Verified — real FDD extraction
SBA-eligible · directory code S2967 since 2018
ar workshop
Other · independent · est. —
AR Workshop is a boutique DIY craft studio where customers attend instructor-led workshops to make wood signs, home decor, and other hands-on projects. A franchisee operates a storefront studio, scheduling classes and private parties and selling project sessions and retail add-ons to hobbyists and groups.
ar workshop net unit count grew +195.6% from 2017–2019 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Too new to judge
Distress
This system grew to 130 franchised units from a base of 3 — the record looks clean because very few units have been exposed for very long, not because many have survived. Median SBA time-to-default is about 61 months; this system has not lived through that window at scale. Judge the disclosures, not a verdict.
Exit rate · latest year
1.0%
fiscal 2019, per Item 20
Cost to open
$71K–$126K
Item 7 total investment range
SBA loan defaults
16.7%
12 loans resolved — directional only
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2017–2019
Survival record
FDD Item 20 · outlet status by year
In fiscal 2019, 1 of 96 franchised outlets left the system — a 1.0% annualized exit rate. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2017 | 2018 | 2019 |
|---|---|---|---|
| Outlets at start | 4 | 45 | 99 |
| Opened | 40 | 53 | 35 |
| Transfers | 0 | 1 | 10 |
| Terminations | 0 | 0 | 0 |
| Non-renewals | 0 | 0 | 0 |
| Reacquired by franchisor | 0 | 0 | 0 |
| Ceased — other reasons | 0 | 0 | 1 |
| Outlets at end | 45 | 99 | 133 |
| Net change | +41 | +54 | +34 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 19 SBA-backed loans to ar workshop franchisees since 2018. Only 12 have resolved so far — too thin for a reliable default rate, but 2 of them charged off.
—
12 resolved · too thin to rate
—
avg. charged-off $ ÷ approved $
—
default rate × loss severity
$127,562
what recent franchisees borrowed
75 mo
approval → charge-off, defaulted loans
7 vs 9
distinct banks still lending
Charge-off rate by loan approval year (%)
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO AR WORKSHOP BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $25K franchise fee (Item 5) and a total investment of $71K–$126K (Item 7). The franchisor publishes an earnings claim (Item 19) — read its methodology closely.
To open (Item 7)
$71K–$126K
all-in investment range
Franchise fee (Item 5)
$25K
upfront, one-time
Royalty (Item 6)
6%
of sales, ongoing
Your figure — cross-check against this brand's Item 19 and current-owner validation.
Royalty you'd pay / yr
$60K
6% of sales, before profit
Over a 10-yr term
$600K
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for ar workshop with an independent CPAModeled risk
FDD Risk Score · modeled from the public record
The public record puts this brand toward the middle of the systems we score — but the evidence is thin, so treat it as a range, not a number.
Risk percentile (range)
29–53 / 100
Directional
Modeled SBA charge-off
11.4%
Observed SBA charge-off
16.7%
Top drivers: Net unit growth (lowers) · Investment ceiling (log) (raises) · Item 20 exit rate (lowers) · System size (log units) (raises). Thin loan history — treat this as a range, not a number. A linear scorecard built from this brand's own disclosure figures plus the federal loan record behind its franchisees; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
5 things: AR Workshop closes in Roseville, space listed for lease
news:The Business Journals · 19mo ago
10 questions to ask a ar workshop franchisee
Built from this brand's own disclosures · take it to your validation calls
The franchisor will give you a list of owners to call. Most buyers ask whether they like it. These are the questions built from what ar workshop has actually disclosed — each one carries the number it came from, so you can tell whether the answer squares with the record.
- 01
ar workshop’s own Item 20 shows 1 of 96 franchised outlets left the system in fiscal 2019 — about 1.0%. Do you know any of those owners, and do you know why they left?
A franchisor will call these “transitions.” An owner three doors down usually knows whether they sold at a profit or handed the keys back.
FDD Item 20 · FY2019
- 02
10 units transferred to new owners in fiscal 2019. When you look at those, were they people cashing out a good business — or getting out of a bad one?
Transfers count as neutral in every ranking. They are the single easiest place to hide distress.
FDD Item 20 · FY2019
- 03
Item 7 says the low end to open is $71K, but the average recent SBA loan to a ar workshop franchisee was $128K. What did you actually spend to open, all in?
Lenders size loans to real project costs. A large gap between the disclosed floor and what banks actually fund is the most common way buyers get underfunded.
FDD Item 7 vs SBA approvals FY2020+
- 04
You pay 6.0% royalty on gross sales, plus the ad fund, before any of your own costs. On your actual revenue last year, what did you take home as the owner — not revenue, take-home?
Royalty is charged on sales, not profit. This is the number the brochure never shows and the one your life actually runs on.
FDD Item 6
- 05
ar workshop makes an earnings claim in Item 19. Does your unit look like that number — and do you know which units they included to build it?
Item 19 is legal to build from a flattering subset. Ask whether they excluded new units, closed units, or company stores.
FDD Item 19 · 2020
- 06
How many months did it take to cover your own costs, and how much cash did you burn getting there?
Ramp-to-breakeven working capital is the most underestimated line in any franchise purchase, and the most common reason otherwise-good units fail.
Not disclosed in any FDD — ask an owner
- 07
Item 3 discloses 1 legal matter. Do you know what those were about, and were any brought by franchisees?
Franchisee-brought suits over territory, fees or support tell you how the franchisor behaves when there's a disagreement.
FDD Item 3 · 2020
- 08
What does the franchisor charge for that you didn't expect — required tech fees, mandatory remodels, approved-supplier pricing?
Required spending appears across Items 6, 8 and 11 rather than in one place, so buyers routinely miss the total.
FDD Items 6, 8, 11
- 09
If your agreement came up for renewal tomorrow at current terms, would you sign again?
The single most predictive question you can ask. A hesitation is the answer.
Ask every owner you speak to
- 10
Who else should I call — including someone who left?
The franchisor's list is curated by definition. Former franchisees are where the unflattering truth lives, and current owners usually know how to reach them.
Ask every owner you speak to
Want this as a checklist you can take to the calls?
I'll email you the printable version, and tell you if ar workshop’s numbers move — a new filing, a rising exit rate, a distress signal. Unsubscribe in one click.
A broker is paid by the franchisor to place you. I'm paid by you — and the job is pressure-testing ar workshop's numbers, including talking you out of a bad deal.
This page is what buyers see before they call you for validation. If the record above is wrong — or right in a way the numbers can't show — say so. Corrections are checked against the filings; nothing you write is published with your name unless you agree to it.
ar workshop franchise questions, answered from the filings
What percentage of ar workshop franchises closed last year?
In ar workshop's latest FDD Item 20 (fiscal 2019), 1 of 96 franchised outlets left the system — an annualized exit rate of 1.0%. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a ar workshop franchise cost?
Per ar workshop's 2020 FDD, buying in requires an initial franchise fee of $25K (Item 5) and a total initial investment of $71K–$126K (Item 7).
What royalty does ar workshop charge?
ar workshop charges an ongoing royalty of 6.0% of gross sales, per Item 6 of its 2020 FDD.
Does ar workshop disclose earnings (Item 19)?
Yes — ar workshop makes a financial performance representation in Item 19 of its 2020 FDD, reporting a median unit volume of $225K. Read it closely: franchisors choose which units and which metrics to include.