Mr. Rooter FDD Item 19 is the section of the Franchise Disclosure Document where the franchisor may provide financial performance representations, giving prospective franchisees the closest thing to an official answer on how much money a Mr. Rooter franchise makes. Mr. Rooter operates within Neighborly, formerly known as the Dwyer Group, which is owned by private equity firm KKR and manages one of the largest home services franchise portfolios in the world with over 30 brands. At Lopes Law LLC, we review plumbing and home services franchise FDDs regularly, and the financial picture for any Neighborly brand requires understanding not just the revenue data in Item 19 but the full cost structure created by the Neighborly platform and its impact on actual take-home income.

This guide explains what Mr. Rooter discloses in Item 19, how to interpret the financial performance data, why gross revenue figures can be misleading in a franchise system with a 7% royalty plus 2% advertising fund plus platform fees, and what every prospective plumbing franchisee should analyze before committing the $76,600 to $185,700 total investment required to launch a Mr. Rooter location.

What Is FDD Item 19 and Is Mr. Rooter Required to Provide Financial Data?

Item 19 of any Franchise Disclosure Document is titled “Financial Performance Representations.” Under the FTC Franchise Rule (16 C.F.R. Part 436), franchisors are not required to include financial performance data. If a franchisor chooses not to make financial performance representations, Item 19 must contain a specific statement to that effect. If the franchisor does provide data, the representations must have a reasonable basis, and the FDD must disclose the assumptions and methodology underlying the numbers.

Mr. Rooter has historically included some financial performance data in its Item 19 disclosure, though the specifics change from year to year as FDDs are updated. When provided, the data may include revenue ranges, average gross sales, or median revenue figures for franchised locations. However, the critical point for prospective franchisees is that Item 19 data typically reports gross revenue, not net income. The gap between those two numbers in a Neighborly franchise is substantial because of the layered fee structure that operates beneath the revenue line.

What Financial Data Might Mr. Rooter’s Item 19 Include?

When Mr. Rooter provides Item 19 data, it typically includes one or more of the following categories:

• Average or median gross sales: The average or median annual gross revenue generated by Mr. Rooter franchised locations across the system, often broken out by location maturity or territory size.
• Revenue ranges by quartile: Data showing what the top 25%, middle 50%, and bottom 25% of locations generate in annual gross revenue.
• Percentage of franchisees achieving stated levels: Information on what percentage of franchisees in the system met or exceeded specific revenue thresholds during the reporting period.
• Geographic or tenure-based breakdowns: Revenue data segmented by how long the franchise has been operating or by regional market characteristics.

What Item 19 almost never includes is a net income figure. This omission is standard across the franchise industry, but it is especially consequential for Mr. Rooter because the Neighborly platform creates fee layers that meaningfully reduce the amount of revenue that reaches the franchisee’s pocket.

How Do Mr. Rooter’s Fees Affect the Financial Performance Numbers?

The revenue figure that appears in Item 19 is the gross number before any franchise-related costs are deducted. To understand what a Mr. Rooter franchisee actually earns, you must subtract every cost layer. Here is a realistic cost breakdown for a Mr. Rooter location generating $800,000 in annual gross revenue:

Expense Category	Estimated Annual Cost	% of Gross Revenue
Royalty (7%)	$56,000	7.0%
National Advertising Fund (2%)	$16,000	2.0%
Neighborly Technology / Platform	$25,000 – $40,000	3.1% – 5.0%
Local Advertising	$15,000 – $25,000	1.9% – 3.1%
Branded Vehicles (fleet)	$30,000 – $50,000	3.8% – 6.3%
Technician Labor	$280,000 – $360,000	35.0% – 45.0%
Parts and Materials	$80,000 – $120,000	10.0% – 15.0%
Insurance	$15,000 – $25,000	1.9% – 3.1%
Office / Warehouse Rent	$18,000 – $36,000	2.3% – 4.5%
Uniforms, Equipment, Misc.	$10,000 – $18,000	1.3% – 2.3%
Total Expenses	$545,000 – $690,000	68% – 86%
Estimated Owner’s Net Income	$110,000 – $255,000	14% – 32%

The wide range in estimated owner’s net income reflects the reality that plumbing franchise profitability depends heavily on operational execution. A well-managed location with efficient technician utilization, low callback rates, and effective upselling can operate at the higher end. A location with high employee turnover, inefficient scheduling, or pricing pressure from local competitors may struggle to reach the lower end.

The Neighborly Platform Cost Layer

One of the most significant line items in Mr. Rooter’s cost structure is the Neighborly technology and platform fees. These fees cover the CRM and scheduling software, call center services, the Neighborly cross-brand referral network, digital marketing tools, and other technology infrastructure. For franchisees accustomed to traditional plumbing franchise models, the Neighborly platform creates an additional cost layer that standalone systems do not have.

The financial trade-off is supposed to be that the Neighborly platform generates incremental revenue through cross-brand referrals, national marketing, and operational efficiency. A Mr. Rooter franchisee may receive referrals from other Neighborly brands like Mr. Appliance, Mr. Electric, or Aire Serv when their customers need plumbing services. Whether this referral volume justifies the platform costs is a question every prospective franchisee should evaluate with real data from existing operators.

How Should You Evaluate Mr. Rooter’s Financial Performance Data?

Whether or not Mr. Rooter provides robust Item 19 data, every prospective franchisee should conduct independent financial analysis. Here is the framework we use at Lopes Law LLC when reviewing plumbing franchise FDDs:

• Build a complete cost model: Start with the gross revenue projection and subtract every cost category identified in Items 5, 6, and 7: royalty, advertising, technology fees, vehicle costs, labor, parts, insurance, rent, and miscellaneous expenses. The result is your estimated owner’s net income.
• Model multiple revenue scenarios: Do not assume you will hit the average revenue figure from Item 19. Model three scenarios: conservative (25th percentile), moderate (median), and optimistic (75th percentile). Evaluate your financial position under each.
• Account for ramp-up time: Item 19 data typically represents mature locations. New Mr. Rooter franchises may take 12 to 24 months to reach sustainable revenue levels. Your working capital must cover operating costs during this period.
• Evaluate the Neighborly premium: Calculate the total annual cost of the Neighborly platform fees, cross-brand technology, and other platform-specific costs. Compare this number against the incremental revenue the platform generates. Ask existing franchisees how many jobs per month come from Neighborly cross-brand referrals.
• Compare against independent operation: An independent plumbing business avoids the 7% royalty, 2% ad fund, and platform fees. On $800,000 in revenue, that is approximately $97,000 to $112,000 annually. Evaluate whether Mr. Rooter’s brand, systems, and support justify this cost differential.

Franchise systems with financial performance data that appears strong on the surface can still produce poor outcomes for individual operators. Dickey’s Barbecue Pit had 27 SBA loan defaults in a single year, and Patrice & Associates reported a 31% failure rate, even though their FDDs contained financial data. Independent analysis is your best protection against investing in a franchise that does not meet your income expectations. If you are already in a franchise that is underperforming, our franchise exit audit can help you evaluate your options.

How Does Mr. Rooter Compare Financially to Other Plumbing Franchises?

Mr. Rooter is one of several established plumbing franchise brands competing for franchisee investment. When evaluating Item 19 data, it helps to understand how Mr. Rooter’s economics compare against alternatives in the plumbing franchise space.

Royalty and Fee Comparison

Mr. Rooter’s 7% royalty is within the standard range for plumbing franchises, which typically charge between 5% and 8%. The 2% national advertising fund is also common. However, the Neighborly platform fees that sit on top of the royalty and advertising contributions are less common in standalone plumbing franchise systems. When you combine the royalty, advertising, and platform fees, Mr. Rooter’s total franchise-related cost as a percentage of gross sales is approximately 12% to 14%, which is at the higher end of the plumbing franchise spectrum.

Brand Recognition and Lead Generation

Mr. Rooter benefits from the Neighborly brand portfolio, which creates brand recognition and cross-brand referral opportunities that standalone plumbing franchises cannot match. The national marketing spend, call center infrastructure, and digital marketing platform are designed to generate a steady flow of inbound leads. For franchisees in competitive markets, this lead generation infrastructure can be a meaningful advantage over independent operators or smaller franchise systems.

Private Equity Ownership Considerations

KKR’s ownership of Neighborly introduces private equity dynamics that directly affect franchise economics. Private equity firms typically seek to maximize platform revenue, which can lead to increased fees, new required technology subscriptions, or changes in the cost structure over the course of a franchise term. Prospective franchisees should evaluate how the fee structure has changed over the past three to five FDD amendments and consider the trajectory. A 10-year franchise agreement means you are committing to whatever fee changes the franchisor implements during that period, subject only to the terms in your franchise agreement.

What Questions Should You Ask Existing Mr. Rooter Franchisees?

The FDD’s Item 20 provides a list of current and former franchisees. Contact as many as possible and ask these specific questions to build a realistic financial picture:

1. What is your annual gross revenue and how long did it take to reach that level?
2. What is your total annual franchise fee burden, including royalty, advertising, and all Neighborly platform fees?
3. How many technicians do you employ and what is your total annual labor cost including benefits?
4. What is your actual owner’s take-home income after all expenses?
5. How many leads or jobs per month come from Neighborly cross-brand referrals versus your own marketing?
6. Have the Neighborly platform fees increased since you signed your franchise agreement?
7. What is your average ticket size and how does it compare to Mr. Rooter’s system average?
8. Would you invest in a Mr. Rooter franchise again knowing what you know now?

These direct conversations will give you financial insight that no Item 19 disclosure can provide. Pay particular attention to any patterns in franchisee responses about platform fee increases, the actual value of cross-brand referrals, and the gap between the revenue data in Item 19 and the owner’s actual take-home pay.

How Does the $76,600 to $185,700 Total Investment Affect Return on Investment?

Mr. Rooter’s total investment range of $76,600 to $185,700 includes the $42,500 franchise fee, branded vehicle costs, equipment and tools, initial marketing, training expenses, and working capital. The wide range reflects differences in territory size, the number of vehicles needed at launch, real estate costs for office or warehouse space, and the amount of working capital required to fund operations during the ramp-up period.

To evaluate return on investment, consider a mid-range investment of $130,000. If the location reaches $800,000 in annual gross revenue and generates $160,000 in owner’s net income by year two, the return on investment is approximately 123% per year on the initial capital, which is strong. However, if the location only reaches $500,000 in revenue by year two, with a correspondingly lower net income of $50,000 to $80,000, the return is more modest, and the franchisee may feel that the risk and effort do not justify the economics.

The ramp-up period is critical. Most plumbing franchises require 12 to 24 months to build a customer base, hire and train technicians, and reach a sustainable revenue level. During this period, the franchisee must fund operating costs including the royalty, advertising, and platform fees from working capital. A franchisee who underestimates working capital needs may face cash flow pressure before the business reaches profitability.

Why Comparing Mr. Rooter to an Independent Plumbing Business Matters

An independent plumbing business avoids the 7% royalty, 2% advertising fund, and Neighborly platform fees. On $800,000 in annual gross revenue, those franchise-specific costs total approximately $97,000 to $112,000 per year. An independent operator who keeps that money as additional profit, or reinvests it in local marketing and employee compensation, may build a more profitable business over the long term.

However, independence comes with its own costs. Building a brand from scratch requires significant marketing investment. Developing operational systems, hiring and training processes, and technology infrastructure takes time and capital. The Mr. Rooter brand carries recognition that opens doors with both customers and employees. For a first-time business owner entering the plumbing industry, the operational playbook and support structure may justify the fee premium.

The right comparison depends on your background. An experienced plumber with an existing customer base and industry knowledge may find more value in independence. A business professional entering the plumbing industry for the first time may benefit from the structure and support that the Mr. Rooter and Neighborly systems provide.

Why Legal Review of Item 19 Is Essential

Item 19 data, whether robust or minimal, must be evaluated in the context of the complete FDD. The fee structure in Items 5 and 6, the sourcing restrictions in Item 8, the territory provisions in Item 12, and the renewal and termination terms in Item 17 all directly affect the financial performance of the franchise. Analyzing Item 19 in isolation is like reading the top line of an income statement without looking at the expenses below it.

At Lopes Law LLC, our flat-fee FDD validation review is $3,000 and includes financial modeling that integrates data from all 23 items. We build cost projections that show realistic owner’s net income, not just gross revenue figures from Item 19. For more on our process, see what to expect from an FDD review.

Frequently Asked Questions About Mr. Rooter FDD Item 19

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Last updated: March 11, 2026