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CompuChild

CompuChild Franchisor LLC
https://www.compuchild.com
1-341-777-8000
3736 Fallon Rd., Suite 125, Dublin, CA 94568

How much does CompuChild cost?

Initial Investment Range

$39,900 to $64,900

Franchise Fee

$24,900 to $34,900

The franchise described in this Disclosure Document is for the operation of a business which engages in Entrepreneurial Science, Technology, Engineering, Art and Math (Entrepreneurial STEAM) education for children in elementary schools, preschools, daycare centers and other similar venues.

Enjoy our partial free risk analysis below

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CompuChild April 11, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: August 22, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
2
3
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor explicitly warns that its financial condition calls its ability to provide support into question. Audited financials confirm this risk, showing an operating loss in 2024 and a large loss in 2022. The company also appears to rely on capital contributions from its owner to fund operations, and state regulators in California and Maryland have mandated fee deferrals due to these financial weaknesses. This poses a significant risk to the support you may receive.

Potential Mitigations

  • Your accountant must conduct a deep analysis of the audited financial statements, including all notes, to assess the franchisor's long-term viability.
  • A business advisor can help you evaluate whether the support offered is sufficient given the franchisor's financial constraints.
  • Consult with your attorney regarding the implications of the state-mandated fee deferrals and what protections they may offer.
Citations: Item 21, Exhibit C, Special Risks

High Franchisee Turnover

High Risk

Explanation

The data in Item 20 reveals a significant risk of franchisee failure or dissatisfaction. In 2023, the system experienced two terminations out of nine franchises operating at the start of the year, representing a 22% termination rate. Such a high rate of turnover in a single year within a small system is a critical red flag that may indicate systemic problems with the business model, profitability, or the franchisor-franchisee relationship, creating substantial risk for a new investor.

Potential Mitigations

  • You should make it a priority to contact the former franchisees who were terminated to understand the reasons for their exit.
  • A business advisor can help you analyze the turnover rate in the context of the industry and the small size of the franchise system.
  • Discuss the high termination rate directly with the franchisor and have your attorney evaluate their response for reasonableness.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD Package. The franchise system is small and its growth has been slow and inconsistent, rather than rapid. Rapid growth can be a concern because a franchisor's support systems may not keep pace, potentially leading to inadequate training, site selection assistance, and ongoing support for franchisees.

Potential Mitigations

  • An accountant can help you review the franchisor's financial statements to ensure they have allocated sufficient resources to support their existing franchisees.
  • It is wise to ask current franchisees about the quality and responsiveness of the support they currently receive from the franchisor.
  • Your business advisor can help you assess whether the franchisor's staffing and infrastructure are adequate for the current system size.
Citations: Not applicable

New/Unproven Franchise System

Medium Risk

Explanation

The current franchisor entity, CompuChild Franchisor LLC (CompuChild), was formed in 2019, making it a relatively new company. However, this risk is mitigated because the business concept has been franchised since 2001 under a predecessor, and the current president has been a franchisee since 2014. This provides a longer operational track record for the system than the current corporate entity's age would suggest, but the management's experience in running the franchisor company itself is still limited.

Potential Mitigations

  • Engaging a business advisor to research the history of the predecessor company could provide valuable context on the system's long-term performance.
  • It is important to ask long-tenured franchisees about the transition from the predecessor and the performance of the current management team.
  • Your attorney should verify that the asset purchase from the predecessor was handled properly and assess any inherited liabilities.
Citations: Items 1, 2, 20

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD Package. The franchise operates in the children's supplemental education market, specifically focusing on STEAM (Science, Technology, Engineering, Art, and Math). This is a well-established and growing educational sector, not a short-term fad. A fad business carries the risk of collapsing demand, leaving you with a worthless investment.

Potential Mitigations

  • A business advisor can help you conduct independent market research to confirm the long-term demand for children's STEAM education in your area.
  • You should evaluate the franchisor's curriculum and plans for future development to ensure it remains relevant and competitive.
  • Consulting with your financial advisor is recommended to assess the business model's resilience to economic shifts and changing educational trends.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

The company's president, Shubhra Kant, has extensive experience as a franchisee within this specific system since 2014, which is a positive. However, her experience managing the franchisor entity only dates to 2019. Running a franchise system requires different skills than operating a single unit, such as managing system-wide marketing, legal compliance, and franchisee support. This limited experience in a leadership role at the franchisor level presents a moderate risk.

Potential Mitigations

  • You should ask the franchisor about what outside advisors or experienced staff they rely on for franchise management expertise.
  • It is advisable to speak with a range of franchisees to gauge their confidence in the current leadership and the quality of support provided.
  • A business advisor can help you assess the management team's overall capabilities and strategic vision for the company.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 1 does not indicate that the franchisor is owned or controlled by a private equity firm. Such ownership can sometimes lead to a focus on short-term profits and cost-cutting in franchisee support over the long-term health of the brand.

Potential Mitigations

  • Your attorney can help you investigate the franchisor's ownership structure to confirm who the ultimate decision-makers are.
  • It is always a good practice to ask current franchisees about any recent changes in ownership and the impact on their business.
  • A business advisor can help you understand the potential implications of different ownership structures on a franchise system.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD Package. The FDD does not disclose any parent company for CompuChild. Failing to disclose a parent company or provide its financial statements when required can obscure a complete picture of the franchise system's financial backing and overall stability.

Potential Mitigations

  • Your attorney can perform a corporate records search to confirm the ownership structure of the franchisor entity.
  • It is prudent to have an accountant review the franchisor's balance sheet to assess its capitalization and ability to stand on its own.
  • A business advisor can help evaluate if the franchisor has sufficient resources without the backing of a parent company.
Citations: Not applicable

Predecessor History Issues

Medium Risk

Explanation

CompuChild acquired the assets of a predecessor, CompuChild Services of America, Inc., which operated from 2001 to 2019. While the disclosure of a predecessor is proper, it introduces a risk that the full history of the system, including any issues under prior ownership, may not be fully apparent. You are investing in a system with a long history that is now under relatively new management, which presents both opportunities and potential challenges inherited from the past.

Potential Mitigations

  • You should attempt to speak with franchisees who have been with the system since before the 2019 ownership change to understand the transition.
  • A business advisor could help you research the business reputation and history of the predecessor company.
  • Your attorney can help you understand the legal implications of the asset purchase and what liabilities, if any, were assumed by the new franchisor.
Citations: Item 1

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 3 states that there is no litigation that is required to be disclosed involving the franchisor or its management. A clean litigation history is a positive sign, as a pattern of lawsuits, particularly from franchisees alleging fraud or breach of contract, can indicate serious systemic problems.

Potential Mitigations

  • It is still wise to have your attorney perform an independent search for any litigation that may not have met the technical disclosure requirements.
  • You should ask current and former franchisees about their experiences and whether they have had any significant disputes with the franchisor.
  • Maintaining open communication and documenting all significant interactions with the franchisor is a good practice recommended by business advisors.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
2
2
11

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
0
6
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.

4

Legal & Contract Risks

Total: 16
5
4
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
0
2
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.

6

Regulatory & Compliance Risks

Total: 10
1
4
5

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
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.

8

Operational Control Risks

Total: 12
3
7
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
5
9
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.

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.