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Club SciKidz
How much does Club SciKidz cost?
Initial Investment Range
$74,400 to $188,500
Franchise Fee
$45,000 to $145,000
Club SciKidz LLC (“Club SciKidz”) offers franchises for the operation of educational and technology enrichment programs for children, utilizing interactive presentations of structured science-themed activities in a fun, nurturing environment.
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Club SciKidz March 28, 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
High Risk
Explanation
The FDD explicitly warns that the franchisor's financial condition calls its ability to provide support into question. Audited 2023 financial statements in Exhibit E show a significant members' deficit (negative net worth). The 2024 financials also show a large loan from the company to its owners. This financial weakness could impact the franchisor's ability to support your business, invest in the brand, and fulfill its obligations, posing a significant risk to your investment.
Potential Mitigations
- An experienced franchise accountant must review the financials, including all footnotes on the deficit, prior period adjustments, and related-party transactions.
- Your attorney should investigate any state-mandated financial assurances like bonds or escrow that may be required due to this financial weakness.
- Discuss the franchisor's plans for improving its financial position with your business advisor.
High Franchisee Turnover
High Risk
Explanation
Item 20 data from 2022 shows that two of the six franchises at the start of the year had exited by year-end, a high turnover rate. Furthermore, the franchisor discloses that some former franchisees signed agreements restricting their ability to speak openly about their experiences. This combination suggests potential systemic issues and makes it more difficult for you to conduct effective due diligence, creating a significant risk.
Potential Mitigations
- It is critical to contact a wide range of current and former franchisees listed in Item 20 to understand their experiences, with your attorney's help in framing questions.
- Your accountant should analyze the multi-year turnover data in detail to assess the underlying trends.
- A business advisor can help you weigh the risks implied by the turnover rate and confidentiality clauses.
Rapid System Growth
Low Risk
Explanation
This specific risk was not identified in the FDD Package. Rapid, uncontrolled growth can strain a franchisor's ability to provide adequate support to new and existing franchisees. Analyzing Item 20 for sharp increases in outlet numbers against the support infrastructure detailed in Item 11 and financial resources in Item 21 is a key due diligence step.
Potential Mitigations
- Your accountant can review the franchisor's financial statements to assess if they have the capital and staff to support their growth rate.
- It is wise to ask existing franchisees about the quality and timeliness of support they receive from the franchisor.
- A business advisor can help you evaluate whether the franchisor's growth seems sustainable or presents a risk.
New/Unproven Franchise System
Medium Risk
Explanation
The franchisor began offering franchises under the current brand in 2016, and its principals have experience in the industry since 2004. However, the system is still relatively small, with 17 franchised outlets at the end of 2024. Smaller systems may have less brand recognition and fewer resources than more established competitors. The franchisor's disclosed financial weakness adds to the risks associated with a smaller, albeit not entirely new, system.
Potential Mitigations
- With your business advisor, conduct extensive due diligence on the management team's specific experience in franchising, not just the industry.
- Speaking with the earliest franchisees listed in Item 20 can provide insight into the system's evolution and support quality.
- Your accountant should carefully assess the franchisor's capitalization and financial stability to ensure it can support its franchisees.
Possible Fad Business
Low Risk
Explanation
This specific risk was not identified in the FDD Package. A business concept tied to a fleeting trend can be risky, as consumer interest may decline, leaving you with a long-term contract for a business with dwindling demand. Evaluating the long-term sustainability of a franchise's core product or service is an important part of the investment decision.
Potential Mitigations
- Research the industry's long-term trends and market projections with a business advisor.
- Assess whether the business has the ability to adapt its offerings if the initial concept proves to be a short-lived trend.
- Your financial advisor can help you model the financial risks if sales were to decline due to changing consumer tastes.
Inexperienced Management
Medium Risk
Explanation
While Item 2 indicates the principals have over 20 years of experience in the children's education program industry, the FDD also discloses significant financial instability and a need to restate prior financial statements due to errors. This combination may raise questions about the management's financial oversight and stewardship, which could present a risk to the overall health and support capability of the franchise system.
Potential Mitigations
- A thorough review of the principals' specific franchising and financial management experience with your business advisor is important.
- It is critical to ask current franchisees about their confidence in the management team's leadership and support.
- Your accountant should analyze the restated financials and notes about related-party loans for insights into management's financial practices.
Private Equity Ownership
Low Risk
Explanation
This specific risk was not identified in the FDD Package. Item 1 does not indicate that the franchisor is owned by a private equity firm. When a PE firm owns a franchisor, there can be a focus on short-term returns that may not align with the long-term health of franchisees. This can sometimes lead to increased fees or reduced support.
Potential Mitigations
- Should you encounter a PE-owned franchisor, have your business advisor research the firm's history with other franchise brands.
- It would be prudent to ask franchisees about any changes in support or fees since a PE acquisition.
- An attorney can help you understand the implications if the franchisor is sold again.
Non-Disclosure of Parent Company
Low Risk
Explanation
This specific risk was not identified in the FDD Package. The franchisor, Club SciKidz LLC, appears to be the primary operating entity, and its financial statements are provided. There is no indication of a parent company whose financials would be material to your decision and are being withheld. Proper disclosure of parent companies is crucial for assessing the true financial backing of a franchise system.
Potential Mitigations
- Your attorney should always verify the corporate structure to ensure there are no undisclosed parent companies or guarantors.
- If a parent company exists and guarantees the franchisor's obligations, an accountant should review its financial statements.
- A business advisor can help assess the relationship and dependencies between a franchisor and its parent.
Predecessor History Issues
Low Risk
Explanation
This specific risk was not identified in the FDD Package. The franchisor discloses a name change in 2007 but indicates it has no predecessors. A franchisee should always review Item 1 carefully for any predecessor history, as this can reveal important information about the brand's past performance, potential inherited issues, or previous business failures that are relevant to the investment risk.
Potential Mitigations
- An attorney should carefully review Item 1 for any mention of predecessors and explain their significance.
- If a predecessor is listed, further due diligence on its history is recommended with a business advisor.
- Speaking with long-term franchisees can provide valuable history on the system, including under previous ownership.
Pattern of Litigation
Medium Risk
Explanation
Item 3 discloses one lawsuit initiated by the franchisor against a former franchisee to enforce a non-compete agreement, which was settled. While this is not a pattern of franchisee-initiated fraud claims, it demonstrates the franchisor's willingness to litigate to enforce its contractual rights, specifically the non-competition covenant. This is an important factor to consider regarding your post-termination obligations.
Potential Mitigations
- Your attorney must review the details of any disclosed litigation and explain the potential implications for you.
- It is wise to ask current franchisees about their perception of the franchisor's relationship with its network.
- A business advisor can help you assess the overall litigation history as part of your risk analysis.
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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