How Much Does a Spice & Tea Exchange Franchise Owner Make?

Item 19 officially reports Gross Sales and Gross Margin, not annual owner earnings. For calendar 2025, the comparable franchised-store results show average Gross Sales of $552,660, median Gross Sales of $505,212, and a range from $210,877 to $1,263,519. The average Gross Margin was $378,347, or 68.5% of Gross Sales. Source: 2026 FDD, Item 19, pp. 55–59.

The FDD defines Gross Sales as total retail sales per unit less returns or discounts. It defines Gross Margin as Gross Sales less Cost of Goods, with Cost of Goods including merchandise acquired for resale and inbound shipping. That means the 68.5% figure is before employee wages, payroll burden, rent, utilities, insurance, required advertising, Royalty Fees, technology costs, interest, and other operating expenses.

How broad is the 2025 Item 19 population?

The FDD describes a full-year comparable cohort, but it also contains a population-count issue that should be verified. Item 19 says 15 of 99 system units were excluded, leaving 84 units in the comparable set. It separately reports the single company-owned Store and warns that its nontraditional location, traffic patterns, and operating characteristics are not comparable to traditional franchised storefronts.

Item 20 reports 97 franchised outlets and one company-owned outlet at December 31, 2025, or 98 total year-end outlets. It also reports eight franchised openings, four outlets that ceased operations for other reasons, and six transfers during 2025. The 99-unit Item 19 denominator and 98-unit Item 20 year-end count may reflect timing or classification differences, but the FDD does not reconcile them in the cited text. Source: 2026 FDD, Item 20, pp. 59–71.

The $82,000–$172,000 range is a cash-oriented owner-operator scenario anchored to the 2025 median Gross Sales figure. It applies the FDD's 68.5% average Gross Margin, a government expense benchmark, current disclosed recurring fees, and a transparent low/base/high sensitivity. It is not a result reported by the franchisor.

Revenue anchors

80%, 100%, and 120% of the official 2025 median Gross Sales of $505,212: $404,170, $505,212, and $606,254. The spread is analytical, not FDD-reported.

Gross Margin

68.5%, the official 2025 average for the comparable population. Applying an average margin to median-based scenario sales is a modeling step, not a median-store result.

Cash operating costs

33.4% of revenue in the base case, derived from the IRS 2023 Food and Beverage Stores sole-proprietorship table after removing Cost of Sales, advertising, and depreciation from total deductions. Conservative and Upside scenarios use 36.4% and 30.4%, a ±3 percentage-point sensitivity.

Recurring franchise burden

7% Royalty Fee, 1% System Development Fee, and 1% local advertising requirement. Technology support and inventory-management fees plus integrated music are modeled at the disclosed annual range of $4,680 to $11,400.

Definition used

Cash-oriented pre-tax owner-operator benefit before personal income taxes and financing principal. Owner wages are not deducted, so part of the result compensates the owner for work performed. Interest is embedded in the broad IRS expense benchmark; depreciation is excluded, and no capital-expenditure reserve is deducted.

Owner involvement can change the economic result by about $69,500 per year in this model. Item 15 says the Store must be managed by an owner who completed Initial Training, so a fully absentee or purely passive case is not treated as a compliant operating model. The comparison below instead shows a hands-on owner-operator against an owner who remains responsible for management but hires a full-time retail supervisor.

The $69,500 supervisor-cost estimate starts with the May 2025 BLS mean annual wage of $53,380 for First-Line Supervisors of Retail Sales Workers and applies the March 2026 BLS retail-trade ratio of total compensation to wages. This adds paid leave, insurance, retirement, and legally required benefits at an industry-average level.

Yes, the 2025 Item 19 cohorts show higher per-Store Gross Sales for outlets owned by multi-unit franchisees, but they do not show per-owner earnings. The two-store and three-or-more-store cohorts are selected populations of full-year Stores under continuous ownership, and the data cannot establish that acquiring additional Stores causes the higher sales.

Source: 2026 FDD, Item 19, pp. 56–59. These are per-Store revenue and Gross Margin statistics, not portfolio profit, owner compensation, or distributions. A multi-unit projection must account for development timing, ramp-up, manager structure, shared overhead, and differences in Store maturity.

Gross Sales, occupancy, payroll, and the owner's labor contribution are the largest unresolved drivers. The FDD supplies a strong product-margin anchor, but it does not disclose rent, employee payroll, operating profit, or distributions for the comparable Store population.

• Location and traffic: the 2025 franchised-store Gross Sales range was $210,877 to $1,263,519. Those endpoints are official observations, not probability bounds or expected outcomes.
• Occupancy: Item 7 describes a typical 1,200-to-1,800-square-foot Store, but annual rent is not disclosed in Item 19. High-rent tourist or premium retail locations can materially compress owner earnings.
• Labor model: Item 15 requires owner management. The estimate rises when the owner performs work that otherwise requires a paid supervisor, but that increment is labor compensation rather than passive return.
• Required fees: the current 7% Royalty has a $1,750 monthly minimum. The percentage controls above $25,000 in monthly Gross Sales; lower-volume periods can produce a higher effective royalty rate.
• Technology and required programs: the FDD currently discloses $300–$800 per month for subscription, support, and inventory management, plus $90–$150 per month for integrated music. Future fee changes remain possible.
• Financing and capital needs: Item 10 says the franchisor does not offer or guarantee financing. Loan principal, personal taxes, and a reserve for equipment replacement or remodels are outside the published range.

What is included and excluded from the estimate?

The range is a pre-tax operating estimate, not after-tax take-home pay. It treats Cost of Goods, ordinary cash operating expenses, current percentage-based franchise fees, and disclosed technology/music fees as operating costs. It does not deduct personal income tax, financing principal, owner distributions, or a maintenance-capital reserve.

Included

Cost of Goods; employee payroll and ordinary operating costs through the IRS benchmark; Royalty Fee; System Development Fee; local advertising; technology and integrated-music fees; broad business-interest expense embedded in the IRS ratio.

Excluded

Personal income taxes; financing principal; startup investment; acquisition price; after-opening major remodels; discretionary distributions; and a specific capital-expenditure reserve.

Owner compensation

Not deducted in the owner-operator range. The paid-supervisor comparison isolates approximately $69,500 of modeled labor value.

Depreciation

Removed from the cash operating-expense ratio because it is noncash. Actual asset replacement still requires cash and should be modeled separately.

A buyer should verify unit-level operating expenses and owner labor directly, because those are the missing links between Gross Margin and owner earnings. The FTC explains that Item 19 claims must have a reasonable basis and that a prospect can request written substantiation for the financial performance representation.

• Request Item 19 written substantiation and ask the franchisor to reconcile the 84-of-99 Item 19 population with the 98 year-end outlets shown in Item 20.
• Ask current franchisees for annual rent, payroll, payroll taxes and benefits, merchant fees, utilities, insurance, shrink, local marketing, technology, repairs, and owner hours.
• Separate owner salary or labor value from Store-level profit, distributions, retained cash, and debt payments in every franchisee interview.
• Compare mature full-year Stores with the proposed site's format, square footage, traffic pattern, tourism exposure, and expected opening ramp.
• Confirm whether the 7% Royalty or the $1,750 monthly minimum would apply at the proposed sales level and whether any advertising or technology fees are scheduled to change.
• For multi-unit plans, obtain a Store-by-Store development calendar and manager structure instead of multiplying one mature Store's estimate by the number of planned locations.

The strongest defensible range is approximately $82,000 to $172,000 in annual pre-tax owner-operator benefit per mature comparable Store, with a base scenario near $124,000. It is scenario-based, not official, because the 2026 FDD reports 2025 Gross Sales and Gross Margin rather than operating profit or owner compensation.

The most important earnings driver is the conversion of the official 68.5% Gross Margin into net cash after payroll, occupancy, recurring fees, and owner labor. The largest unresolved uncertainty is the actual non-product operating cost structure for comparable The Spice & Tea Exchange Stores. A buyer should verify Item 19 substantiation, reconcile the Item 19 and Item 20 populations, and obtain normalized operating statements and owner-hour data from multiple current franchisees before treating any point in the range as decision-ready.

Evidence confidence: LIMITED. The revenue and Gross Margin anchors are current same-brand FDD facts, but the owner-earnings result relies materially on a broader IRS industry benchmark and editorial scenario sensitivities.