Bath Tune-Up
Initial Investment Range
$109,930 to $173,850
Franchise Fee
$64,950
As a Bath Tune-Up franchisee, you will offer bathroom updates and full bath remodels.
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Bath Tune-Up March 3, 2025 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
Medium Risk
Explanation
The audited financial statements for HFC KTU LLC (HFC KTU) show positive net worth and profitability. However, net income decreased from $2.27 million in 2023 to $1.58 million in 2024. While the company appears financially stable, this decline in profitability warrants attention as it could potentially affect future resources available for franchisee support and system development. The company relies significantly on vendor rebates for a portion of its revenue.
Potential Mitigations
- An accountant should review the complete financial statements, including all notes, to assess the reasons for the decline in profitability and its potential impact on your investment.
- Discuss the franchisor's financial health and plans for future growth with your financial advisor to gauge long-term stability.
- During discussions with existing franchisees, it is valuable to ask about the quality and consistency of the support they receive from the franchisor.
High Franchisee Turnover
High Risk
Explanation
Item 20 data for 2024 indicates a potentially high franchisee turnover rate. The system started with 48 outlets and experienced 9 departures (6 terminations, 3 ceased operations), representing an 18.75% attrition rate. This level of turnover can be a significant indicator of potential systemic issues, such as franchisee unprofitability, dissatisfaction with the system, or inadequate franchisor support, which may increase your risk of failure.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Item 20 to understand their reasons for leaving the system; your attorney can help frame these questions.
- Your business advisor should help you analyze the turnover data over the three years provided to identify any persistent negative trends.
- Discuss the high turnover rate directly with the franchisor and ask for their explanation of the causes.
Rapid System Growth
Medium Risk
Explanation
Item 20 data shows the system grew from 25 to 48 outlets between the start of 2022 and the end of 2023, nearly doubling in size. While growth is positive, such a rapid pace can strain a franchisor's ability to provide adequate training, site selection assistance, and ongoing operational support to all franchisees. You may find that the support infrastructure has not kept pace with the system's expansion.
Potential Mitigations
- During your due diligence calls, ask both new and established franchisees about the quality and responsiveness of the franchisor's support system.
- In discussions with the franchisor, inquire about how they have scaled their support staff and systems to manage this growth.
- Your business advisor can help you evaluate whether the franchisor's current infrastructure, as described in Item 11, appears sufficient for the system's size.
New/Unproven Franchise System
High Risk
Explanation
The franchisor explicitly discloses 'Short Operating History' as a special risk. While the parent company has extensive experience, the Bath Tune-Up brand itself is relatively new, having commenced operations in late 2020. Investing in a newer system carries inherent risks, as the business model, brand recognition, and operational support systems may be less proven than those of a more established franchise, potentially affecting your long-term success and profitability.
Potential Mitigations
- A business advisor can help you conduct thorough due diligence on the specific performance and franchisee satisfaction within the newer Bath Tune-Up system.
- It is important to speak with the earliest franchisees of this specific brand to understand their experience and the evolution of the support.
- Your accountant should help you develop conservative financial projections, given the limited performance history of the brand.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A fad business is one tied to a fleeting trend, which can create long-term risk for franchisees who are locked into multi-year agreements. Your investment's success depends on the sustained consumer demand for the product or service. You must assess whether the business has long-term market viability or if it primarily relies on a current trend that may fade.
Potential Mitigations
- To better assess long-term viability, consider researching market trends and consumer demand for bathroom remodeling services with your business advisor.
- Discuss the franchisor's strategies for innovation and adaptation to changing consumer tastes with their management team.
- Analysis of the business model's resilience in various economic climates with a financial advisor could provide valuable insight.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package, as the management team of the franchisor and its parent, Home Franchise Concepts, appear to have significant experience in franchising and the home services industry. Inexperienced management can be a major risk, as it may lead to flawed strategies, weak support systems, and a lack of understanding of the franchisee-franchisor relationship, which could jeopardize your investment.
Potential Mitigations
- It is still prudent to review the backgrounds of key personnel listed in Item 2 with your business advisor.
- Asking current franchisees about their direct experiences with the management team can provide valuable, real-world insight.
- Your attorney can help you understand the stability of the management team and any recent key departures.
Private Equity Ownership
Medium Risk
Explanation
HFC KTU is owned by Home Franchise Concepts, which is ultimately owned by JM Family Enterprises, Inc. The documents do not state if this is a private equity firm, but it is a large corporate parent structure. This can introduce risks if the parent's goals, such as short-term profit maximization or a quick sale of the brand, are not aligned with the long-term health of franchisees. Decisions could be made that benefit shareholders over individual franchise owners.
Potential Mitigations
- A business advisor can help you research the parent company's reputation and its track record with its other franchise brands.
- During franchisee calls, ask about any changes in support, fees, or culture since the current parent company took control.
- Your attorney should review the assignment clause in the Franchise Agreement to understand your rights if the brand is sold.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor clearly discloses its parent companies, Home Franchise Concepts, LLC and JM Family Enterprises, Inc. A failure to disclose a parent company or provide its financial statements when required can hide the true financial backing and stability of the franchisor. This is especially risky if the franchisor is a newly-formed entity relying on its parent for financial or operational support.
Potential Mitigations
- Your attorney can verify the corporate structure and ensure all relevant parent and affiliate relationships are properly disclosed.
- An accountant should confirm if parent company financial statements are required by law and have been provided.
- Understanding the full corporate structure is essential for assessing the overall health of the franchise system, a task your business advisor can assist with.
Predecessor History Issues
Low Risk
Explanation
The franchisor discloses that it acquired the assets of a predecessor, KTUW, which operated the Kitchen Tune-Up brand. While this history is disclosed, it is important to understand any inherited issues or past challenges from the predecessor's operations that could affect the current system. The health and history of the system under prior ownership can provide insight into its long-term viability and potential recurring problems.
Potential Mitigations
- Engaging a business advisor to research the predecessor's history and reputation can provide important context.
- When speaking with long-term franchisees, ask about their experience under the predecessor's management and any changes since the acquisition.
- Your attorney should carefully review Items 1, 3, and 4 for any negative history associated with the predecessor.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 does not disclose a pattern of franchisee-initiated litigation alleging fraud or misrepresentation. The disclosed cases are primarily collection actions initiated by the franchisor. A pattern of franchisees suing the franchisor for fraud is a major red flag, as it can suggest systemic problems with the sales process, the business model's viability, or the franchisor's fulfillment of its promises.
Potential Mitigations
- A franchise attorney should always be engaged to thoroughly review Item 3 and assess the nature and severity of any disclosed litigation.
- Independent research for any additional litigation not disclosed in the FDD can be a prudent step, which your attorney can assist with.
- Discussing any disclosed litigation with current and former franchisees can provide crucial context beyond the FDD's summary.
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
Unlock Full Risk Analysis
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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
Unlock Full Risk Analysis
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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
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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