For a Red Mango store within the 2025 top-quartile sales observations disclosed in the 2026 FDD, the strongest defensible estimate is approximately $2,700 to $78,400 in annual pre-tax owner-operator benefit, with a base scenario near $27,200. Item 19 reports sales—not profit—so these are independent scenarios rather than franchisor-reported owner earnings.
This estimate is an independent analytical scenario, not an Item 19 financial performance representation by Red Mango FC, LLC. It combines identified 2026 FDD sales and fee facts with a separately identified IRS operating-margin benchmark and BLS manager-wage benchmark. Actual results can differ materially by location, store format, sales, food cost, labor, occupancy, financing, owner involvement, seasonality, local competition, and execution.
Data basis
- Legal franchisor
- Red Mango FC, LLC, a Texas limited liability company.
- Current disclosure
- 2026 Red Mango Franchise Disclosure Document, issued April 23, 2026.
- Item 19 status
- Official sales disclosure only; no store profit, EBITDA, net income, owner compensation, or cash-flow figure.
- Applicable population
- 25 franchised Traditional and Non-Traditional stores reporting at least 11 of 12 accounting periods during December 30, 2024–December 28, 2025; the population includes U.S. states and Puerto Rico.
- External benchmarks
- IRS 2023 sole-proprietorship restaurant income statements and BLS May 2024 food-service-manager wages.
- Date checked
- July 16, 2026.
The FDD evidence is current and same-brand, but it stops at sales. The earnings model therefore relies materially on a broad IRS benchmark for full-service restaurants, limited-service restaurants, and drinking places. That benchmark is authoritative, but it is not Red Mango-specific and does not isolate franchised frozen-yogurt stores.
Evidence mode: FDD-Anchored Scenario Estimate. The official sales source is the 2026 Red Mango FDD, Item 19, pp. 47–48. No verified matching public FDD was located on a franchise-controlled domain, so the FDD citation is intentionally unlinked.
Top-quartile median sales multiplied by the 3.3807% IRS aggregate net margin.
Median sales among six top-quartile reporting stores; not the systemwide median.
96.2% of stores operating at year-end met the stated reporting eligibility test.
Net income less deficit divided by business receipts for the broad restaurant category.
6% royalty plus 3% required marketing allocation, before other operating costs.
BLS median annual wage in food services and drinking places, May 2024.
What does Red Mango’s FDD actually disclose?
The official disclosure measures annual store sales, not owner earnings. The 2026 Red Mango FDD says 25 franchised stores operated for at least 11 of 12 accounting periods and reported sales for the fiscal year ending December 28, 2025. Item 19 then reports only the top and bottom quartiles.
| Item 19 cohort | Stores | Average unit volume | Median unit volume |
|---|---|---|---|
| Top 25% | 6 | $860,441 | $803,139 |
| Bottom 25% | 7 | $121,637 | $99,349 |
The top quartile ranged from $717,060 to $1,228,414. It contained five Traditional stores and one Non-Traditional store on a college campus. Item 19 describes the bottom quartile as small c-store operations with one or two machines and a topping bar; its sales ranged from $33,998 to $210,154. Those formats are economically different enough that merging them into one “typical Red Mango” figure would be misleading.
Item 19 expressly excludes cost of sales, payroll, rent, royalty, marketing, technology, delivery fees, insurance, repairs, depreciation, interest, and other expenses. The disclosed unit volume cannot be treated as owner income or even gross profit. The figures are unaudited franchisee reports, and the franchisor says it did not independently verify them.
The disclosure also says one Non-Traditional c-store unit was excluded because it did not consistently report 2025 sales. Written substantiation is available upon reasonable request. These limitations follow the earnings-claim framework described in the Federal Trade Commission’s Franchise Rule Compliance Guide.
How is the annual owner-earnings range calculated?
The model applies an official government net-margin benchmark to observed Red Mango top-quartile sales points. It uses the FDD’s top-quartile low, median, and high sales figures as revenue anchors, then applies a conservative, base, and upside margin sensitivity around the IRS benchmark.
The IRS Nonfarm Sole Proprietorship study covers Schedule C business receipts, deductions, and net income by industry. In the 2023 IRS income-statement table, “Restaurants (full & limited service) and drinking places” reported $77.216690 billion of business receipts and $2.610484 billion of net income less deficit. Dividing those compatible aggregates produces a 3.3807% net margin.
Because the IRS margin is an all-in net result after reported business deductions, the calculation does not subtract Red Mango royalty, marketing, or technology fees a second time. The tradeoff is comparability: the IRS category includes franchised and independent businesses, several restaurant formats, and sole proprietors with different expense structures. The scenario band therefore uses 3 percentage points below and above the 3.3807% benchmark.
| Scenario | FDD sales anchor | Margin assumption | Owner-operator benefit |
|---|---|---|---|
| Conservative | $717,060 | 0.3807% | $2,730 |
| Base | $803,139 | 3.3807% | $27,152 |
| Upside | $1,228,414 | 6.3807% | $78,382 |
- Revenue anchors are official observations, not probabilities. The low, median, and high values come from only six stores in the disclosed top quartile.
- Margin sensitivity is editorial. The 0.3807%, 3.3807%, and 6.3807% margins are not Red Mango FDD results.
- The result is pre-tax. No personal federal, state, or local income tax is calculated.
- Financing principal is excluded. The IRS benchmark may reflect business interest and depreciation reported by filers, but debt principal payments are separate cash obligations.
- Capital expenditure is not normalized. Future machine replacement, remodels, and major repairs can reduce distributable cash.
Three scenario combinations using observed top-quartile Red Mango sales and the IRS margin sensitivity.
Interpretation: even within the top disclosed sales cohort, a few margin points change annual owner benefit by tens of thousands of dollars. Sources: 2026 Red Mango FDD, Item 19, pp. 47–48; IRS Statistics of Income, 2023 Table 2. Values are independent scenarios.
How does owner involvement change the result?
Red Mango’s operating requirements make owner involvement economically significant. Item 15 requires on-premises supervision by a Managing Owner who devotes full-time efforts to the business. When the Managing Owner is not full-time or the franchisee operates multiple stores, a trained full-time Key Person must manage operations.
The owner-operator scenarios above should therefore be read as owner-operator benefit: they may include both residual business profit and the economic value of management work performed by the owner. They are not passive-income estimates.
To illustrate a manager-run structure, the model subtracts the BLS May 2024 median wage of $63,040 for food-service managers in food services and drinking places. The BLS wage excludes self-employed workers. No employer payroll taxes, benefits, bonuses, or recruiting costs are added, so the manager-run residual is optimistic rather than conservative.
Each row subtracts a $63,040 annual manager wage from the same operating scenario.
Interpretation: after one market-rate manager wage, only the upside scenario remains positive, at about $15,300—and that is before employer payroll burden. Sources: BLS Occupational Outlook Handbook, May 2024 wage data; 2026 Red Mango FDD, Item 15, p. 37. Values are independent scenarios.
The $63,040 difference is compensation for management labor, not additional store profit. A buyer should not compare the owner-operator number with passive investment income without assigning a market value to the owner’s full-time work.
Which Red Mango fees matter to annual earnings?
Recurring franchise charges materially reduce the revenue available for food, labor, occupancy, and owner benefit. Under Item 6, a Traditional store pays a 6% royalty and 3% required marketing allocation, while a Non-Traditional store pays the same 6% royalty and a 1% required marketing allocation.
| Recurring obligation | Traditional | Non-Traditional | Model treatment |
|---|---|---|---|
| Royalty fee | 6% of Gross Revenue | 6% of Gross Revenue | Recognized as material; not double-subtracted from the IRS all-in net margin. |
| Required marketing allocation | 3% | 1% | Format-specific burden; the top-cohort model is mostly Traditional. |
| POS maintenance | About $250/month | About $250/month | Approximately $3,000 annually before future price changes. |
| Technology fee | Up to $1,800/year cap | Up to $1,800/year cap | Cap may rise by up to 10% from the prior-year cap. |
| Loyalty/online ordering base | $70/month | $70/month | About $840 annually, plus disclosed transaction and delivery charges. |
Item 6 also permits designated supplier requirements, promotional-program costs, and transaction-based online-ordering charges. Traditional stores are encouraged—but not currently required—to spend another 1% of Gross Revenue on local marketing; Non-Traditional stores receive the same recommendation.
A 2026 Early Franchise Incentive Program can reduce the royalty to 3% for the first 12 accounting periods when stated opening conditions are satisfied. That temporary concession is excluded from the steady-state earnings scenarios because it does not represent the standard mature royalty burden. Sources: 2026 Red Mango FDD, Item 5, pp. 5–6, and Item 6, pp. 7–10.
What could move actual earnings outside the range?
The largest unresolved variable is Red Mango’s actual store-level expense structure. Item 19 does not disclose food cost, payroll, occupancy, utilities, merchant fees, delivery commissions, repairs, insurance, depreciation, interest, or store-level operating profit. A small change in labor or occupancy can erase the base scenario’s $27,152 benefit.
Does the bottom-quartile sales figure imply a small but viable income?
No reliable earnings conclusion can be drawn from it. Applying the IRS base margin mechanically to the $99,349 bottom-quartile median produces only about $3,400, but Item 19 describes those outlets as c-store micro-formats. Shared host-site labor, rent, utilities, and traffic can make their economics fundamentally different from a standalone Traditional store. That calculation is therefore not used as the article’s principal range.
Does system contraction affect confidence?
Yes, as an uncertainty signal rather than an earnings calculation. Item 20 shows franchised outlets declining from 45 at the start of 2025 to 26 at year-end, a net reduction of 19 stores, or 42.2%. The table reports 18 non-renewals and one outlet ceasing operations for other reasons, with no 2025 openings. The FDD separately highlights a greater-than-30% three-year turnover rate. These facts do not provewhy any store left or what it earned, but they increase the importance of interviewing former as well as current franchisees.
Are debt service and taxes included?
Personal taxes and financing principal are not included. The scenario is pre-tax. Personal tax outcomes depend on entity structure, jurisdiction, deductions, and owner circumstances. Loan principal payments reduce cash available to the owner but are not operating expenses; they should be modeled separately using the buyer’s actual financed amount, interest rate, term, and equipment or lease obligations.
- Gross Revenue or unit volume: customer and other business revenue as defined by the franchise agreement; it is not owner income.
- Owner-operator benefit: residual net result plus the implicit value of management labor performed by the owner. It is not passive profit.
- Manager-run residual: scenario owner benefit less one BLS manager wage; employer payroll burden and benefits remain excluded.
- Pre-tax: before the owner’s personal federal, state, and local income taxes.
What should a prospective owner verify before relying on this range?
A buyer should replace the broad benchmark with actual Red Mango profit-and-loss evidence. Item 19 sales can anchor the revenue discussion, but only written substantiation and franchisee operating records can establish whether the expense profile supports meaningful owner benefit.
- Request the written substantiation supporting 2026 FDD Item 19, including the sales records, cohort definitions, and treatment of the excluded reporting store.
- Ask current and former franchisees for trailing-12-month profit-and-loss statements separated by Traditional, college-campus Non-Traditional, and c-store micro-format.
- Reconcile food and paper cost, hourly labor, manager payroll, rent and common-area charges, royalty, required marketing, technology, delivery, merchant, insurance, repair, and waste expense as a percentage of sales.
- Confirm whether the owner will satisfy the full-time Managing Owner requirement or fund a trained full-time Key Person, and obtain a local compensation estimate rather than relying only on the national BLS median.
- Ask what caused the 2025 non-renewals and other cessation, without assuming that all departures were financial failures.
- Model debt principal, interest, equipment replacement, and remodel reserves separately from store operating earnings.
What is the strongest defensible earnings view?
The strongest defensible range is approximately $3,000 to $78,000 in annual pre-tax owner-operator benefit for a store performing within Red Mango’s disclosed top-quartile sales observations. It is a scenario-based range, not an official Red Mango profit disclosure, and the base case is about $27,200.
The most important earnings driver is the combination of sales volume and unit-level margin; owner involvement is close behind because a market-rate manager wage absorbs $63,040 before payroll burden. The largest unresolved uncertainty is the absence of same-brand store-level expense and profit data. Before making a decision, a buyer should reconcile Item 19 substantiation with actual franchisee profit-and-loss statements, distinguish Traditional stores from micro-formats, and test both full-time owner operation and Key Person payroll under the buyer’s real location and financing terms.