Between royalty and the ad fund, most electrical franchise owners send around eight cents of every dollar to the franchisor off the top. You cannot negotiate that line. Which is exactly why the lines you can control have to be right.
You bought a system, and the system came with reporting obligations, fixed fees and a scoreboard you get measured against. Generic bookkeeping handles none of that.
Royalty and ad fund are charged on gross sales. A bad month still owes them. That makes margin discipline more important for you than for an independent shop, not less.
Franchise disclosure documents typically report gross sales by performance quartile. They rarely tell you what anyone kept. So you can know you are top quartile on sales and have no idea whether you are bottom half on profit.
Vendor rebate programs, co-op advertising, required reporting formats and territory-level numbers. Book them wrong and your margin reads wrong all year.
Built on a single-territory electrical franchise doing gross sales near the industry average, with a 6% royalty and a 2% ad fund.
| Line | Amount | Of revenue |
|---|---|---|
| Gross sales | $780,000 | 100% |
| Direct job costs, labor and material | $549,900 | 70.5% |
| Gross profit | $230,100 | 29.5% |
| Royalty | $46,800 | 6.0% |
| Ad fund | $15,600 | 2.0% |
| Everything else it takes to keep the doors open | $110,000 | 14.1% |
| What you keep | $57,700 | 7.4% |
Here is the line that matters. That $62,400 in royalty and ad fund is 27% of your gross profit, gone before rent, insurance or your own pay. It is also the one cost on the page you have no say over. Every dollar of margin you leave on a job is therefore worth more to you than it is to the shop down the road that is not paying it.
That last one is the whole argument. At 7.4% net, netting another $7,800 the hard way means selling, staffing and collecting on roughly $105,000 of additional work. Recovering one point of margin on work you already do is the same money with no new trucks and no new customers.
The problem changes shape. One set of consolidated books tells you the group is fine while one territory is carrying two others. You need both views, every month, without building them by hand.
Each location on its own, using the same allocation method every time so the comparison is real rather than an artifact of how costs got coded.
One office, one dispatcher, three territories. How that gets spread decides which location looks profitable, so it gets decided on purpose rather than by accident.
Revenue per truck, gross margin and net by territory, side by side. The internal benchmark is usually more useful than the franchise-wide one.
No. Livewire Financial is independent and we are not affiliated with, endorsed by or sponsored by any franchisor. We work for you. If your franchise agreement requires a particular reporting format or an approved accounting system, we work within it.
Franchisor reporting is built to compare you to other franchisees, mostly on revenue. It is not built to tell you which call types lose money, what a tech hour really costs you, or whether you can afford the next truck. Those are different questions and they need your own books to answer.
We work in ServiceTitan, Housecall Pro, Jobber, Service Fusion, JobNimbus, JobTread and BuildOps, plus Xero and QuickBooks Online. If your system mandates a specific platform, tell us on the call and we will be straight with you about whether we can get clean numbers out of it.
That is usually the honest answer of nobody knows, including you, because the disclosure you get benchmarks gross sales rather than profit. Once your job costing is real we can show you your gross margin by work type and your net, and compare it to what we see across comparable shops. That is a more useful scoreboard than sales rank.
Then the first thing to establish is whether territory one is genuinely profitable or just busy, because a second one multiplies whatever is already true. That is exactly the kind of decision to bring to a strategy call rather than to a spreadsheet at midnight.
No. Month to month, cancel anytime. You already signed one long agreement this decade. See pricing.
Livewire Financial is an independent accounting and advisory firm. Any franchise brand names referenced elsewhere on this site or in conversation are used only to identify the systems our clients operate within. No affiliation, endorsement or sponsorship is implied.
Thirty minutes on your books. We show you where the margin is going and what one point is worth on your revenue.