For a Mr. Electric business in the largest 2025 Item 19 reporting cohort—territories with 74,000 to 300,000 people—a defensible independent scenario produces about $28,000 to $120,000 of annual pre-tax owner-operator benefit, with a $55,000 base case. The amount combines residual business income with compensation for the owner’s own management work. It is not passive profit.
This range is an independent analytical scenario, not an Item 19 financial performance representation by MR. ELECTRIC SPV LLC. It combines official 2025 Gross Sales observations from the 2026 Franchise Disclosure Document with a broad Internal Revenue Service sole-proprietor margin benchmark and explicit sensitivity assumptions. Actual results can differ materially by territory, sales mix, technician productivity, payroll, materials, local marketing, software and call-center usage, financing, owner involvement, and execution.
FDD citations in this article refer to the 2026 Mr. Electric Franchise Disclosure Document, Items 5, 6, 7, 15, 19, and 20. No matching public copy of the 2026 FDD was verified on an official franchise-controlled website, so the FDD is cited by year, Item, and page rather than linked.
2025 median for 87 full-year businesses in territories of 74,000–300,000 people. Revenue is not owner earnings.
Item 19 includes 71.6% of the 236 U.S. franchised businesses operating at year-end 2025.
IRS 2023 net income less deficit divided by receipts for broad specialty trade contractors.
Standard License Fee plus MAP Fee, each calculated on Gross Sales, subject to FDD terms and exceptions.
May 2023 BLS annual mean wage for General and Operations Managers in NAICS 238210.
Item 20 reports an entirely franchised U.S. system in 2023, 2024, and 2025.
What does Mr. Electric Item 19 actually measure?
Item 19 officially measures Gross Sales, not operating profit, EBITDA, owner compensation, distributions, or take-home pay. Its 2025 results cover franchised businesses that were open and reporting for all 52 weeks, grouped by territory population. The strongest central observations are the medians because the averages are pulled upward by high-sales businesses.
The 2026 FDD defines Gross Sales broadly as revenue and receipts arising from the business, excluding sales taxes, authorized refunds, rebates or discounts, and qualifying Excluded Services. Franchisees supplied the data through the system’s software, and the FDD says they were not required to use generally accepted accounting principles. See 2026 Mr. Electric FDD, Item 19, pp. 74–78.
| 2025 territory population | Reporting businesses | Average Gross Sales | Median Gross Sales |
|---|---|---|---|
| 74,000–300,000 | 87 | $514,894 | $352,821 |
| 300,001–500,000 | 30 | $1,412,806 | $1,022,586 |
| 500,001–1,000,000 | 32 | $1,534,978 | $1,292,838 |
| 1,000,001–5,000,000 | 20 | $2,599,071 | $2,004,844 |
Item 19 excludes 40 businesses opened during 2025, 17 that did not provide reliable full-period data, 10 businesses whose data were aggregated with a primary reporting unit, and 15 businesses that closed during 2025. The reported population therefore describes surviving, full-year reporters—not every business exposed to the system during the year.
Item 20 provides useful context: U.S. franchised outlets increased from 211 at the start of 2025 to 236 at year-end, while 14 transfers occurred during the year. Growth in outlet count does not establish profitability, and the excluded closures are especially relevant when interpreting a full-year survivor cohort.
How was the owner-operator earnings range calculated?
The estimate multiplies three official Item 19 revenue observations by an IRS-derived owner-operator margin sensitivity. Conservative revenue uses the median Gross Sales of the bottom half of the 74,000–300,000 territory cohort; the base uses the cohort’s overall median; and upside uses the median of its top half. These are descriptive FDD observations, not probabilities or forecasts.
- Conservative revenue
- $220,793, the 2025 median Gross Sales of the cohort’s bottom 50%.
- Base revenue
- $352,821, the 2025 median Gross Sales of all 87 businesses in the cohort.
- Upside revenue
- $639,725, the 2025 median Gross Sales of the cohort’s top 50%.
- Margin benchmark
- 15.7%, calculated as 2023 IRS net income less deficit of $40.481 billion divided by $257.750 billion of business receipts for sole proprietors classified as Specialty trade contractors.
- Margin sensitivity
- 12.7%, 15.7%, and 18.7%—the benchmark minus three percentage points, the benchmark, and the benchmark plus three percentage points.
Estimated annual pre-tax owner-operator benefit; rounded to the nearest $1,000.
Interpretation: the range is driven by both revenue dispersion inside the official cohort and a six-percentage-point margin sensitivity. The $55,000 midpoint is a base scenario, not a “most likely” result.
Sources: 2026 Mr. Electric FDD, Item 19, pp. 75–78; IRS Nonfarm Sole Proprietorship Statistics and 2023 IRS Table 2 income statements. Formula: revenue × scenario margin. Full-precision inputs were used before rounding.
- All-in benchmark treatment: The IRS margin is treated as an all-in tax-return margin. The FDD’s License Fee, MAP Fee, local advertising, payroll, materials, occupancy, software, call-center expense, interest, and depreciation are not subtracted again because that would risk double counting costs already reflected in the benchmark.
- Owner labor treatment: A sole proprietor cannot deduct a salary paid to the proprietor. The modeled result is therefore labeled owner-operator benefit: it can include both economic profit and the value of work performed by the owner.
- Excluded from take-home pay: Personal income taxes and financing principal payments are excluded. Capital expenditures beyond tax depreciation and changes in working capital are not separately modeled.
The IRS category is broader than electrical contracting, is not franchise-specific, and combines sole proprietors with different staffing, market, and expense structures. It is useful as a sensitivity anchor, but it cannot establish a Mr. Electric margin. A buyer should replace it with actual franchisee profit-and-loss statements before underwriting the purchase.
How does owner involvement change the result?
An active owner may capture the modeled owner-operator benefit, while a manager-run structure must fund replacement management before the owner receives residual income. Item 15 generally requires an individual owner to perform or supervise operations unless the franchisor consents otherwise. If the owner is not supervising, a trained bona fide manager must directly supervise the business.
Owner-operated
The owner performs or directly supervises management work. The scenario’s 15.7% base margin is interpreted as owner-operator benefit, not pure passive business profit. Part of the result compensates the owner for labor.
Manager-run
The model subtracts a $126,030 wage proxy—the May 2023 BLS annual mean for General and Operations Managers in NAICS 238210. Benefits, payroll taxes, recruiting expense, and management incentives are not added, so the residual is generous.
Base scenario by official territory cohort, using each cohort’s 2025 median Gross Sales and the 15.7% IRS margin proxy.
Interpretation: under this base sensitivity, the standard 74,000–300,000 cohort does not cover the BLS manager wage from modeled owner-operator benefit. Larger territory cohorts show more residual, but they have smaller samples and may represent more developed organizations, more technicians, or multiple operating territories.
Sources: 2026 Mr. Electric FDD, Item 19, pp. 75–78; BLS May 2023 NAICS 238210 wage estimates; BLS current OEWS tables. Formula: FDD cohort median × 15.7056% − $126,030 manager wage. The manager subtraction is a labor-replacement sensitivity and may overlap with staffing costs already present in the broad IRS benchmark.
For the standard cohort, the conservative, base, and upside manager-run residuals are approximately −$98,000, −$71,000, and −$6,000 before manager benefits and payroll burden. This does not prove a manager-run business will lose money; it shows that a market-rate manager is difficult to support at these revenue and margin assumptions. A manager-run structure requires separate consent under Item 15 and must be tested with unit-specific staffing economics.
Which FDD fees can move owner earnings most?
The largest disclosed recurring burdens are the 6% standard License Fee, 2% MAP Fee, and local marketing requirements. The FDD also lists software, user, call-center, bookkeeping, convention, and possible Key Accounts charges. The model does not subtract them line by line because it uses an all-in IRS margin; instead, the figures below show why a franchise-specific P&L is essential.
| Recurring item | 2026 FDD term | At $352,821 Gross Sales | Model treatment |
|---|---|---|---|
| Standard License Fee | 6% of Gross Sales, subject to minimums and roll-in exceptions | $21,169 | Included implicitly in all-in margin proxy |
| MAP Fee | 2% of Gross Sales | $7,056 | Included implicitly in all-in margin proxy |
| Minimum Local Marketing Spending | Franchisor may require the greater of $55,000 or 8% of prior-year Gross Sales after the initial period | $55,000 | Not assumed universally; tested in diligence |
| Software System monthly fee | Currently $270 per month, plus possible user and vendor charges | $3,240 | Included implicitly; vendor usage varies |
| Call Center base fee | Currently $349.99–$449.99 per month plus $25 per booked appointment | $4,200–$5,400 | Base shown; appointment fees remain variable |
| BackOffice HelpDesk | $400 per month for six hours; required during first 24 months | $4,800 | Startup-period obligation, not mature-year assumption |
At the standard cohort’s $352,821 median, the 6% License Fee, 2% MAP Fee, and a $55,000 local-marketing floor—if imposed—would total about $83,226, or 23.6% of Gross Sales, before payroll, materials, vehicles, insurance, software, call-center usage, occupancy, and other overhead. The $55,000 requirement is not assumed to apply universally in the scenario; its applicability and actual qualifying spend must be verified.
The first two operating years are structurally different. Item 6 requires $60,000 of marketing spending in the first 12 months and $75,000 in months 13–24, while the BackOffice program is required for the first 24 months. A mature full-year Item 19 revenue observation should not be treated as evidence that a new business can absorb those ramp-period costs on the same margin.
Item 7’s $159,500–$357,425 initial investment is startup capital, not an annual operating expense. It should not be subtracted from one year of sales to calculate annual profit. Financing principal is also separate from operating earnings; interest is reflected only to the extent it appears in the broad IRS tax-return benchmark.
What creates the widest uncertainty in this earnings range?
The largest unresolved issue is the absence of same-brand expense and profit data. Item 19 shows unusually wide sales dispersion within every territory cohort, while the external margin benchmark does not reveal whether a Mr. Electric business has comparable technician payroll, materials, advertising, vehicle, dispatch, and franchise-fee economics.
- Territory size is not a margin guarantee. Larger cohorts have higher median Gross Sales, but the FDD does not disclose how many technicians, vehicles, managers, acquired operations, or combined territories produced those results.
- Full-year reporting selection matters. New openings, unreliable reporters, combined reporting units, and 2025 closures are excluded from the Item 19 sales tables.
- Average and median diverge. In the 74,000–300,000 cohort, average Gross Sales were $514,894 while median Gross Sales were $352,821; only 31 of 87 businesses, or 36%, met or exceeded the average.
- Local economics dominate. Electrician wages, service-call pricing, materials mix, customer acquisition cost, licensing rules, weather, housing stock, commercial work, and dispatch efficiency can move the margin materially.
- Debt changes cash available. The scenario excludes financing principal and does not assume a common financed amount, rate, or term. Two owners with identical operating profit can have very different cash distributions.
The industry match is reasonable but imperfect. The U.S. Census Bureau definition of NAICS 238210 covers establishments primarily installing and servicing electrical wiring and equipment, including maintenance and repairs. The IRS margin, however, is published for the broader Specialty trade contractors group rather than NAICS 238210 alone.
What should a buyer verify before using the range?
A buyer should treat the $28,000–$120,000 range as a screening tool and replace its assumptions with written, unit-level evidence. The most useful work is a reconciliation from Gross Sales to owner benefit for comparable franchisees in the same territory band, stage of development, and owner-role structure.
- Request Item 19 written substantiation and confirm the exact 2025 businesses included in the relevant territory cohort, including how combined reporting units are handled.
- Interview current and former franchisees from Item 20 and ask for revenue, technician payroll, materials, gross margin, marketing, software, vehicles, insurance, manager compensation, owner hours, and normalized operating income.
- Separate owner salary or labor value from distributions and retained earnings. Ask whether reported “income” is before or after interest, depreciation, manager pay, owner pay, and capital expenditures.
- Confirm in writing whether the $55,000-or-8% Minimum Local Marketing Spending applies, what expenditures qualify, whether an LMG contribution is required, and how the first 24 months differ.
- Verify the number of technicians and vehicles needed to reach the selected Item 19 revenue observation, plus recruiting time, wage rates, payroll burden, warranty work, and utilization.
- For a manager-run plan, obtain franchisor consent requirements under Item 15 and price a bona fide manager with benefits, payroll taxes, incentives, and recruiting cost—not salary alone.
- Model debt service separately using the buyer’s actual financed amount, rate, term, collateral, and working-capital needs. Do not convert pre-tax operating benefit into after-tax take-home pay.
The FTC’s Consumer’s Guide to Buying a Franchise explains that Item 19 is where a franchisor’s sales or earnings claims must appear and recommends evaluating the basis and limitations. The FTC also advises prospects to ask for written substantiation and have an accountant scrutinize financial performance representations in its guidance on evaluating franchise economics.
What is the strongest defensible earnings takeaway?
The strongest defensible screening range is approximately $28,000 to $120,000 of annual pre-tax owner-operator benefit for the 74,000–300,000 territory cohort, with a $55,000 base scenario. It is scenario-based, not official owner-profit data. The most important driver is Gross Sales relative to technician, materials, and customer-acquisition costs; the largest uncertainty is the lack of a same-brand operating margin.
Owner involvement is decisive. At the standard cohort’s modeled economics, replacing owner management with a market-rate manager eliminates the modeled benefit in all three scenarios before benefits and payroll burden. Larger territory cohorts may support management in the base sensitivity, but their higher revenue cannot be assumed for a new or single-territory business.
A buyer should verify the applicable Item 19 cohort and substantiation, obtain comparable franchisee P&Ls, reconcile every recurring fee, and distinguish residual business profit from compensation for the owner’s labor. Personal taxes and financing principal remain outside this estimate.