Daabin Store Logo

Daabin Store

DaaBIN Store Franchising, LLC
https://daabinstore.com/
1-319-215-2825
4426 Butterfield Road, Cedar Falls, IA 50613

Initial Investment Range

$161,750 to $381,000

Franchise Fee

$35,000 to $81,500

As a DaaBIN Store franchisee, you will operate a unique discount store offering products from overstock, damaged items, end-of-lot items and returns/open-box items.

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Daabin Store April 1, 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

DaaBIN Store Franchising, LLC (DaaBIN) is insolvent. Its audited 2023 financial statements show a net worth deficit of ($185,031) and a net loss of ($27,396), following a ($169,466) loss in 2022. The franchisor also explicitly discloses its poor financial condition as a "Special Risk." This severely questions DaaBIN's ability to support you or even remain in business, placing your entire investment at risk.

Potential Mitigations

  • Your accountant must conduct a thorough review of the franchisor's financial statements, including all footnotes and negative equity.
  • To understand the franchisor's ability to meet its obligations, ask your attorney about the implications of investing in an insolvent company.
  • A business advisor can help you evaluate if the potential rewards of this franchise could possibly justify the extreme financial risks involved.
Citations: Item 21, Exhibit F

High Franchisee Turnover

High Risk

Explanation

The FDD reveals an extremely high franchisee failure rate. In 2023, the system began with six franchised outlets, and five of them ceased operations during that year. This represents an 83% churn rate in a single year. Such a high number of closures is a critical red flag, strongly suggesting systemic problems with the business model, profitability, or franchisor support that could directly impact your own chances of success.

Potential Mitigations

  • Your business advisor should help you analyze the implications of this exceptionally high turnover rate on your own potential for success.
  • It is critical to contact every former franchisee listed in the FDD to understand why they left the system; your attorney can help frame questions.
  • An accountant can help you model the financial risks of joining a system with a demonstrated high rate of franchisee failure.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. The data in Item 20 shows the system is shrinking, not undergoing rapid expansion. However, uncontrolled growth in other franchise systems can strain a franchisor's ability to provide adequate training, site selection assistance, and ongoing support to all franchisees, potentially diluting brand quality and support for everyone.

Potential Mitigations

  • A business advisor can help you evaluate a franchisor's growth plans in relation to their support infrastructure.
  • When interviewing franchisees, asking about the quality and timeliness of support can provide insight into whether a franchisor is overextended.
  • An accountant can analyze a franchisor's financials to assess if they have allocated sufficient resources to support system growth.
Citations: Not applicable

New/Unproven Franchise System

High Risk

Explanation

DaaBIN is a new and unproven franchisor, having been formed in early 2022 and only franchising since May 2022. This is highlighted by the franchisor as a "Special Risk." The extremely high franchisee failure rate detailed in Item 20 and the company's insolvency in Item 21 confirm the significant risks associated with its unproven business model and limited operating history, making it a much riskier venture than an established system.

Potential Mitigations

  • A business advisor can help you assess the heightened risks of investing in a new and struggling franchise system.
  • Speaking with the very few remaining franchisees about their experiences with the new system is critical; your attorney can assist.
  • Your accountant should stress-test your financial projections to account for the instability of an unproven and insolvent franchisor.
Citations: Items 1, 20, 21, Special Risks

Possible Fad Business

Medium Risk

Explanation

The business model centers on selling liquidated goods in a "bin store" format. While discount retail is established, this specific concept may be reliant on trends and the consistent availability of overstock and returned merchandise. The long-term sustainability of this specific retail niche and its supply chain is not as proven as more traditional retail models, which could present a risk if consumer tastes or supply sources change.

Potential Mitigations

  • Your business advisor should help you research the long-term viability and supply chain stability of the liquidation bin store industry.
  • Inquire with the franchisor about their strategies for securing inventory and adapting to potential shifts in the retail landscape.
  • Discuss with current franchisees their experiences with inventory sourcing, quality, and consistency to gauge the stability of the supply model.
Citations: Item 1

Inexperienced Management

Medium Risk

Explanation

Item 2 shows that the business experience of DaaBIN's management team primarily consists of owning and operating other DaaBIN stores, all of which are very recent. There is little disclosed executive experience in managing a national franchise system, providing robust franchisee support, or navigating the complexities of large-scale franchising. This lack of broad franchise management experience could be a contributing factor to the system's significant operational and financial challenges.

Potential Mitigations

  • A thorough review of the management team's professional background with your business advisor is important to gauge their franchise management expertise.
  • When speaking with current franchisees, specifically inquire about the quality and sophistication of the support and strategic direction provided by management.
  • Your attorney can help you assess whether the management team's experience aligns with the support obligations outlined in the franchise agreement.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package, as Item 1 does not indicate that the franchisor is owned by a private equity firm. When this situation does occur, there can be a risk that the ownership's goals, often focused on short-term returns and a planned exit, may not align with the long-term health of the franchisees and the brand.

Potential Mitigations

  • A business advisor can help research a private equity firm's history and reputation with other franchise brands they have owned.
  • When a franchisor is PE-owned, asking current franchisees about changes since the acquisition is a key due diligence step.
  • Your attorney can help you understand any contractual clauses that facilitate the sale of the franchise system.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. DaaBIN does disclose its parent company in Item 1. In some cases, a franchisor might be a thinly capitalized subsidiary of a larger, undisclosed parent. If that parent guarantees obligations or is a key supplier, failing to disclose its financials could hide significant risks about the true financial stability and backing of the franchise system.

Potential Mitigations

  • An attorney can help investigate a company's corporate structure if you suspect an undisclosed parent entity might be relevant.
  • If a parent company is disclosed and provides a guarantee, your accountant should review its financial statements if provided.
  • In situations with a complex corporate structure, a business advisor can help assess the true source of support and stability.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package, as no predecessors are disclosed in Item 1. When a franchisor has a predecessor, it is important to investigate that entity's history. Past issues such as litigation, bankruptcy, or high franchisee turnover under a predecessor could indicate inherited problems or a fundamentally flawed business model that may continue to affect the current system.

Potential Mitigations

  • Your attorney can help you understand the disclosures related to any predecessor entity in Items 1, 3, and 4.
  • A business advisor can assist in researching a predecessor's public reputation and history.
  • It's wise to ask long-term franchisees about their experiences under any previous ownership or brand name.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package, as Item 3 discloses no litigation. However, a pattern of franchisee-initiated lawsuits against a franchisor alleging fraud or misrepresentation, or a high number of suits filed by the franchisor against franchisees, can be a major red flag. It may signal deep-seated problems with the franchise system's sales practices, support, or overall franchisee relations.

Potential Mitigations

  • Your attorney should always carefully review any litigation disclosed in Item 3 for patterns and potential red flags.
  • A business advisor can help you investigate the context of any disclosed litigation through online searches and franchisee interviews.
  • Consider any significant pattern of fraud or breach of contract claims to be a serious warning sign requiring deep investigation with your attorney.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
7
3
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

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3

Financial & Fee 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.

4

Legal & Contract Risks

Total: 16
0
9
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
1
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
2
3
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
1
2
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
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
9
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.

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.