Does 'Payroll Expense' for a Closet Storage Concepts franchise include owner compensation?

According to Closet Storage Concepts' 2025 Franchise Disclosure Document, 'Payroll Expense' does not include owner compensation. Note 7 to Tables 1 through 11 in Item 19 explicitly states that "Payroll Expense represents salary and wage amounts paid to all employees. Owner compensation is not included."

This means that when Closet Storage Concepts calculates the 'Payroll Expense' for its financial performance representations, it only considers the wages and salaries paid to employees, such as installers, sales designers, administrative staff, and shop employees. The money an owner pays themselves is accounted for separately, if at all.

For a prospective franchisee, this is an important distinction. When reviewing the financial performance data, particularly Table 7 which shows 'Payroll Expenses' for 2024, it's crucial to remember that these figures do not reflect the total labor costs of running the business if the owner is actively working in the business. A franchisee will need to factor in their own desired salary or compensation when projecting their potential earnings and expenses. This could significantly impact the overall profitability of the franchise.

Furthermore, Table 8 shows 'Payroll Expenses as a Percentage of Gross Revenue' for 2024. Again, this percentage is based solely on employee payroll and does not account for owner compensation. A franchisee should consider how their own compensation needs will affect this percentage and the overall financial health of their Closet Storage Concepts franchise.