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Apex Leadership Co
How much does Apex Leadership Co cost?
Initial Investment Range
$86,000 to $134,700
Franchise Fee
$59,500 to $69,500
As an Apex franchisee, you will operate a business that provides a fundraising solution for schools, sports teams, clubs and other groups while developing students into leaders utilizing a proprietary two-week curriculum that includes health, fitness and leadership training.
Enjoy our partial free risk analysis below
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Apex Leadership Co October 21, 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
Apex Leadership Franchising, LLC (Apex LLC) is in a precarious financial state. The FDD's “Special Risks” section and audited financial statements in Exhibit B reveal a significant Member's Deficit (negative net worth) of ($536,519) and consecutive annual net losses. The company appears to rely on new franchise fee sales to fund operations and made large cash distributions to its owners despite the losses. This creates a significant risk regarding its long-term ability to support you.
Potential Mitigations
- A franchise accountant must review the audited financial statements, including all footnotes and the auditor's report, to assess the franchisor's viability.
- Discuss the implications of the negative net worth and reliance on the parent company for funding with your financial advisor.
- Your attorney should clarify if any financial assurances, like a performance bond, are in place to protect your investment.
High Franchisee Turnover
High Risk
Explanation
The franchise system shows signs of franchisee distress. Item 20 tables for the last two fiscal years show a combined 15 franchised outlets were reacquired, terminated, or ceased operations. Furthermore, the Item 19 financial performance representation excludes a high number of franchisees (17) and territories that ceased operating (7), potentially distorting the performance data. Item 20 also discloses the use of confidentiality agreements that may prevent former franchisees from speaking openly about their experiences.
Potential Mitigations
- It is critical to contact a wide range of current and former franchisees from the list in Exhibit D to discuss their experiences and reasons for leaving.
- An accountant should help you analyze the turnover rates in Item 20 and the high number of exclusions from the Item 19 data.
- Your attorney can help you formulate questions for the franchisor regarding the franchisee turnover and use of confidentiality agreements.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. Rapid system growth can strain a franchisor's ability to provide adequate support. However, the growth of the Apex LLC system appears modest, with a net increase of only four franchised outlets in the most recent fiscal year according to Item 20. The primary risk appears to be financial instability rather than excessively rapid expansion.
Potential Mitigations
- Assessing the franchisor's infrastructure and capacity to support its franchisees is a key due diligence step to discuss with a business advisor.
- It is wise to ask current franchisees about the quality and timeliness of the support they receive from the corporate office.
- Your accountant can review the franchisor's financials to see if they are reinvesting in support systems as the franchise network grows.
New/Unproven Franchise System
High Risk
Explanation
While the Apex system has a history through a predecessor, the current franchisor entity, Apex LLC, was only formed in late 2021 and is owned by a private equity firm. The combination of this new ownership structure with the franchisor's significant financial weakness, as detailed in Item 21, presents a heightened risk. An unproven management team under a new ownership structure, coupled with financial instability, could impact the quality and consistency of support.
Potential Mitigations
- With your business advisor, thoroughly investigate the track record of the parent private equity firm and its management of other brands.
- Engaging with franchisees who have operated under both the predecessor and the current ownership can provide valuable insight.
- Your accountant must carefully analyze the financial health of the new entity and its ability to sustain itself.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The business of providing school fundraising solutions has a history of sustained demand. While specific program themes may change, the fundamental need for schools and youth organizations to raise funds is ongoing. The business model does not appear to be based on a short-lived trend or fad, suggesting a degree of market stability.
Potential Mitigations
- A business advisor can help you conduct independent market research to confirm long-term demand for these types of services in your local area.
- It is prudent to evaluate the business model's adaptability to changing school environments or economic conditions.
- Questioning current franchisees about the year-over-year consistency of demand in their territories can provide useful data.
Inexperienced Management
Medium Risk
Explanation
Item 2 shows that the key executives have been with the Apex system since before the 2021 acquisition by the parent company, indicating operational experience with the brand. However, the franchisor entity itself is new, and its parent company is a private equity firm. The primary risk appears to stem from the new ownership's financial management and strategy, as reflected in the Item 21 financials, rather than a lack of operational experience within the management team.
Potential Mitigations
- It is important to discuss the management team's franchising and industry experience with a business advisor.
- Contacting current franchisees to inquire about their direct experiences with the management team's support and competence is a valuable step.
- Your attorney can help you understand the implications of the new ownership structure on the established management team.
Private Equity Ownership
High Risk
Explanation
The franchisor is owned by a private equity firm, Heritage Acquisition, LLC. The audited financial statements in Item 21 show the franchisor has a significant negative net worth and is operating at a loss, yet it made member distributions of $740,000 in the last fiscal year. This suggests a focus on extracting cash for investors over building the franchisor's financial health, which could jeopardize long-term support and system stability for your benefit.
Potential Mitigations
- A business advisor can help you research the reputation and typical operating strategy of the parent private equity firm.
- Having your accountant analyze the financial statements, particularly the cash distributions in light of operating losses, is critical.
- It is wise to ask current franchisees if they have observed any changes in support, fees, or strategy since the acquisition.
Non-Disclosure of Parent Company
Medium Risk
Explanation
Item 1 discloses the parent company, Heritage Acquisition, LLC. However, the franchisor's financial survival appears to depend on this parent, as stated in Note 9 of the financial statements. Despite this dependency, the parent's financials are not included in the FDD, nor is there a written guarantee from the parent included as an exhibit. This creates a risk as you cannot fully assess the financial strength of the entity that is propping up the franchisor.
Potential Mitigations
- Your attorney should inquire why the parent company's financials are not provided, given the franchisor's financial state and dependency.
- A discussion with your accountant is needed to assess the risk of investing in a company whose viability depends on an entity whose finances are not disclosed.
- It is crucial to understand that without a written guarantee, the parent's stated intention to provide support is not legally binding.
Predecessor History Issues
Low Risk
Explanation
Item 1 discloses that the current franchisor acquired the system from a predecessor, Apex Fun Run, LLC, in 2021. Item 3 discloses that this predecessor had a regulatory action against it in Washington in 2015 for selling an unregistered franchise and providing a non-compliant FDD. While this event is dated, it is part of the system's history and indicates past compliance issues. You are investing in a system operated by a new entity with a history under a different owner.
Potential Mitigations
- A discussion with your attorney is important to understand the implications of the predecessor's regulatory history.
- Inquiring with long-term franchisees about their experience under the previous ownership could provide valuable context.
- Your business advisor can help you assess how the new ownership may have addressed the issues of the predecessor.
Pattern of Litigation
Low Risk
Explanation
Item 3 discloses one past regulatory action against the franchisor's predecessor from 2015, which resulted in a consent order and a $1,000 payment. There is no disclosure of a pattern of litigation against the current franchisor or its management involving claims of fraud or misrepresentation. The lack of such a pattern is a positive indicator, though the single past event should be noted.
Potential Mitigations
- Your attorney should review the specifics of the single disclosed litigation to ensure a full understanding of the matter.
- A business advisor can help you search public records for any undisclosed litigation, though this is not always exhaustive.
- It is still valuable to ask current franchisees about their general experiences and whether they are aware of any disputes within the system.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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