A reasonable modeled range for one mature Plato’s Closet store is approximately $22,000 to $263,000 per year, with a base scenario near $169,000. This is estimated pre-tax owner-operator benefit, not an official owner-income disclosure. It combines residual store economics with the value of work performed by an active owner.
This range is an independent analytical scenario, not an Item 19 financial performance representation by Winmark Corporation. It combines identified facts from the 2026 Plato’s Closet Franchise Disclosure Document with separately identified operating assumptions. Actual results can differ materially because of location, sales, merchandise acquisition, labor, occupancy, financing, owner involvement, and execution.
Legal franchisor: Winmark Corporation. FDD issuance date: March 16, 2026. Item 19 status: official Gross Sales and Gross Profit, but no Operating Profit, EBITDA, Net Income, Cash Flow, or Owner Compensation. Reporting population: 492 franchised stores in the United States and Canada that operated under the same owner for the full 12 months ended December 27, 2025; newly opened and transferred stores were excluded. U.S. limitation: the FDD does not publish a U.S.-only Item 19 breakout. Checked: July 15, 2026.
The 2025 median for the 492-store Item 19 cohort. Revenue is not owner earnings.
Gross Sales less Cost of Goods Sold; operating expenses remain to be paid.
All eligible mature franchised stores reported, but the population combines U.S. and Canadian stores.
5% Continuing Fee plus a 6% minimum combined advertising and local-marketing requirement.
Before personal income tax, financing costs, capital spending, and owner-specific withdrawals.
What does the 2026 Plato’s Closet FDD actually disclose?
Officially, Item 19 discloses store revenue and Gross Profit—not annual owner earnings. For the 12 months ended December 27, 2025, the 492-store reporting population produced average Gross Sales of $1,307,875, median Gross Sales of $1,206,301, average Gross Profit of $833,084, and median Gross Profit of $764,012. These are franchised-store measures for a combined U.S.-and-Canada cohort, not a U.S.-only owner-income study.
The FDD defines Gross Profit as Gross Sales minus Cost of Goods Sold, including freight and shrinkage. It explicitly says Gross Profit excludes the operating expenses required to reach Net Income or profit. Payroll, occupancy, royalty, advertising, software, insurance, professional fees, repairs, and other store costs still have to be paid. Only 40% of reporting stores attained or exceeded the system average Gross Sales, illustrating why the average should not be treated as a typical result. Item 20 reports no company-owned Plato’s Closet stores, so there is no company-operated profit proxy. See the 2026 Plato’s Closet FDD, Item 19, pages 37–40, and Item 20, pages 40–48.
The official $1.21 million median is Gross Sales. The official $764,012 median is Gross Profit after merchandise cost, not cash available to the owner. Treating either figure as salary or take-home pay would overstate the evidence.
| Item 19 cohort | Stores | Average Gross Sales | Average Gross Profit |
|---|---|---|---|
| Top sales quartile | 123 | $2,033,682 | $1,292,564 |
| Second sales quartile | 123 | $1,358,958 | $864,335 |
| Third sales quartile | 123 | $1,085,306 | $689,072 |
| Bottom sales quartile | 123 | $753,552 | $486,363 |
Official source: 2026 Plato’s Closet FDD, Item 19, pages 38–39. Quartiles describe observed 2025 sales groups; they are not probabilities or promises for a new store.
How is the annual owner-benefit range estimated?
The estimate starts with official Item 19 sales and Gross Profit, then deducts recurring franchise obligations and explicit operating assumptions. The conservative, base, and upside cases apply to a mature standard retail store and are independent estimates for a steady operating year, not results reported by Winmark Corporation.
- Estimated owner-operator benefit means residual store economics after merchandise cost, normal staff payroll, occupancy, royalty, required marketing, annualized software and marketing fees, and modeled other operating expenses—but before personal income taxes and financing costs.
- Included FDD obligations are the 5% Continuing Fee, the 6% minimum combined advertising and local-marketing requirement, the $1,500 annual Marketing Fee, and an annualized $3,540 Software Fee.
- Excluded items are loan interest and principal, depreciation, personal taxes, capital expenditures, remodel reserves, owner-specific benefits, and any future Technology Fee. Each exclusion can reduce cash actually distributed.
| Scenario | Official revenue / Gross Profit anchor | Estimated owner-operator benefit | After $60K manager cost |
|---|---|---|---|
| Conservative | Bottom-quartile average: $753,552 sales and $486,363 Gross Profit | $22,000 | -$38,000 |
| Base | Overall median sales of $1,206,301 at the disclosed 63.70% average Gross Profit percentage | $169,000 | $109,000 |
| Upside | Second-quartile average: $1,358,958 sales and $864,335 Gross Profit | $263,000 | $203,000 |
The range widens because sales, payroll, occupancy, and other operating costs are not fixed across stores.
Interpretation: the modeled spread is not an FDD probability distribution. The conservative case uses the bottom-quartile average, the base uses the official median sales figure and official average Gross Profit percentage, and the upside case deliberately uses the second-quartile average rather than the top-quartile result.
Source and method: 2026 Plato’s Closet FDD, Items 6, 7, and 19; independent operating assumptions shown below. Values are rounded to the nearest $1,000.
- Staff payroll excluding the owner: 24% of sales in the conservative case, 22% in the base case, and 20% in the upside case. These are editorial scenario assumptions, not Plato’s Closet disclosures.
- Annual rent: $120,000, $100,000, and $80,000. The FDD estimates typical annual rent at $80,000 to $120,000 for a 3,500–4,500 square-foot store.
- Other operating expenses: 10%, 8%, and 7% of sales for insurance, utilities, repairs, supplies, professional services, payment costs, and miscellaneous overhead. These are analytical assumptions because Item 19 does not disclose a store-level expense statement.
- Recurring franchise burden: 5% of Gross Sales for the Continuing Fee and 6% for required advertising and local marketing. The 2% North American Ad Fund beginning July 1, 2026 is treated as part of—not additional to—the 6% combined requirement.
A fully reconciled analytical bridge from Gross Sales to estimated owner-operator benefit.
Interpretation: merchandise cost is already embedded in the FDD’s Gross Profit calculation. Subtracting inventory purchases again would double-count Cost of Goods Sold.
Reconciliation: $437,887 COGS + $265,386 staff payroll + $132,693 percentage fees + $100,000 rent + $96,504 other operating expenses + $5,040 fixed fees + $168,790 owner-operator benefit = $1,206,301 Gross Sales.
How does active ownership change the result?
Active ownership is economically material and is the operating model contemplated by the FDD. Item 15 says an individual franchisee must be the on-site owner/operator and personally manage the store unless Winmark Corporation gives prior consent to delegate. A multi-store owner may delegate additional stores to managers. Therefore, the $22,000–$263,000 range is an estimated owner-operator benefit, not passive business profit.
The model assumes the owner performs the general-management role and does not charge a separate owner salary to store expenses. Part of the residual therefore compensates the owner for labor. To illustrate a consent-dependent manager-run structure, the table subtracts a rounded $60,000 annual manager-cost assumption. That assumption is informed by the U.S. Bureau of Labor Statistics occupation profile for First-Line Supervisors of Retail Sales Workers, SOC 41-1011, but it is not a Plato’s Closet wage and may not include the full local payroll burden.
Under the base scenario, estimated owner-operator benefit is about $169,000. After a $60,000 replacement-manager cost, the modeled residual falls to roughly $109,000. The $60,000 difference is labor value, not passive profit.
Which variables move Plato’s Closet owner earnings most?
Sales volume and labor efficiency are the largest modeled drivers, while the biggest unresolved uncertainty is the operating-expense structure below Gross Profit. Item 19 is strong on Gross Sales, Cost of Goods Sold, and Gross Profit distribution, but it does not report payroll, rent, other overhead, Operating Profit, or owner distributions for the 2025 reporting population.
- Sales and merchandise productivity: the FDD’s quartile-average Gross Sales range from $753,552 to $2,033,682, showing substantial store-level dispersion before operating costs.
- Payroll: a one-percentage-point change in payroll equals about $12,063 at the base sales level. Scheduling, processing productivity, wage rates, and owner hours can materially alter residual cash.
- Occupancy: the FDD’s $80,000–$120,000 annual rent range creates a $40,000 swing before common-area charges, utilities, and location-specific lease obligations.
- Recurring fees: the 5% Continuing Fee and 6% marketing requirement consume approximately $132,693 at base sales before the annual Marketing Fee and Software Fee.
- Population limitation: Item 19 combines U.S. and Canadian stores. Item 20 reports 476 U.S. franchised stores and 50 Canadian franchised stores at December 27, 2025, but Item 19 does not publish separate U.S. performance.
The evidence-confidence label is LIMITED because the owner-benefit result relies materially on editorial operating assumptions and a mixed-country Item 19 cohort. The official same-brand revenue and Gross Profit data are broad, but the missing expense lines prevent a direct owner-income calculation.
What should a prospective owner verify before relying on this range?
A buyer should treat the range as a due-diligence framework and replace every scenario assumption with local, store-specific evidence. The official FDD figures cover mature franchised stores for 2025, while a new U.S. store may have a different ramp-up, rent structure, wage market, inventory turn, and financing profile.
- Request the written substantiation supporting Item 19 and reconcile Gross Sales, Cost of Goods Sold, freight, and shrinkage definitions to the proposed operating model.
- Interview several current and former franchisees from Item 20 about payroll as a percentage of sales, owner hours, manager compensation, occupancy, merchant fees, insurance, repairs, and annual capital spending.
- Ask for separate evidence on newer stores, transferred stores, bottom-quartile stores, and U.S.-only results because the published Item 19 population excludes 2025 openings and transfers and combines two countries.
- Confirm how the North American Ad Fund, cooperative advertising, and local marketing combine to satisfy the 6% requirement; do not add the 2% fund twice.
- Model financing separately. Loan interest and principal, personal income taxes, entity structure, depreciation, and owner draws are not included in the published owner-benefit scenarios.
- Compare the proposed lease with the FDD’s $80,000–$120,000 annual rent context and include common-area maintenance, taxes, insurance, utilities, and required modernization reserves.
The Federal Trade Commission’s franchise-buying guidance explains why prospects should examine the Franchise Disclosure Document, contact current and former franchisees, and test financial claims. The FTC Franchise Rule Compliance Guide provides the regulatory context for Item 19 financial performance representations.
What is the strongest defensible annual earnings range?
The strongest defensible range is approximately $22,000 to $263,000 of annual pre-tax owner-operator benefit for one mature store, with a base scenario near $169,000. It is scenario-based, not official owner earnings. The most important driver is the conversion of Gross Sales and Gross Profit into payroll-efficient store operations; the largest unresolved uncertainty is the absence of Item 19 operating-expenseand owner-compensation data.
A buyer should verify the Item 19 substantiation, obtain U.S.-specific expense evidence, and use franchisee interviews to replace the payroll, occupancy, other-overhead, and manager-cost assumptions. Debt service and personal taxes must then be modeled separately before estimating actual cash available to the owner.