AR Homes Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
AR Homes is a custom home building franchise designing and constructing luxury homes for discerning buyers. Franchisees run local building operations, managing design, permitting, subcontractors, and client relationships.
FranchiseVerdict summary · 2026
A AR Homes franchise requires a total initial investment of $535K – $2.2M, including a $65K franchise fee. Per the 2025 FDD, average unit revenue was $14.7M[2]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $535K – $2.2M
- 86th pct Real Estate
- Avg gross sales
- $14.7M
- 13th pct Real Estate
- Royalty
- N/A
- Units
- 42
- 30th pct Real Estate
- SBA charge-off
- N/A
Quick verdict · Real Estate · color = vs category peers
Green = favorable by >10% vs Real Estate avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $535K – $2.2M including a $65K franchise fee.
- RETURNSAverage unit revenue of $14.7M/year (median $10.4M), with an estimated 50% cash-on-cash return (based on Adj. Net Income / % of Closing Revenue (3)).
- RISKVerdict A (Strongest tier), verdict score 64/100 (higher is better).
- DECLINESystem contracting at -8.7% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- AR Franchising, Inc.
- Parent company
- AR Family Holdings, LLC
- Predecessor
- Arthur Rutenberg Homes, Inc.
- Prior franchisor entity
- CEO title
- Chief Executive Officer
- Donald L. Whetro
- Founder active
- Yes
- Original founder still leading the business
- Incorporated in
- FL
- HQ
- 160 Fountain Parkway N, Suite 210, St. Petersburg, Florida 33716-1410
- Auditor
- Forvis Mazars, LLP
- Audited financials
- Franchisor revenue
- $25.3M
- vs $34.9M prior year
- Management churn noted
- Frequent turnover
- Item 2 disclosed frequent executive changes
Overview
About
- CEO
- Donald L. Whetro
- Headquarters
- FL
- Founded
- 1990
- FDD year
- 2025
- States available
- 11
Can you afford it, and what does the money buy?
Entry cost runs 538% above the typical real estate franchise.
Source: FDD 2025 · Items 5–7
FDD Item 7 · 2025 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $65K | $65K |
| Working capital (3–6 mo) | $325K | $775K |
| Equipment, build-out, other | $145K | $1.4M |
| Total initial investment | $535K | $2.2M |
Source: AR Homes 2025 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $535K – $2.2M
- Bottom third — review vs category
- Liquid capital req'd
- $325K – $775K
- Bottom third — review vs category
- Franchise fee
- $65K – $65K
- Bottom third — review vs category
- Royalty
- Greater of Minimum Annual Royalty or 3.5%–4.25% of Adjust…
- Ad fund
- 0.3%
- typical 3–5%
- Total fee load
- 3.8%
- vs 9–13% typical
- Payback period
- 2.0 yrs
- From FDD / Item 19
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty (flat) | The greater of the Minimum Annual Royalty or 3.5% to 4.25% of the Adjusted Sales Price |
| Marketing / ad fund | 0.3% of gross sales |
| Technology fee | $1K |
| Transfer fee | $33K |
| Renewal fee | $33K |
| Inventory (initial) | $1K – $5K |
| Total fee load | 3.8% of rev |
A 3.8% total fee load is unusually lean. More of each revenue dollar stays with the franchisee.
What do units actually make?
Average unit sales run 887% above the real estate norm.
Source: FDD 2025 · Item 19
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$2.5M
16.8% margin
Unlevered ROIC
129%
EBITDA / total invested capital
Payback
9 mo
cash-on-cash, unlevered
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
FDD-reported earnings vs. model
The FDD reports $1.2M as Adj. Net Income / % of Closing Revenue (3). Our model estimates $2.5M SLEBITDA from the same revenue using category-average cost assumptions. These numbers differ because Adj. Net Income / % of Closing Revenue (3) deducts different expense categories than our model.
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real lease quote, labor market, and build-out budget.
Returns model · single-unit ROIC
What would one AR Homes unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
129%
Above the 30–60% band. Verify revenue is per-unit average
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Levered LBO scenario · Yale Crease Capital framing
What would 25 AR Homes units return on equity?
Equity IRR · 5-yr
21.3%
2.63× MOIC
Year-1 DSCR
4.49×
EBITDA ÷ debt service
Equity required
$95.7M
on $143.8M purchase
Total debt
$48.1M
SBA $5.0M + senior + seller note
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
- Avg gross sales
- $14.7M
- Per unit, per year
- Median gross sales
- $10.4M
- Avg adj. net income / % of closing revenue (3)
- $1.2M
- Reported as Adj. Net Income / % of Closing Revenue (3) in FDD Item 19
- Cash-on-cash
- 49.6%
- Based on Adj. Net Income / % of Closing Revenue (3) / investment midpoint
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- gross sales
- Sample size
- 29
- vs category median 64 · small
- Range (low → high)
- $1.8M→$45.1M
- Cohort dispersion (min → max)
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
- Transparency
- 7 / 10
- vs category median 0 / 10 · above
Compared against 101 Real Estate brands
Revenue is 10.8x the investment midpoint. At typical franchise margins, this suggests a payback under 3 years.
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $14.7M/year in gross sales. Median is $10.4M — top performers pull the average up, so a typical unit earns less. Revenue-to-investment ratio: 10.8x.
Fee burden
Total ongoing fee load of 3.8% — below the Real Estate average of 9.1%.
Disclosure
Transparency score 7/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System contracting at -8.7% CAGR over 3 years. Investigate whether closures are franchisor-driven consolidation or franchisee exits.
Multi-unit rate
Only 1% of franchisees own multiple units. Could indicate challenging economics or a young system where operators haven't had time to expand.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Real Estate averages
How AR Homes Compares
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 42
- Opened
- 1
- Last reporting year
- Closed
- 1
- Terminated
- 1
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 16.7%
- Company-owned
- 0
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
- Multi-unit owners
- 1.0%
- Net growth (3-yr)
- -8.7%
- Net unit change over 3 years
- 3-yr CAGR
- -8.7%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 7
- Closed (3yr)
- 1
- Terminated (3yr)
- 6
- Non-renewed (3yr)
- 0
- Transfers (3yr)
- 1
- Reacquired (3yr)
- 0
- Franchisor bought back
- Transfer rate
- 2.4%
- Owners selling to other franchisees
- Termination rate
- 2.4%
- Franchisor-initiated terminations
- Ceased ops
- 2.4%
- Units that stopped operating
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 10 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator. Not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA loan disclosures. This brand has only 3 7(a) loans on file; statistical reliability is limited below 10 loans.
- Total loans
- 3
- Loan volume
- $762K
- Median loan
- $254K
- average
- Charge-off rate
- N/A
- limited sample (3 loans) — rate not shown below 10
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- N/A
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 2
- Defaults
- N/A
Explore lender portfolios on Bank Reports or regional data on State Reports.
What could kill this investment?
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Moderate-to-high risk investment with unresolved litigation, unprotected territory, opaque financial performance claims, and unclear unit economics in a capital-intensive sector.
Litigation (Item 3)
1 pending case (Tate v. Ethics Construction Company and Arthur Rutenberg Homes, Inc.) relating to former franchisee deposit; 1 concluded case settled for $10,000 (F&S Frame and Trim vs. Catenac Custom Homes and ARH)
Largest disclosed settlement: $10,000
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Forvis Mazars, LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
ⓘ These are the parent company's consolidated financials (the parent guarantees the franchisor), not this brand's standalone results — the figure reflects the whole corporate group, not this brand alone.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 64 / 100 verdict
- 01HIGHPending litigation (Scott Tate) involving 'aiding and abetting' claims suggests potential franchisor accountability issues beyond standard disputes
- 02MINORNo protected territory in real estate/home building sector creates direct competition risk between franchisees in same market
- 03MINORUnknown unit growth trajectory with only 42 units is concerning—no clarity on system expansion or contraction over past 3-5 years
- 04MINORHigh initial investment range ($535K-$2.19M) paired with undefined Minimum Annual Royalty creates unpredictable cost structure
- 05MINORItem 19 (Financial Performance) absent from disclosure—average revenue ($14.7M) and net income ($1.2M) figures cannot be verified as franchisor-provided
- 06HIGHPrevious litigation settlement (F&S Frame and Trim, 2015) indicates history of contractor/vendor payment disputes, a red flag in construction franchises
- 07MINORRoyalty structure (3.5%-4.25% + undefined minimum) on Adjusted Sales Price creates ambiguity—'adjusted' definition critical to profitability
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 3.8% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 10 years |
|---|---|
| Renewal term | 10 years |
| Allowed renewalsℹ | 1 |
| Territory type | none |
| Protected territory | No |
| Exclusive territoryℹ | No |
| Online sales rights | Granted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 3 years |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Curable defaultsℹ | 10 |
| Mandatory arbitration | No |
| Jury trial waiver | Yes |
| Governing law | FL |
| Litigation count | 2 |
View Item 3 litigation summary
1 pending case (Tate v. Ethics Construction Company and Arthur Rutenberg Homes, Inc.) relating to former franchisee deposit; 1 concluded case settled for $10,000 (F&S Frame and Trim vs. Catenac Custom Homes and ARH)
Items 10, 11
Training & Operations
- Classroom training
- 151 hrs
- On-the-job training
- 41 hrs
- Training location
- Our Headquarters, Your Location, or Remote Session
- Ongoing training
- Required
- Time to open
- 3 mo
- From signing to launch
- Site selection
- Franchisee with franchisor approval
- Franchisor financing
- Offered
- Item 10
- POS system
- ARIS / Software Bundle
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: ARIS / Software Bundle
Item 20 · call current owners
Franchisee Contacts
46 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
AR Homes · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a AR Homes franchise?
The total investment to open a AR Homes franchise ranges from $535K – $2.2M, with an initial franchise fee of $65K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do AR Homes franchise owners earn?
According to Item 19 of the AR Homes FDD, the average gross sales per unit is $14.7M. The median is $10.4M. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Item 19 in the AR Homes FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the AR Homes FDD and qualifies whose outlets they describe.
What is AR Homes's franchise failure rate?
SBA 7(a) loan charge-off data is not available for AR Homes (fewer than 10 loans on file). Charge-off rates are one way to gauge franchise risk, but not all franchise loans go through the SBA program. We recommend reviewing turnover and closure data in the FDD and speaking with current franchisees.
How many AR Homes franchise locations are there?
As of their most recent FDD filing, AR Homes has 42 total units in the United States, including 42 franchised units and 0 company-owned units. 1 new units were opened in the latest reporting year.
Is AR Homes a good franchise to buy?
FranchiseVerdict rates AR Homes as a A-grade franchise with a verdict score of 64 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
Are you the franchisor?
If you represent AR Homes, you can request corrections or provide updated information.
Other Real Estate franchises
Compare similar franchise opportunities in the Real Estate category
Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.