Paul Davis Restoration

Paul Davis structures its franchise fee by territory population: $0.26 per person. A standard 500,000-person territory costs $130,000 in franchise fee alone; the maximum single unit (800,000 people) runs $208,000. In practice, 2024 fees ranged from $17,148 to $176,698 depending on territory size and any VetFran discount (25%). Critically, at least 50% must be paid in cash at signing — you can finance the balance over 4 years at 7% APR via promissory note.

The item 7 total investment range of $298,800–$804,900 for a standard 500,000-person territory reflects the operational reality of restoration: you need vehicles ($10,000–$121,000 for branded work vans), an equipment and chemical startup package ($5,000–$54,000), significant insurance coverage ($20,500–$63,500 — well above most franchise categories), and $150,000–$200,000 in working capital for the first 3 months. That working capital figure is what separates restoration from most franchises — you're funding active jobs for weeks or months before insurance pays.

Ongoing fees are lower than most franchises: 4% royalty on gross sales, with a ramp-up minimum that starts at zero and builds annually by territory population. A $500K territory hits $4,000/year minimum royalty in Year 5, stepping to a $6,000/year minimum by Year 9. The Strategic Marketing Plan fee runs $500/month plus 0.75% of invoiced sales (up to a CPI-adjusted cap) — call it roughly 1.25% effective total. The Common Software Fee (RMS) is $525/month for your primary office. Total fee burden to corporate is approximately 5–6% of gross sales — one of the lowest royalty structures in home services.

Paul Davis provides two revenue tables. For 183 franchised businesses that have been operating 2+ years, the 2024 average gross sales was $6,006,779 — but the median was $3,976,094 and only 30% of operators exceeded the average. The range was $83,873 to $55,516,949 (a single operator in SE Wisconsin). This is a highly right-skewed distribution driven by a handful of large multi-territory operators.

For 45 newer businesses (operating less than 2 years), the 2024 average was $1,765,113 with a median of $1,006,593. The high end was $10.6M (an operator that grew extremely quickly), with the minimum at $6,899.

At $4M in gross sales (near the 2+ year median): at 4% royalty ($160K), SMP fee (~1% effective = $40K), RMS software ($6.3K/year), and call center fees ($10–15K/year), total corporate fees run roughly $220K — about 5.5% of gross. Before payroll, vehicles, materials, insurance, and rent, the restoration business can yield strong margins on high-ticket insurance claims — but the variance in outcome is significant.

No net income figures are disclosed. The resale data in Table 5 shows deals at 0.33–1.55x annual sales — suggesting the market values these businesses at 0.5–1x revenue, which is reasonable for a service business with recurring insurance relationships.

Paul Davis has grown from 224 units in 2022 to 266 by end of 2024, adding 42 units over three years. Annual openings have been consistent at 20–28 per year, with closures very low (4–7 per year). The 2024 net change of +21 units reflects the strongest growth year of the three. Transfer activity (14–20 transfers/year) reflects a healthy resale market.

The system is entirely franchised — no company-owned locations — which means Paul Davis International is 100% dependent on franchisee performance for its revenue base. The brand has a well-developed insurance relationships infrastructure (they work directly with major carriers on program work) that differentiates established operators from cold-start competition.

The working capital requirement is the most underestimated aspect of this franchise. $150,000–$200,000 is needed for the first 3 months, and the FDD notes that after year one, you must maintain working capital (including unused credit lines) equal to the greater of 10% of prior-year sales or $500,000. At $4M in sales, that's a $400,000 liquidity requirement permanently maintained. Restoration businesses can have outstanding receivables stretching 60–120 days from insurance companies — cash flow management is a core operational skill.

Insurance cost is significantly higher than most franchise categories: $20,500–$63,500 annually, with the FDD noting that California and New York franchisees may face higher requirements. This is driven by the environmental and liability risks of water, fire, and mold remediation work.

The software and technology stack is complex: RMS software ($525/month), Symbility/Validate per-claim fees ($15.75/claim), call center costs (AnswerNet monthly plus per-call usage), and optional program management fees. At 100 claims per month, the per-claim technology costs alone could run $3,000–$4,000 monthly.

Program work (jobs referred by insurance companies through Paul Davis's carrier relationships) requires meeting strict quality standards. If you lose program status, your referral pipeline disappears. This is both a differentiating advantage and a concentration risk.