, two franchisor reacquisitions, five other cessations, and eight transfers. Stable net count does not mean every outlet had stable economics.
- Debt and taxes: the FDD states that neither the franchisor nor affiliates offer financing for the initial investment. Debt principal and personal income taxes are buyer-specific and are not included in the annual owner-earnings range.
The Federal Trade Commission’s franchise buyer guidance emphasizes that Gross Sales do not reveal costs or profits and recommends requesting written substantiation, testing geographic relevance, and speaking with current and former franchisees.
What should a buyer verify before relying on this range?
Verify actual unit expense statements and owner workload, not just sales. The estimate is useful for screening, but only store-level documents and franchisee interviews can establish whether a specific market, format, and management structure support the modeled margin.
- Request Item 19 written substantiation and ask for the franchised-versus-company-owned split within the 117 reporting stores.
- Ask for sales and expense statements from stores matching the proposed kiosk, take-out, dine-in, mall, strip-center, or nontraditional format.
- Confirm cost of goods, hourly labor, manager payroll, rent, common-area charges, delivery commissions, utilities, insurance, and local advertising as percentages of Gross Revenues.
- Ask current franchisees how many weekly hours the Designated Owner works and whether the owner replaces one of the two required Store Managers.
- Compare mature-store results with first-year and second-year ramp-up, including closures, transfers, and stores below the bottom-quartile median.
- Model debt service separately using the buyer’s actual loan amount, rate, term, fees, and required reserves; do not deduct the Item 7 startup investment from one year of revenue.
- Confirm any POS upgrades, remodel obligations, supplier price changes, required campaigns, and local advertising expectations not captured by the minimum disclosed fees.
What is the strongest defensible earnings takeaway?
The strongest defensible range is approximately $6,000 to $68,000 in manager-run annual pre-tax owner earnings, or about $69,000 to $131,000 in owner-operator benefit when the owner replaces one paid manager. These are scenario-based estimates, not official Happy Lemon earnings figures. The most important earnings driver is the combination of store-level Gross Revenues and labor/occupancy control; the largest unresolved uncertainty is the absence of a same-brand franchised-store expense and profit statement. A buyer should verify Item 19 substantiation, format-specific unit economics, manager staffing, and actual franchisee cash flow before using any point in the range for a financing or personal-income decision.