AR Homes Franchise Cost, Revenue & Review 2026
- Investment
- $535K – $2.2M
- Disclosed sales
- $14.7M
- gross sales, not profit
- SBA charge-off
- Under 10 loans (3)
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 and an ongoing 3.5% royalty[2]. Per the 2025 FDD, average unit revenue was $14.7M[2]. FranchiseVerdict grade: B (Above average), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: medium - issued 12 to 24 months ago; a newer filing is likely on file
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✗ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored7 of 8 headline figures on this page cite a page of the filing; the rest are marked “Not cited” beside the figure.
Overview
- Investment
- $535K – $2.2M
- 87th pct Real Estate
- Avg gross sales
- $14.7M
- 11th pct Real Estate
- Royalty
- 3.5%
- 7th pct Real Estate
- Units
- 42
- 29th pct Real Estate
- SBA charge-off
- N/A
Quick verdict · Real Estate · color = vs category peers
Green = favorable by >10% vs Real Estate median · 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, 3.5% ongoing royalty.
- 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 B (Above average), verdict score 68/100 (higher is better).
- GROWTHFlat: no net change in franchised outlets in the latest year (1 opened, 1 closed) (Item 20).
- 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
- FDD Item 1, page 10 of the 2025 FDD
- 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 925% 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
- 3.5%
- Set by a formula · typical 6–8%
- 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 | 3.5% of gross sales |
| Marketing / ad fund | 0.3% |
| 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 3742% above the real estate norm.
Source: FDD 2025 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for AR Homes until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$1.9M
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
FDD-reported earnings
The FDD reports $1.2M as Adj. Net Income / % of Closing Revenue (3). This is a disclosed figure, not our estimate — we publish no modelled profit for AR Homes.
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, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own 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?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
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%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
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 outlets
- vs category median 53
- Range (low → high)
- $1.8M→$45.1MCited, not corroborated — printed on page 50 of the 2025 FDD. Nothing else in our record independently restates or re-derives it.
- 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 median of 7.5%.
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 medians
How AR Homes Compares
Category median of published Real Estate brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
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
- 2.4%
- 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
Last fiscal year · Item 20 exits and transfers
- Terminated
- 1
- Not renewed
- 0
- Signed, not yet open
- 0
- 0.00 per open outlet · Item 20 Table 5
- Projected new
- 8
- Franchisor's next-year forecast
- 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.
Where the owners are · Item 20 owner list
46 current owners across 10 states.
- FL 23
- SC 6
- NC 5
- GA 2
- IN 2
- TN 2
- TX 2
- VA 2
- AL 1
- OH 1
Counts only, from the list the franchisor prints in Item 20. Names and phone numbers are for your own due diligence and are not shown here.
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
- Under 10 loans (3)
- Insufficient SBA coverage: 3 loans, rate hidden below 10
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- Under 10 loans (3)
- 5-yr charge-off
- Under 10 loans (3)
- 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.
Why this reads harsher than the B grade: the grade weighs financial health, unit economics, unit growth, scale, legal, and transparency across the whole filing, while this summary lists individual flags without that weighting. The flags are worth checking with current owners; neither is investment advice.
Litigation (Item 3)
Subject: the franchisor is a named party (defendant).
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)
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Forvis Mazars, LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Consolidated total revenues of AR Franchising, Inc. and Subsidiaries for FY ended Dec 31, 2024 ($25,345,375) and 2023 ($34,889,668). Components include franchise and license fees, interior design services/merchandise sales, residential design fees, vendor subsidies, rental and other income, and interest income. other_revenue reflects 'Rental and other income' ($95,604).
ⓘ 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 68 / 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
- 05HIGHPrevious litigation settlement (F&S Frame and Trim, 2015) indicates history of contractor/vendor payment disputes, a red flag in construction franchises
- 06MINORRoyalty 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 | No territory protection |
| 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
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.
Who owns AR Homes?
AR Homes is franchised by AR Franchising, Inc.. Its parent company is AR Family Holdings, LLC. Source: FDD Item 1, 2025 filing.
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 B-grade franchise with a verdict score of 68 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. 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
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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.