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Best Choice Roofing

Best Choice Roofing Franchising, LLC
https://www.bestchoiceroofing.com
1-615-637-3341
105 Hazel Path, Hendersonville, TN 37075

Initial Investment Range

$117,410 to $496,910

Franchise Fee

$63,010 to $357,910

You will operate a business selling residential and commercial roofing and other property maintenance related services.

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Best Choice Roofing April 29, 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.

1

Franchisor Stability Risks

Start Here
Total: 10
3
2
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

Best Choice Roofing Franchising, LLC's (BCR) audited financials reveal a negative net worth (Member's Deficit) of ($179,111) for 2023 and a net loss of ($97,394). This follows a net loss and deficit in 2022. State addenda for Virginia, Illinois, and Maryland explicitly note these financial weaknesses and require a surety bond. This financial condition raises questions about BCR’s ability to support you and grow the system, representing a significant risk to your investment.

Potential Mitigations

  • Your accountant must conduct a deep analysis of all financial statements and footnotes to evaluate the franchisor's financial viability and reliance on franchise fees for cash flow.
  • A business advisor can help you assess if the franchisor has sufficient capital and resources to fulfill its support obligations despite its financial state.
  • Ask your attorney to explain the protections offered by the state-mandated surety bonds and under what circumstances you could make a claim.
Citations: Item 21, Exhibit D, Exhibit G

High Franchisee Turnover

High Risk

Explanation

Item 20 data shows a notable level of franchisee turnover for a young system. In 2023, while 14 franchises opened, two were terminated. Exhibit F further indicates that as of the FDD issuance date, one franchisee has been terminated and another is in the process of termination. This rate of departure and conflict in a small but growing system could indicate potential issues with the business model, franchisee profitability, or the franchisor-franchisee relationship.

Potential Mitigations

  • Speaking with a significant number of current and former franchisees listed in Exhibit F is critical to understanding the reasons for these departures.
  • Your attorney should help you formulate questions for former franchisees about their challenges and reasons for leaving the system.
  • An accountant should analyze the turnover rates in Item 20 over the past three years to identify any negative trends.
Citations: Item 20, Exhibit F

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. Rapid system growth can be a concern if it outpaces a franchisor's ability to provide adequate support to all franchisees. Signs of this might include a very high number of new units opening in a short period, coupled with signs of financial or personnel strain.

Potential Mitigations

  • Your business advisor can help you assess if the franchisor's support infrastructure is scalable to match its growth projections.
  • Talking with franchisees who joined at different times can provide insight into whether support levels have changed as the system has grown.
  • An accountant should review the franchisor's financial statements to see if they are reinvesting in support systems to manage growth.
Citations: Item 20

New/Unproven Franchise System

High Risk

Explanation

BCR began offering franchises in December 2021 and has a limited operating history as a franchisor. The FDD's 'Special Risks' section explicitly highlights this short operating history. An unproven franchise system carries inherent risks, including the possibility of underdeveloped support systems, unrecognized branding, and potential flaws in the business model that have not yet become apparent over a longer period. This increases the overall risk profile of the investment.

Potential Mitigations

  • Your business advisor should help you conduct extensive due diligence on the prior industry and business experience of the management team listed in Item 2.
  • Speaking with the earliest-joining franchisees from the list in Item 20 is crucial to understand their experience with the evolving system.
  • With your accountant, carefully assess the franchisor's capitalization to determine if it can withstand the challenges of a new franchise system.
Citations: Items 1, 2, 20, 21

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. The roofing industry is a long-established service sector, not typically associated with short-term fads. The business model is based on property maintenance and repair, which represents a persistent market need rather than a fleeting trend.

Potential Mitigations

  • A business advisor can help you research the long-term stability and economic cycles of the residential and commercial roofing industry in your specific market.
  • To gauge adaptability, it is wise to ask the franchisor about plans for incorporating new technologies and materials.
  • Analyzing local and national housing and construction trends with a real estate professional can provide insight into future market demand.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

The management team listed in Item 2 appears to have considerable experience in the roofing industry through their operation of affiliate-owned Best Choice Roofing businesses. However, their experience specifically in franchising is more recent, as the company only began franchising in late 2021. While industry expertise is a positive, a shorter track record in managing a franchise system could present risks related to the development and delivery of franchisee support, training, and systems.

Potential Mitigations

  • A thorough discussion with current franchisees about the quality and responsiveness of the franchisor's support systems is essential.
  • Your business advisor can help you evaluate whether the management team's skills are successfully translating from operating their own businesses to supporting franchisees.
  • It may be beneficial to ask the franchisor directly about how they have built out their franchise-specific support infrastructure.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Private equity ownership can be a risk if the firm prioritizes short-term returns over the long-term health of the franchise system. Item 1 indicates the franchisor is a privately held limited liability company, and there is no disclosure of ownership by a private equity firm.

Potential Mitigations

  • Your attorney can help you verify the ownership structure of the franchisor through public records.
  • In any franchise, it is important to understand the franchisor's long-term vision for the brand, which you can discuss with a business advisor.
  • Reviewing the 'Assignment' clause in the Franchise Agreement with your attorney will clarify what happens if the company is sold in the future.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. The FDD appropriately discloses its affiliate companies in Item 1, including Best Choice Roofing & Home Improvement, Inc. and Storm Leads, Inc. There is no indication of a parent company whose financials would be required for a complete risk assessment but have been omitted.

Potential Mitigations

  • Your attorney can confirm the corporate structure and ensure all relevant affiliated entities are properly disclosed.
  • It's good practice to have an accountant review the financials of any disclosed affiliates, especially if they are crucial suppliers or guarantors.
  • Asking the franchisor for an organizational chart can provide clarity on the relationship between all related companies, which your business advisor can help interpret.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 states that the franchisor, Best Choice Roofing Franchising, LLC, has no predecessors. The history provided relates to affiliated companies, which is a separate consideration from a predecessor entity that previously operated the same franchise system.

Potential Mitigations

  • Your attorney can help you understand the distinction between a predecessor and an affiliate company.
  • When considering any franchise, researching the history of the brand and its operators is a valuable part of due diligence, which a business advisor can assist with.
  • Asking long-tenured employees or affiliates about the brand's history can sometimes reveal information not present in the FDD.
Citations: Not applicable

Pattern of Litigation

Medium Risk

Explanation

Item 3 discloses litigation initiated by the franchisor against a former franchisee for breach of contract, which is ongoing. Item 4 discloses a prior personal bankruptcy by the Chief Financial Officer. While not a pattern of franchisee-initiated fraud claims, the litigation shows a willingness to enforce the agreement aggressively. The CFO's bankruptcy, although discharged, is a data point to consider regarding management's financial history.

Potential Mitigations

  • A discussion with your attorney is crucial to understand the implications of the disclosed litigation and bankruptcy information.
  • It would be beneficial to ask the franchisor about its litigation philosophy and approach to resolving disputes with franchisees.
  • Contacting former franchisees listed in Exhibit F might provide context on the franchisor's enforcement practices.
Citations: Items 3, 4
2

Disclosure & Representation Risks

Total: 15
6
2
7

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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3

Financial & Fee Risks

Total: 10
4
3
3

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.

4

Legal & Contract Risks

Total: 16
8
1
7

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.

5

Territory & Competition Risks

Total: 5
1
3
1

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.

6

Regulatory & Compliance Risks

Total: 10
4
2
4

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.

7

Franchisor Support Risks

Total: 4
1
1
2

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.

8

Operational Control Risks

Total: 12
4
6
2

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.

9

Term & Exit Risks

Total: 18
10
7
1

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.

10

Miscellaneous Risks

Total: 2
2
0
0

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.