This is an estimated owner-operator benefit range, not an official YESCO profit figure. The base scenario is approximately $132,000. After substituting a paid general manager, the modeled pre-tax residual ranges from about -$51,000 to $101,000, with a base result near $27,000.
What does YESCO Item 19 actually measure?
Officially, Item 19 measures Gross Revenue, not business profit, owner salary, distributions, or take-home pay. For calendar 2025, the strongest same-brand figure is median Gross Revenue of $785,250 across 52 continuously operated franchised businesses.
The reporting population included 46 U.S. operations and 6 Canadian operations. Canadian revenue was converted to U.S. dollars. A “Franchised Business” can contain more than one Territory and report as one consolidated operation, so the figures are not necessarily one territory, one outlet, or one owner. The FDD also says franchisees supplied the data and the franchisor did not audit or verify it. Source: YESCO 2026 FDD, Item 19, pp. 41–45.
Eligibility required monthly Gross Revenue of at least $1,000 in 10 or more months during 2025. One newer business and two businesses that failed this continuous-operation test were excluded. Two Arkansas businesses were consolidated for Item 19 because they had contiguous Territories, the same Primary Owner and Principal Operator, and consolidated financial statements.
Median 2025 Gross Revenue within each Item 19 quartile; these are sales observations, not earnings probabilities.
Interpretation: Revenue dispersion is substantial. The top-quartile median was more than 24 times the bottom-quartile median, so a single system average is a weak basis for an earnings forecast.
Source: YESCO 2026 FDD, Item 19, Table 1, p. 42. Each quartile contains 13 Franchised Businesses.
How can annual owner earnings be estimated?
The estimate uses three official YESCO revenue observations and a separately sourced cash-margin proxy. It produces owner-operator benefit of approximately $55,000, $132,000, and $207,000 under Conservative, Base, and Upside scenarios.
The revenue anchors are the third-quartile median, overall median, and second-quartile median from Item 19. They are not probabilities and are not labeled “expected” results. The margin anchor comes from 438,242 Schedule C returns in the IRS 2023 nonfarm sole-proprietorship income statement for the broad “Miscellaneous repairs” category. The reproducible calculation is ($3,230,813,000 net income less deficit + $889,847,000 depreciation) ÷ $24,438,604,000 business receipts = 16.86%. The Conservative and Upside margins are editorial sensitivities of three percentage points below and above that benchmark.
| Scenario | Revenue and margin anchor | Owner-operator benefit | Manager-run residual |
|---|---|---|---|
|
Conservative Third-quartile median |
$397,974 13.86% |
$55,000 | -$51,000 |
|
Base Overall median |
$785,250 16.86% |
$132,000 | $27,000 |
|
Upside Second-quartile median |
$1,040,520 19.86% |
$207,000 | $101,000 |
- Owner-operator benefit = Item 19 revenue anchor × scenario cash-proxy margin.
- Manager-run residual = owner-operator benefit − $105,768 annualized manager wage.
- The BLS wage is derived from the May 2025 national median of $50.85 per hour for General and Operations Managers × 2,080 hours.
- Calculations use full-precision inputs and are rounded to the nearest $1,000 for publication.
The IRS proxy is an all-in tax-return margin, so the model does not subtract YESCO royalty and advertising fees again. This avoids obvious double counting, but the IRS table does not identify the fee burden of the underlying businesses. The estimate could therefore be too high if comparable repair businesses bear materially lower franchise fees than YESCO operators. This unresolved comparability issue is a principal reason for the Limited confidence rating.
In the cash proxy, interest remains embedded in IRS deductions, depreciation is added back, and capital expenditures are not deducted. Financing principal and personal income taxes are excluded. The manager-run result subtracts wage only; employer payroll taxes, insurance, benefits, recruiting, and coverage for absences would reduce the residual further.
Modeled annual pre-tax benefit or residual, rounded to the nearest $1,000.
Interpretation: At every revenue level, the labor value assigned to a full-time general manager materially changes what remains for the owner. The owner-operated figure should not be interpreted as passive business profit.
Sources: scenario calculations from YESCO 2026 FDD Item 19 revenue anchors; IRS 2023 nonfarm sole-proprietorship Table 2; BLS May 2025 national wage data. Manager wage is a derived annualization of the BLS median hourly wage.
Can a YESCO franchise be manager-run?
Yes, the FDD contemplates either an owner serving as Principal Operator or an owner hiring a qualified Principal Operator, but it does not describe ownership as passive. This is an official structural fact from Item 15, while the dollar effect shown above is estimated.
The Primary Owner must oversee general management and operations, complete required training, and either serve as Principal Operator or be responsible for hiring one. The Principal Operator acts as general manager, actively oversees day-to-day operations and service delivery, and has authority to sign contracts and commercial documents. The Primary Owner and Principal Operator may be the same person. Source: YESCO 2026 FDD, Item 15, pp. 33–34.
- Gross Revenue
- The FDD-defined sales and receipts of the business, excluding specified sales taxes. It is not owner earnings.
- Estimated owner-operator benefit
- Modeled cash proxy before personal income taxes and financing principal. It includes residual business economics and the market value of management labor performed by the owner.
- Estimated manager-run residual
- Owner-operator benefit less a wage-only general-manager assumption. It is not after-tax take-home pay and does not include employer payroll burden or benefits.
- Debt service
- Kept separate. Item 10 financing rates and terms vary by purpose, creditworthiness, collateral, and timing, so one debt payment would create false precision.
Which FDD fees put the most pressure on owner earnings?
The core recurring burden is at least 8% of Gross Revenue: a 6% royalty plus a 2% local advertising requirement. The advertising total can reach 3%, and other variable fees may apply. These are official Item 6 obligations, not scenario assumptions.
| Recurring obligation | Official amount | Owner-earnings relevance |
|---|---|---|
| Royalty | Greater of $1,000 per month or 6% of Gross Revenue | At the three scenario revenue levels, 6% exceeds the $12,000 annual minimum. |
| Advertising | At least 2% local; combined national and local requirement capped at 3% | Creates an 8%–9% core sales burden when combined with the standard royalty. |
| National Lead Admin Fee | Up to 6% of amounts received from a National Lead | Applies only to relevant national-lead revenue, so the annual effect depends on sales mix. |
| Technology and communication | First 10 software users free; $100 monthly per additional user, plus possible storage, email, and website fees | Usually smaller than percentage fees but increases with users, storage, and selected services. |
Source: YESCO 2026 FDD, Item 6, pp. 6–10. The Item 7 initial investment of $65,000–$432,200 is not an annual operating expense and is not subtracted from one year of revenue. Vehicle replacement, capital expenditures, and financing principal still affect cash available to an owner even though they are outside this annual operating scenario.
Why is the earnings range still uncertain?
The largest unresolved issue is YESCO-specific unit-level cost structure. Item 19 shows a useful revenue distribution but does not publish labor, subcontractor, parts, truck, occupancy, selling, office, or net-profit data for the reporting businesses.
Several factors reduce comparability. The cohort combines U.S. and Canadian operations, some Franchised Businesses contain multiple Territories, and the median reporting business had 9.5 years in operation. The IRS benchmark covers sole proprietors in a broad repair category and is much broader than YESCO’s franchised sign and lighting service model. The BLS manager figure is national and not adjusted for local wage levels, payroll taxes, benefits, or the scope of a particular multi-territory operation.
Item 20 provides useful context rather than an earnings answer: franchised businesses declined from 57 at the start of 2025 to 56 at year-end, with one opening, one termination, and one non-renewal. These counts do not establish why an outlet changed status or whether it was profitable. Source: YESCO 2026 FDD, Item 20, pp. 45–50.
- Request the written substantiation for Item 19 and reconcile the 2025 quartile table to the exact Territory structure being considered.
- Ask current and former U.S. franchisees for revenue, direct labor or subcontractor costs, parts, truck costs, insurance, occupancy, selling expense, and owner compensation using consistent definitions.
- Separate owner labor from distributions: record the hours and responsibilities performed by the Primary Owner and Principal Operator.
- Test the 6% royalty, 2%–3% advertising burden, national-lead mix, and technology charges against a monthly operating statement.
- Model vehicle replacement, working capital, interest, and principal separately rather than treating the operating estimate as cash available for personal use.
- Compare mature multi-territory operators with new or single-territory operators; do not assume the system median applies to a new launch.
What earnings range should a prospective owner use?
Use approximately $55,000–$207,000 as a planning range for estimated owner-operator benefit, with about $132,000 as the model’s central calculation—not as a promised or most-likely result. For a manager-run structure, use approximately -$51,000 to $101,000 before personal taxes and financing principal, with the base residual near $27,000 and potentially lower after payroll burden and benefits.
The most important earnings driver is the combination of revenue scale and owner involvement. The largest unresolved uncertainty is the absence of YESCO-specific operating-expense and profit data. Before relying on the range, a buyer should verify Item 19 substantiation, obtain comparable U.S. franchisee operating statements, and confirm how Territory count, maturity, manager compensation, truck costs, subcontractor economics, and recurring fees apply to the proposed operation.