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Cyberbacker
How much does Cyberbacker cost?
Initial Investment Range
$52,000 to $84,950
Franchise Fee
$40,000 to $40,500
As a Cyberbacker® franchisee, you will operate a business that connects business owners with outsourced virtual assistants called “cyberbackers” who provide remote administrative assistance and other types of remote assistance to business owners.
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Cyberbacker April 18, 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The audited financial statements for Cyberbacker International, Inc. (Cyberbacker Intl) show consistent net losses from 2021 through 2023. Total revenue and total assets also declined significantly between 2022 and 2023. This pattern of unprofitability and shrinking financial scale indicates potential financial weakness, which could impair the franchisor's ability to provide support, invest in the brand, or meet its obligations to you.
Potential Mitigations
- A thorough review of the franchisor's financial statements, including all footnotes and trends, with your accountant is essential.
- Your business advisor should help you assess whether the franchisor has sufficient capital to sustain operations and support franchisees without relying on new franchise sales.
- Ask your attorney about the implications of investing in a financially unstable system and what protections, if any, exist.
High Franchisee Turnover
High Risk
Explanation
The FDD data for 2023 reveals an exceptionally high turnover rate. From a starting base of 49 franchised outlets, 23 were "reacquired by franchisor," which Exhibit C clarifies were mutual terminations where territories were transferred to an affiliate. This represents a 47% annual turnover rate, a critical red flag suggesting potential systemic issues with profitability, franchisee satisfaction, or the overall business model.
Potential Mitigations
- It is critical to contact a significant number of the former franchisees listed in Exhibit C to understand their reasons for leaving the system.
- Your attorney should help you formulate questions about profitability, support, and the circumstances surrounding the high number of "mutual terminations."
- Discuss the extremely high turnover rate and its potential causes with your business advisor before making any commitment.
Rapid System Growth
Medium Risk
Explanation
The system grew rapidly from 0 to 49 franchisees between 2021 and 2022 before experiencing a sharp contraction in 2023. This pattern of explosive growth followed by high turnover suggests the franchisor's support infrastructure may have been unable to keep pace with its sales. This could mean that support systems, training, and quality control are underdeveloped, presenting a risk to new franchisees entering the system.
Potential Mitigations
- Engaging a business advisor to question the franchisor about how its support systems have evolved to handle system size is important.
- It's prudent to ask a broad range of current franchisees about their direct experiences with the quality and responsiveness of franchisor support.
- Your accountant can help analyze if the franchisor's financial condition appears sufficient to support the remaining franchisees.
New/Unproven Franchise System
High Risk
Explanation
Cyberbacker Intl only began franchising in January 2021, and the FDD explicitly lists its "Short Operating History" as a special risk. This limited track record, combined with the disclosed net losses and extremely high franchisee turnover, indicates the business model is unproven in a franchise context. Investing in a new system carries a higher risk of failure, inadequate support, and potential changes to the business model as the franchisor learns.
Potential Mitigations
- A comprehensive due diligence process with your business advisor is crucial to vet the backgrounds of the management team and the viability of the concept.
- An accountant should carefully scrutinize the franchisor's capitalization to assess its ability to survive the startup phase.
- Consulting with an attorney is advisable to explore negotiating more franchisee-favorable terms to offset the heightened risk.
Possible Fad Business
Low Risk
Explanation
The business model, providing outsourced virtual assistants, is part of the established and growing business process outsourcing (BPO) industry. This is not a concept based on a short-term trend or fad. Therefore, the risk of the entire business category becoming obsolete due to shifting consumer tastes appears low, as the demand for remote administrative support is a durable business need.
Potential Mitigations
- Your business advisor can help research the long-term outlook and competitive landscape for the virtual assistant industry.
- Discussing the evolution of services and market demand with current franchisees can provide valuable insight.
- An analysis with your accountant of how the business might perform under various economic conditions is recommended.
Inexperienced Management
Medium Risk
Explanation
The franchisor entity was formed in 2020 and began franchising in 2021. While Item 2 indicates some key personnel have prior industry experience, their collective experience in managing a franchise system is very limited. This lack of a long-term track record in franchising may be a contributing factor to the system's instability and high turnover rate, posing a risk to the quality of support and strategic guidance you may receive.
Potential Mitigations
- Speaking with current franchisees about the quality and effectiveness of management's support and guidance is essential.
- Your business advisor can help you investigate the specific franchising track record of each member of the executive team.
- It is wise to ask the franchisor directly what steps they have taken to compensate for their limited history in managing a franchise system.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package, as Item 1 does not indicate that Cyberbacker Intl is owned or controlled by a private equity firm. When PE firms own a franchise, there can be a focus on short-term profits over the long-term health of the brand, which may affect franchisees negatively. The franchisor appears to be privately held by its founders.
Potential Mitigations
- Your attorney can help verify the ownership structure of the franchisor through corporate records.
- Engaging a business advisor to research the background of the principal owners can provide further insight into their business philosophy.
- You should ask the franchisor if there are any plans to sell the company in the near future.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The franchisor discloses its key affiliate, Cyberbacker, Inc., which is the sole supplier of the virtual assistants and handles all client contracting and billing. However, the FDD does not include financial statements for this critical affiliate. Without this information, you cannot assess the financial stability of the entity responsible for delivering the core service your business sells, creating a significant blind spot in your risk assessment.
Potential Mitigations
- Your attorney should request the financial statements for the affiliate, Cyberbacker, Inc., to allow for a complete due diligence review.
- An accountant should review any provided affiliate financials to assess its stability and ability to perform its obligations.
- It is important to discuss with your business advisor the risks of being dependent on an affiliate whose financial health is unknown.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 does not disclose any predecessors from which Cyberbacker Intl acquired its assets or that previously offered franchises for this system. A predecessor's history can sometimes reveal inherited issues or past challenges for a franchise system. The analysis is based on the history of the current franchisor entity.
Potential Mitigations
- A business advisor can help you research the business history of the franchisor's principals to see if they were involved in similar prior ventures.
- Your attorney can confirm the absence of disclosed predecessors in the FDD.
- Asking early franchisees about the history of the system's development can sometimes provide additional context.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package, as Item 3 states that no litigation is required to be disclosed. A pattern of lawsuits, particularly those initiated by franchisees alleging fraud or misrepresentation, can be a major red flag about a franchisor's practices and system health. The absence of such disclosures is a positive indicator in this specific area.
Potential Mitigations
- Your attorney can conduct independent searches for litigation involving the franchisor or its principals that may not have met the threshold for FDD disclosure.
- Engaging a business advisor to ask current and former franchisees about any informal disputes they are aware of is a prudent step.
- You should continue to monitor for any new litigation that may arise after the FDD's issuance date.
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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