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How much does 1 Percent Lists cost?
Initial Investment Range
$21,870 to $59,560
Franchise Fee
$15,000
The franchise offered is for a 1 Percent Lists® Business that, using our Marks, Copyrights and our System operates a real estate brokerage business.
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1 Percent Lists June 11, 2024 FDD Risk Analysis
Free FDD Library AI Analysis Date: July 16, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
1 Percent Lists Franchises, LLC (1PLF) explicitly warns of its questionable financial condition. Financial statements in Exhibit A confirm this, showing a significant negative net worth for both 2022 and 2023, and continuing into Q1 2024. This condition could seriously impact 1PLF's ability to provide promised support, invest in the brand, or meet its obligations to you, presenting a substantial risk to your investment's viability.
Potential Mitigations
- An experienced franchise accountant must conduct a deep analysis of the financial statements, including footnotes and cash flow, to assess solvency.
- Your attorney should advise on the implications of the franchisor's disclosed financial weakness and any state-required financial assurances.
- Discuss capital and support adequacy with a significant number of current franchisees, with guidance from your business advisor.
High Franchisee Turnover
High Risk
Explanation
The data in Item 20 indicates a potentially high rate of franchisee churn. In 2022, four units (three terminations, one cessation) out of a starting base of 20 left the system, representing a 20% turnover rate. In 2023, four units out of 30 left, a 13% rate. This pattern, especially in a young system, may suggest underlying issues with franchisee profitability, satisfaction, or the business model itself, posing a significant risk to new investors.
Potential Mitigations
- Contacting former franchisees listed in Exhibit J is critical to understand their reasons for leaving; your attorney can help frame these discussions.
- A business advisor can help you analyze the turnover data in the context of the system's overall growth and industry norms.
- Your accountant should review the potential financial impact if the business model proves less stable than anticipated.
Rapid System Growth
Medium Risk
Explanation
The system has grown rapidly, from 6 franchised outlets at the start of 2021 to 38 by the end of 2023. While growth can be positive, when combined with the franchisor's negative net worth as shown in Item 21, it raises concerns. Rapid expansion without sufficient capital can strain support systems, potentially compromising the quality of training, marketing, and operational assistance available to you as the system scales.
Potential Mitigations
- Inquire with the franchisor about their specific plans to scale support infrastructure to match unit growth.
- It is prudent to ask a broad range of existing franchisees about their satisfaction with the current level and quality of franchisor support.
- Your accountant should evaluate whether the franchisor's financial statements show adequate investment in support resources relative to its growth.
New/Unproven Franchise System
High Risk
Explanation
1PLF began franchising in March 2020, making it a relatively new and unproven system. This newness, combined with significant risks identified elsewhere—namely financial instability (negative net worth), high franchisee turnover, and pending litigation involving fraud allegations—elevates the overall risk. An unproven system lacks a long-term track record of franchisee success and franchisor stability, which could impact brand recognition and support quality.
Potential Mitigations
- Intensive due diligence is required; with your business advisor, you should speak with as many existing franchisees as possible from the Item 20 list.
- An accountant's review of the franchisor's dependency on initial franchise fees versus ongoing royalties is crucial for assessing model sustainability.
- Your attorney can help you assess if the contractual terms offer any protections to offset the higher risks of a new system.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The business model is a discount real estate brokerage. While this is a specific niche within the real estate industry, the underlying service of property transactions is a long-established market and not considered a fad. Therefore, the risk of the entire business concept becoming obsolete due to shifting trends appears low.
Potential Mitigations
- A business advisor can help you research the long-term stability and market trends for the specific industry niche.
- It is wise to evaluate the franchisor's plans for innovation and adaptation to stay relevant in a changing market.
- Consider the sustainability of the business model and its resilience to economic downturns with a financial advisor.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 indicates that the key principals, Grant and Kelly Clayton, have been involved with the predecessor company since 2015 and have operated in the real estate industry for over a decade. While their direct franchising experience began in 2020, their extensive industry and brand-specific operational experience reduces the risk associated with inexperienced management.
Potential Mitigations
- It is always prudent to have a business advisor help you vet the management team's background in both the industry and in franchising.
- Speaking with existing franchisees is a good way to gauge their perception of management's competence and support.
- An attorney can review the franchisor's obligations in the agreement to ensure they are clearly defined, regardless of management's experience.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 does not indicate that the franchisor is owned or controlled by a private equity firm. The ownership structure appears to be composed of the founding members and several individual investor members, as detailed in the financial statement notes.
Potential Mitigations
- Your attorney should always confirm the ownership structure disclosed in Item 1 and the financial statement notes.
- A business advisor can help you research the background of the primary owners to understand their business philosophy and track record.
- It is wise to ask current franchisees about any recent changes in ownership or management direction.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 states clearly, "We do not have a parent company." Therefore, concerns about undisclosed parent companies or the need for parent financial statements are not applicable here.
Potential Mitigations
- An attorney should always verify the corporate structure disclosed in Item 1 to confirm the absence of a parent entity.
- If a franchisor is a newly formed subsidiary, an accountant should assess if it is adequately capitalized on its own.
- Your business advisor can help research the disclosed ownership to understand their financial backing.
Predecessor History Issues
Medium Risk
Explanation
1PLF, formed in 2020, acquired its core intellectual property from predecessor companies operated by the same principals. While this is a common structure, the combination of the franchisor entity's newness, its negative net worth, and the litigation from a former franchisee (Item 3) suggests potential inherited challenges. The risk is that the current franchisor structure has not yet proven its ability to overcome historical or systemic issues that may have existed under the predecessors.
Potential Mitigations
- Your attorney should carefully review the history of the predecessors as disclosed in Items 1, 3, and 4.
- Discuss with your accountant the financial health of the current franchisor entity and its reliance on franchise sales for revenue.
- Questioning long-term franchisees about their experience before and after the 2020 formation can provide valuable insight.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a lawsuit initiated in January 2024 by a terminated franchisee alleging serious claims, including fraudulent inducement and unfair trade practices. For a young system, a single lawsuit with such allegations is a significant event, especially when viewed alongside the rate of franchisee turnover shown in Item 20. 1PLF states it is aggressively defending the suit, but its existence represents a material risk and a potential indicator of disputes within the system.
Potential Mitigations
- Your attorney must review the specific allegations in the disclosed litigation and advise you on their potential implications.
- It is wise to consider the litigation as a significant red flag and weigh it heavily in your investment decision.
- A business advisor can help you discuss the circumstances surrounding the dispute with other franchisees to gather more context.
Disclosure & Representation Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Financial & Fee Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Legal & Contract Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Territory & Competition Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Regulatory & Compliance Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Franchisor Support Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Operational Control Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Term & Exit Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Miscellaneous Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems