Estimated annual owner economics
A single-store U.S. owner-operator may receive an estimated pre-tax owner-operator benefit in this range per year. The estimate includes about $51,000–$175,000 of modeled business residual plus a separately identified $55,000 labor-value assumption for personally managing the store. It is not after-tax take-home pay, and the labor component is not passive profit.
Median Gross Sales
All 408 reporting stores in the 2025 Item 19 cohort; revenue, not owner earnings.
Median Gross Profit
Gross Sales less Cost of Goods Sold only; store operating expenses remain to be paid.
Average Gross Profit percentage
The FDD’s systemwide average ratio, before payroll, rent, fees, advertising and other expenses.
Eligible stores reporting
Approximately 99.8% coverage of the defined mature, same-owner cohort.
Annualized fee and ad burden at median sales
5% Continuing Fee, 5% required local/co-op advertising, $1,500 Marketing Fee and $3,540 Software Fee.
Item 19 evidence
What does the 2026 FDD actually disclose?
It discloses sales and Gross Profit, not annual owner earnings. For the fiscal year ended December 27, 2025, Item 19 reports average and median results for a defined cohort of franchised stores. “Gross Profit” means Gross Sales minus Cost of Goods Sold, including freight and shrinkage. It does not subtract labor, rent, royalty, advertising, software, utilities, insurance, bookkeeping, repairs or other store-level operating expenses. Source: 2026 FDD, Item 19, pp. 36–39.
The strongest central observations are $1,178,261 median Gross Sales and $784,890 median Gross Profit. These two medians should not be divided to infer a store-level margin because the median sales store and median gross-profit store need not be the same outlet. The FDD separately reports a 66.71% average Gross Profit percentage across the reporting population.
A buyer cannot treat the $1.18 million median Gross Sales figure—or the $784,890 median Gross Profit figure—as owner income. The undisclosed operating-cost layer is large enough to determine whether the residual available to an owner is modest, substantial or negative.
How representative is the reporting cohort?
Coverage is broad within the FDD’s eligibility rules, but the population is not U.S.-only. The disclosure includes 408 of 409 eligible stores, all operated by the same franchisee or owners for the full 12-month period and opened in 2024 or earlier. It excludes 32 stores that opened or transferred during 2025. Item 20 reports 441 franchised stores at year-end—378 in the United States and 63 in Canada—with no company-owned stores. Source: 2026 FDD, Items 19–20, pp. 37–46.
Winmark states that the included U.S. and Canadian stores do not have material financial and operational differences for the disclosed measures. Even so, the FDD does not provide a U.S.-only sales table. This article therefore uses the combined Item 19 revenue observations as the highest-priority same-brand evidence while applying only the U.S. franchise terms disclosed in the U.S. FDD. That population limitation is one reason the confidence rating is Limited.
Where did reporting stores fall by annual Gross Sales?
Most of the 408-store cohort reported between $1 million and $2 million in 2025 Gross Sales.
Interpretation: The sales distribution is wide. Revenue placement is therefore a major driver of any owner-earnings estimate, and an overall average should not be treated as a forecast for a new location.
Source: 2026 FDD, Item 19, pp. 38–39. Percentages cover the combined U.S.-and-Canada reporting cohort defined by the FDD.
Scenario model
How can Gross Sales be converted into a reasonable earnings range?
The conversion requires an explicit operating-margin assumption because the FDD stops at Gross Profit. The model uses three official sales observations and three editorial residual-margin assumptions. It does not claim that Winmark reported or endorsed the resulting owner-earnings figures.
- Conservative revenue: $721,647, the fourth-quartile median Gross Sales figure. The modeled residual margin is 7%.
- Base revenue: $1,178,261, the all-store median Gross Sales figure. The modeled residual margin is 10%.
- Upside revenue: $1,345,919, the second-quartile median Gross Sales figure. The modeled residual margin is 13%. The top-quartile median was not used, avoiding an upside case built from the top 25% of stores.
The residual margin is defined after normal store-level operating costs and the disclosed recurring franchise obligations, including a paid manager in the delegated-management case. It is before personal income taxes, financing interest, financing principal, depreciation and major capital expenditures. Routine repair and maintenance is assumed to be included; major remodels are not. The 7%–13% band is analytical sensitivity, not FDD evidence.
| Scenario | FDD revenue anchor | Delegated-management residual | Owner-operator benefit |
|---|---|---|---|
|
Conservative 7% residual margin |
$721,647 | $50,515 | $105,515 |
|
Base 10% residual margin |
$1,178,261 | $117,826 | $172,826 |
|
Upside 13% residual margin |
$1,345,919 | $174,969 | $229,969 |
Estimated annual owner-operator benefit by scenario
Each column combines modeled business residual with a $55,000 labor-value assumption for the owner’s on-site management work.
Interpretation: The range should be read as scenario sensitivity, not a probability distribution. Sales placement and the undisclosed operating-expense structure move the result more than rounding.
Formula: revenue anchor × scenario residual margin + $55,000 owner labor value. Revenue anchors: 2026 FDD, Item 19, pp. 37–38. Margin and labor values: editorial scenario assumptions.
- Delegated-management residual
- Modeled cash available after normal unit operating expenses, recurring franchise fees and paid store management, but before taxes, financing and major capital expenditures. A single-store individual owner needs Winmark’s prior consent to delegate management.
- Owner-operator benefit
- Delegated-management residual plus the market value assigned to management labor performed by the owner. It combines return on the business with compensation for work.
- Not included
- Personal income tax, loan interest, loan principal, depreciation, major modernization expenditures and the opportunity cost of invested equity.
Owner role
How does owner involvement change the result?
Owner involvement is central to the standard single-unit model, not an optional passive-income overlay. Item 15 says an individual franchisee must be the on-site owner/operator and personally manage the store unless Winmark gives prior consent to delegate that authority. The owner’s primary job responsibility must be operating the store. A qualifying owner of multiple stores may delegate management of additional stores. Source: 2026 FDD, Item 15, pp. 30–31.
Modeled after paid management and normal store expenses.
Rounded analytical assumption for full-time retail supervision; replace with a local compensation quote.
Business residual plus labor value; not passive profit or after-tax income.
The $55,000 increment is not “extra profit” created by changing labels. It represents compensation for management work the owner performs instead of paying a manager. A local market may require materially more or less compensation, and payroll taxes or benefits can make the employer cost higher than salary alone.
The labor assumption is intentionally rounded because the relevant BLS profile for First-Line Supervisors of Retail Sales Workers varies by state, metropolitan area and industry. A buyer should substitute a location-specific fully loaded manager cost rather than treating $55,000 as an official national rate.
Recurring obligations
Which disclosed fees materially constrain owner earnings?
At the FDD’s $1,178,261 median Gross Sales, the current recurring royalty, required advertising and annualized fixed software/marketing obligations total about $122,866 before ordinary store expenses. This is a derived calculation from Item 6, not a franchisor-reported profit line. The scenario margins already assume these obligations are paid, so they are not subtracted a second time.
| Obligation | FDD term | At $1,178,261 sales | Scenario treatment |
|---|---|---|---|
| Continuing Fee | 5% of Gross Sales | $58,913 | Embedded in residual margin |
| Co-op/local advertising | Minimum combined spend of 5% of Gross Sales | $58,913 | Embedded; advertising spend is not necessarily paid entirely to Winmark |
| Marketing Fee | $1,500 per year | $1,500 | Embedded |
| Software Fee | $295 per month | $3,540 | Annualized and embedded |
| Derived total | 10% of sales + $5,040 | $122,866 | About 10.43% of median sales |
Item 6 allows Winmark, with notice, to raise the total minimum advertising expenditure to 6% of Gross Sales, with up to 3% directed to a North American Ad Fund. The FDD lists the current Technology Fee as $0 but estimates $500–$2,500 per year if one is established. The Software Fee may increase under its stated terms. Source: 2026 FDD, Item 6, pp. 7–10.
The FDD also says quarterly inventory replenishment generally ranges from $65,000 to $80,000. That inventory spending belongs in Cost of Goods Sold and is already reflected in Gross Profit; subtracting it again after using a Gross Profit-based framework would double count inventory cost.Item 7 gives an annual rent context of approximately $80,000–$120,000, but actual occupancy depends on store size, condition and location. Source: 2026 FDD, Items 6–7, pp. 9–13.
Winmark does not offer or guarantee financing under Item 10. This model therefore keeps both loan interest and principal outside operating earnings. A financed buyer must subtract actual annual debt service from the modeled owner benefit to estimate cash remaining after financing.
Uncertainty
What could move actual annual earnings outside the range?
The largest unresolved variable is the operating-cost layer below Gross Profit. Item 19 does not disclose payroll, employer taxes, occupancy, utilities, insurance, bookkeeping, repairs, card fees, supplies or store-level operating profit. A few percentage points of residual margin create a large dollar difference at seven-figure sales.
| Uncertainty | Why it matters | How to verify |
|---|---|---|
| Local payroll and staffing model | Labor can absorb much of the spread between Gross Profit and owner benefit. | Request role counts, hours, wage rates, payroll taxes and benefits from comparable stores. |
| Rent and occupancy charges | The FDD’s $80,000–$120,000 annual rent context is broad and may exclude some occupancy costs. | Model the actual lease, common-area maintenance, taxes, insurance and escalation clauses. |
| U.S./Canada combined Item 19 cohort | The FDD does not isolate U.S.-only sales and Gross Profit. | Ask Winmark for written substantiation and U.S.-specific context it is permitted to provide. |
| New-store ramp and transfers | The 32 stores opened or transferred in 2025 were excluded from the mature cohort. | Interview recent openings and review monthly results through at least the first full year. |
| Merchandise sourcing and shrinkage | Buy discipline, product mix, freight and shrinkage determine Gross Profit dollars. | Compare category margins, inventory turns, markdowns, shrink and cash paid for used goods. |
| Financing and modernization | Debt service and periodic capital requirements reduce owner cash but are excluded from the estimate. | Use lender terms and a separate capital-reserve schedule. |
The Winmark Corporation Item 19 evidence is current and same-brand for Gross Sales and Gross Profit, but the earnings result depends materially on editorial operating-margin assumptions because Item 19 does not disclose Store-Level Profit, Operating Profit or another owner-earnings measure. The combined U.S./Canada cohort adds a second compatibility limitation.
Buyer verification
What should a buyer confirm before relying on this estimate?
Verify the undisclosed expense layer with written records and comparable franchisee interviews. The most useful diligence is a monthly revenue-to-cash bridge for mature U.S. stores with similar rent, wage conditions and owner involvement—not another generic “average owner salary” claim.
- Request the written substantiation supporting the 2026 FDD Item 19 tables and ask whether U.S.-only cohort detail is available.
- Obtain anonymized or franchisee-provided profit-and-loss statements that reconcile Gross Sales, Cost of Goods Sold, payroll, occupancy, fees, advertising and store-level cash flow.
- Ask several franchisees how many weekly hours the owner works, what duties the owner performs and what a replacement manager would cost locally.
- Separate salary or labor value from distributions, retained earnings and business profit when discussing “owner income.”
- Model actual loan interest and principal separately; do not compare a pre-financing operating estimate with after-debt cash.
- Stress-test sales below the fourth-quartile median and residual margins below 7%, including a loss case, before committing capital.
The strongest defensible planning range is approximately $106,000–$230,000 of annual pre-tax owner-operator benefit for a mature single store, including $55,000 of assumed owner labor value. The corresponding modeled business residual is approximately $51,000–$175,000. Both figures are scenario-based, not official Item 19 owner earnings.
The dominant earnings driver is the combination of sales volume and the operating margin remaining after payroll, occupancy, the 5% Continuing Fee, required advertising and other store costs. The largest unresolved uncertainty is that Item 19 stops at Gross Profit and combines U.S. and Canadian stores. Before relying on the range, a buyer should review Item 19 substantiation, test the model against comparable U.S. franchisee profit-and-loss statements, and ask franchisees to separate business profit from compensation for the owner’s on-site work.