How Much Does a Signal 88 Security Franchise Owner Make?

The strongest defensible estimate is $19,000 to $231,000 in annual manager-run pre-tax owner earnings, with a base scenario of approximately $109,000. The result is estimated for mature franchised business units, not new territories, individual outlets, or a guaranteed “typical” owner.

The three revenue anchors come directly from the 2025 Item 19 distribution: the fourth-quartile average for the Conservative case, the full mature-cohort median for the Base case, and the second-quartile average for the Upside case. Those quartile labels describe historical groups; they are not probabilities.

How was the estimate calculated?

The calculation is a scenario, not a franchisor disclosure. For each case: official Item 19 revenue anchor × scenario all-in margin = estimated manager-run pre-tax owner earnings. The central 6.6156% margin equals 2023 “total income (loss) minus total deductions” divided by total receipts for IRS partnerships in the broad Administrative and Support and Waste Management and Remediation Services sector. The Conservative and Upside margins are three percentage points below and above that benchmark.

• Revenue is not earnings.Gross Revenue is the customer revenue measure defined in Item 19. It is the starting point only.
• The IRS ratio is all-in.The model does not subtract the 4% Royalty Fee and 5% Franchise Support Fee again, because doing so would double-count expenses if they are already reflected in the benchmark’s total deductions.
• Interest and depreciation treatment is imperfect.The IRS tax-return measure can include business interest and depreciation in deductions. Financing principal and personal income taxes are not included in the estimate.
• The portfolio is mature.The revenue anchors come from business units with at least 12 months of revenue by year-end 2025; start-up and ramp-up results may be materially lower.

The official evidence measures Gross Revenue and Gross Profit for franchised business units, not annual owner take-home pay. For 2025, the mature cohort included 120 business units with 1,654 outlets, and every included business unit had operated with revenue for at least 12 months.

• Franchised Business UnitThe franchisee’s overall operation. One business unit can cover multiple territories or “outlets,” so per-business-unit revenue cannot be treated as revenue from one physical location.
• Gross RevenueThe broad revenue definition in Item 19 for products and services connected to the franchised business or security industry, excluding specified taxes and bank fees.
• Gross ProfitGross Revenue minus officer compensation and payroll expenses, expressed as a percentage of revenue. It is not gross profit in every accounting system and is not net income.
• Excluded overheadVehicles, uniforms, insurance, some employee costs, and other overhead are excluded from the FDD’s Gross Profit calculation. Royalties, other periodic fees, debt interest, legal and accounting charges, and depreciation also remain relevant.

Population limitation: the quartile tables exclude business units that had not generated revenue for at least 12 months by the end of 2025 or for which the franchisor lacked the payroll-expense information needed for the Gross Profit calculation. The FDD says the data were not audited and that more established units may have labor efficiencies newer units should not expect. Source: 2026 Signal 88, LLC FDD, Item 19, pp. 46–49.

Owner involvement can add approximately $93,205 of annual labor value to each scenario when the owner personally performs the full-time general-management role. The resulting figures are labeled estimated owner-operator benefit, because they combine residual business profit with compensation for work performed.

The FDD says Signal prefers owner-operated franchises and requires the owner and/or a designated manager to devote full-time energy and best efforts. The official Signal franchise ownership process likewise describes the role as hands-on, full-time, and not passive. A manager-run model is therefore possible through a designated manager, but passive ownership should not be inferred.

The largest uncertainty is the amount of nonpayroll overhead below the FDD’s Gross Profit line. The FDD has direct access to revenue and some payroll information, but it says it does not have franchisee overhead data sufficient to state net profit or net margin.

• Contract labor economicsGuard wage rates, overtime, scheduling efficiency, payroll taxes, workers’ compensation, benefits, and unbillable time can move margins even when revenue is unchanged.
• Recurring franchise feesThe standard 4% Royalty Fee and 5% Franchise Support Fee equal 9% of Gross Revenues. A 2% Strategic Partner Fee can apply to qualifying referred contracts, while certain Signal Response arrangements use separate revenue-sharing terms.
• Portfolio structureBusiness-unit revenue combines multiple territories. Territory count alone does not reveal client density, contract mix, staffing intensity, or shared-overhead efficiency.
• Insurance and vehiclesCommercial liability, automobile liability, umbrella coverage, workers’ compensation, approved vehicles, fuel, maintenance, uniforms, and required equipment sit below the disclosed Gross Profit measure.
• FinancingDebt principal is not an operating expense in this model. Business interest may be embedded in the IRS deductions proxy, but actual loan amount, rate, term, and amortization can change owner cash flow materially.
• Taxes and entity formNo after-tax estimate is published. Personal taxes depend on entity structure, state and local jurisdiction, owner compensation, deductions, and the buyer’s circumstances.

The 6.6% central margin is a broad partnership-sector benchmark, not a Signal 88 Security margin and not specific to NAICS 561600. The underlying IRS sector includes administrative support and waste-management businesses, so its cost structure may differ substantially. That comparability gap is why the confidence rating remains Limited. The source can be reviewed in the IRS partnership statistics by sector or industry.

A buyer should verify the full revenue-to-cash bridge with written substantiation and real franchisee profit-and-loss statements. The scenario is useful for framing diligence, but it cannot replace outlet-specific records.

• Request Item 19 written substantiation. The FDD says it is available on reasonable request, and the FTC’s franchise-buying guidance recommends examining source data, limitations, and assumptions.
• Confirm the exact operating unit. Determine how many territories, customers, vehicles, guards, and office locations sit inside each comparable Franchised Business Unit.
• Reconcile the FDD’s 39% Gross Profit. Obtain payroll reports and identify officer compensation, overtime, payroll taxes, workers’ compensation, benefits, uniforms, recruiting, and employee travel.
• Build the overhead schedule. List the 4% Royalty Fee, 5% Franchise Support Fee, any 2% Strategic Partner Fee, insurance, vehicles, fuel, rent, accounting, legal, technology outside the support fee, bad debt, and depreciation.
• Separate owner labor from return on capital. Ask manager-run franchisees what a competent full-time manager costs and owner-operators how many hours they personally work.
• Interview current and former franchisees. Compare mature and newer operators, lower and higher revenue quartiles, transferred territories, and businesses with similar labor markets and customer mix.
• Model debt separately. Apply the buyer’s actual financed amount, interest rate, term, and required principal payments after operating earnings are established.