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Code Ninjas

Code Ninjas, LLC
https://www.codeninjas.com
1-855-446-4652
3500 Parkway Lane, Suite 400, Peachtree Corners, Georgia 30092

How much does Code Ninjas cost?

Initial Investment Range

$68,500 to $298,250

Franchise Fee

$30,750 to $40,750

A "Code Ninjas" franchisee will operate a learning center providing child focused educational programs, including subjects such as computer programming, coding, math, logic, and teamwork.

Enjoy our partial free risk analysis below

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Code Ninjas March 27, 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.

1

Franchisor Stability Risks

Start Here
Total: 10
4
2
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

Code Ninjas, LLC (Code Ninjas) explicitly warns of its financial condition. The audited financial statements in Exhibit G confirm this, showing a net loss of over $690,000 in 2024 and a members' deficit (negative net worth) of approximately $1.8 million. Current liabilities significantly exceed current assets, which may impact the franchisor's ability to provide ongoing support and services, posing a substantial risk to your investment.

Potential Mitigations

  • A franchise accountant should analyze the franchisor's financial statements for the past three years to assess trends and viability.
  • Discuss the franchisor's financial condition and its plans for achieving profitability with your business advisor.
  • Your attorney should investigate if a financial performance bond is required by your state due to the weak financials.
Citations: Special Risks to Consider About This Franchise, Item 21, FDD Exhibit G

High Franchisee Turnover

High Risk

Explanation

The franchisor explicitly discloses a high "Turnover rate" as a special risk. Analysis of Item 20 data shows a significant number of outlets have ceased operations. In 2024 alone, 41 franchised units were terminated, not renewed, or otherwise ceased operations, representing a gross churn rate of approximately 15.6% of the locations open at the start of the year. This high turnover may indicate systemic issues, franchisee dissatisfaction, or lack of profitability.

Potential Mitigations

  • It is critical to contact a significant number of former franchisees listed in Item 20 to understand why they left the system.
  • A business advisor can help you analyze the turnover data over three years to identify any negative trends.
  • Your attorney can help you frame specific questions for the franchisor regarding the high rate of unit closures.
Citations: Special Risks to Consider About This Franchise, Item 20

Rapid System Growth

High Risk

Explanation

The franchise system is shrinking, not growing. Item 20 data reveals a net decrease of 22 franchised outlets in 2023 and another 23 in 2024. A declining system size can signal potential issues with the business model's viability, brand strength, and franchisee profitability. This may also lead to reduced resources for support and marketing as the overall royalty base diminishes, presenting a significant risk to your investment's long-term health.

Potential Mitigations

  • Your business advisor should help you evaluate the risks associated with investing in a contracting franchise system.
  • Question the franchisor directly about the reasons for the net outlet decline and their strategy to reverse this trend.
  • Ask your accountant to assess the financial impact of a shrinking system on the franchisor's ability to provide support.
Citations: Item 20

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified. Code Ninjas began franchising in 2016 and has a history of operating hundreds of units. An unproven system presents risks because its business model, support structures, and brand recognition are not yet established. Franchisees in such systems may face higher uncertainty and a greater likelihood of system-wide failure. While Code Ninjas is experiencing challenges, it is not a new or unproven brand.

Potential Mitigations

  • When evaluating any franchise, it is prudent to have your business advisor assess the franchisor's operational history and system maturity.
  • An attorney can help you understand the risks associated with investing in a newer, less established franchise concept.
  • Speaking with the earliest franchisees in a system provides valuable insight into its evolution and the franchisor's learning curve.
Citations: Not applicable

Possible Fad Business

Medium Risk

Explanation

The business of providing coding and technology education for children could be subject to changing trends in education and parental spending. The long-term, sustainable demand for this specific type of supplemental education may be less certain than for more traditional industries. A shift in technology or educational focus could impact the viability of the business model, presenting a risk to your long-term investment if the franchisor does not adapt effectively.

Potential Mitigations

  • Conduct independent market research with a business advisor to assess the long-term demand for child-focused coding education in your area.
  • Question the franchisor about their research and development plans to keep the curriculum and business model current with technological trends.
  • Developing a diversified local marketing plan with a marketing professional can help build a stable customer base.
Citations: Item 1

Inexperienced Management

Low Risk

Explanation

This risk was not identified, as the executive team detailed in Item 2 appears to have extensive business experience with major corporations like Starbucks and Ernst & Young. Franchisors with inexperienced management can pose a risk because they may lack the specific skills needed to run a successful franchise system, provide adequate support, or make sound strategic decisions, potentially jeopardizing the entire network.

Potential Mitigations

  • A business advisor can help you research the background and franchising-specific experience of any franchisor's executive team.
  • It is wise to ask existing franchisees about their direct experiences with the management team's competence and support.
  • An attorney can help you understand the importance of experienced leadership when evaluating a franchise opportunity.
Citations: Not applicable

Private Equity Ownership

High Risk

Explanation

Code Ninjas is ultimately managed by Eagle Merchant Partners, a private equity firm. Such ownership can create risk, as decisions may prioritize short-term investor returns over the long-term health of franchisees. This could manifest as reduced support to cut costs, increased fees, or pressure to use affiliated vendors. Given the system's high turnover and financial weakness, this risk may be heightened.

Potential Mitigations

  • Your business advisor should help you research the private equity firm's reputation and track record with other franchise systems.
  • It is critical to ask current franchisees about any changes to support, fees, or culture since the private equity acquisition.
  • Your attorney should review the Franchise Agreement for clauses that give the franchisor broad rights to sell the system.
Citations: Item 1

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. The FDD clearly discloses the parent companies in Item 1. Failing to disclose a parent entity can be a significant issue, as it may hide the true financial backing, control structure, or potential liabilities of the franchise system. A complete understanding of the entire corporate structure is necessary for a thorough risk assessment.

Potential Mitigations

  • Your attorney should always verify the corporate structure and identify all parent and affiliate companies involved in the franchise.
  • If a parent company exists, it is important for your accountant to determine if its financial statements should also be reviewed.
  • Consulting a business advisor can help you understand the potential influence of parent companies on the franchisor's operations.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified, as Item 1 states that Code Ninjas has no predecessors. When a franchisor has a predecessor, it is important to scrutinize that entity's history for issues like bankruptcy, litigation, or high franchisee failure rates. A negative predecessor history could indicate inherited problems or a rebranded system with a poor track record, which would be a significant risk for a new franchisee.

Potential Mitigations

  • An attorney should carefully review Item 1 for any mention of predecessors and their business history.
  • If a predecessor exists, researching their history through public records and news articles is a prudent step for your business advisor.
  • Asking long-term franchisees about their experience under any previous ownership can provide valuable context.
Citations: Not applicable

Pattern of Litigation

Medium Risk

Explanation

Item 3 discloses that Code Ninjas was previously involved in a lawsuit with a franchisee who asserted counterclaims for misrepresentation related to the franchise sale. While this specific case was settled, claims of misrepresentation by a franchisee are a serious concern. It suggests potential issues in the sales or disclosure process that could affect you. The FDD does not show a broad pattern of litigation, but the nature of this disclosed claim warrants attention.

Potential Mitigations

  • Your attorney should carefully review the details of any litigation disclosed in Item 3, paying close attention to claims of fraud or misrepresentation.
  • Discuss the potential implications of such litigation with your business advisor as part of your due diligence.
  • It is wise to ask the franchisor for their perspective on any disclosed litigation during your validation calls.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
8
0
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

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3

Financial & Fee Risks

Total: 10
4
4
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.

4

Legal & Contract Risks

Total: 16
7
5
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.

5

Territory & Competition Risks

Total: 5
2
3
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.

6

Regulatory & Compliance Risks

Total: 10
3
4
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.

7

Franchisor Support Risks

Total: 4
2
1
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.

8

Operational Control Risks

Total: 12
3
6
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.

9

Term & Exit Risks

Total: 18
7
5
6

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
0
2
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.