Dill Dinkers
Initial Investment Range
$178,050 to $866,050
Franchise Fee
$125,450 to $750,450
As a Dill Dinkers regional developer, you will solicit franchises for the establishment and operation of, and you will provide services to, Dill Dinkers pickleball clubs under the “Dill Dinkers”trade name and business system.
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Dill Dinkers October 15, 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
Dill Dinkers Franchising, LLC (Dill Dinkers) explicitly discloses its poor financial condition as a special risk. Audited financials for the period ending June 30, 2024, confirm this, showing a significant members' deficit of ($1,718,090) and a net loss of ($2,062,538). This raises substantial doubt about its ability to fund operations and provide promised support to you without relying heavily on new franchise sales, which is an unsustainable model.
Potential Mitigations
- Your accountant must conduct a deep analysis of the franchisor's financial statements, including footnotes and cash flow, to assess its viability.
- It is critical to ask the franchisor for their detailed plan to achieve profitability and financial stability, which your financial advisor can help evaluate.
- Consult with your franchise attorney about the implications of investing in a franchisor with a declared negative net worth.
High Franchisee Turnover
Low Risk
Explanation
This risk was not identified in the FDD package. As a new franchise system that began offering franchises in 2023, there is not yet a history of franchisee turnover. Tracking this metric in future FDDs is important, as high turnover can indicate systemic problems, such as a lack of profitability or franchisee dissatisfaction. A high rate of terminations, non-renewals, and other cessations relative to the system's size would be a significant red flag.
Potential Mitigations
- Your business advisor can help you analyze future Item 20 tables to calculate the annual turnover rate for any franchise you consider.
- Speaking with a significant number of former franchisees is a key due diligence step an attorney can help you prepare for.
- An accountant should review the Item 20 data in conjunction with the franchisor’s financials in Item 21 to look for correlations.
Rapid System Growth
High Risk
Explanation
Item 20 shows that the system grew from zero to 17 Regional Developer businesses in its first year of franchising. This very rapid expansion, especially for a new franchisor with a significant financial deficit as shown in Item 21, creates a high risk that its support infrastructure—including training, site selection assistance, and operational guidance—may not be able to keep pace. This could result in you and your sub-franchisees receiving inadequate support.
Potential Mitigations
- A business advisor can help you assess whether the franchisor's stated support staff and systems are adequate for its rapid growth rate.
- It is crucial to ask current Regional Developers about the quality and timeliness of the support they are currently receiving.
- Questioning the franchisor directly about their specific plans to scale their support team should be a priority, with guidance from your attorney.
New/Unproven Franchise System
High Risk
Explanation
Dill Dinkers explicitly discloses its 'Short Operating History' as a special risk. The franchising entity was formed in July 2023 and has a very limited track record. Investing in such a new and unproven system carries a higher risk of business model flaws, underdeveloped support systems, and potential franchisor failure compared to a more established brand. The entire Regional Developer concept is new and its long-term viability is unknown.
Potential Mitigations
- Extensive due diligence on the founders' and management's direct experience in franchising and the specific industry is essential; a business advisor can assist.
- Your accountant should perform a thorough analysis of the company's capitalization and financial projections to assess its potential for long-term survival.
- Speaking with the very first Regional Developers to join the system can provide valuable insight into the early-stage challenges and support.
Possible Fad Business
Medium Risk
Explanation
The business is centered exclusively on pickleball, a sport experiencing a surge in popularity. While this creates current market demand, there is a risk that the business model is tied to a trend that could eventually cool down or become oversaturated with competitors. This could impact long-term profitability and the sustainability of your investment after the initial trend-driven growth phase, while your contractual obligations would remain.
Potential Mitigations
- A business advisor can help you conduct independent market research to assess the long-term, sustainable demand for pickleball facilities versus a short-term fad.
- Evaluating the franchisor's plans for innovation, service diversification, and adapting to market changes is a key discussion to have with them.
- Your financial advisor should help you model a worst-case scenario where demand cools to assess the financial resilience of the business.
Inexperienced Management
Medium Risk
Explanation
The biographical information in Item 2 for the Co-Founders, who also serve as CEO and COO, does not show extensive prior executive experience in managing a franchise system. While the company has hired a Chief Development Officer with franchise experience, the limited franchising background of the core leadership team presents a risk. This could impact the quality of strategic decisions, operational systems, and franchisee support, which is a concern for a new, rapidly growing system.
Potential Mitigations
- Inquiring about the specific roles and influence of the experienced franchise executives on the team is an important step.
- A thorough conversation with current franchisees about the quality of leadership and the effectiveness of the support systems is highly recommended.
- Your business advisor can help you assess if the management team's collective experience is sufficient for the challenges of a new franchise.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 indicates the franchisor is owned by Dill Dinkers Holdings, Inc. and does not appear to be controlled by a private equity firm. Private equity ownership can introduce risks related to prioritizing short-term investor returns over the long-term health of franchisees. This may manifest as reduced support, increased fees, or a quick sale of the franchise system.
Potential Mitigations
- Your attorney can help you verify the ownership structure of any franchisor you consider.
- If a franchisor is owned by a private equity firm, a business advisor can help you research the firm's history with other franchise brands.
- Understanding the typical investment timeline of a private equity owner is crucial, a topic for discussion with your financial advisor.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor properly discloses its parent company, Dill Dinkers Holdings, Inc., in Item 1. A failure to disclose a parent company, or failure to provide its financial statements when it guarantees the franchisor's performance, can conceal critical information about the true financial stability and control of the franchise system. This appears to be properly disclosed here.
Potential Mitigations
- Your attorney can help confirm the full corporate structure and identify all parent and affiliate companies.
- When a parent company exists, it is important to have an accountant review its financials if they are provided or required.
- Understanding the legal relationship and obligations between a franchisor and its parent is a key role for your legal counsel.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 of the FDD states that the franchisor has no predecessors. When a franchisor has acquired a business from a predecessor, it's important to understand the predecessor's history, including any past litigation, bankruptcy, or high franchisee turnover, as these can indicate inherited systemic problems that may continue under the new ownership.
Potential Mitigations
- Your attorney should always verify the predecessor history disclosed in Item 1 of any FDD.
- If a predecessor exists, researching their public records and speaking to long-term franchisees can provide valuable context; a business advisor can assist.
- An accountant can analyze a predecessor's financial history if available to identify trends that may affect the current franchisor.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 discloses no material litigation involving the franchisor, which is expected for a company that has only recently begun franchising. A pattern of litigation, particularly lawsuits from franchisees alleging fraud or misrepresentation, can be a major red flag indicating systemic issues with a franchisor's practices or business model. Constant monitoring of this Item in future FDDs is prudent.
Potential Mitigations
- It is wise to have your attorney review the litigation history in Item 3 of any FDD you consider.
- For any disclosed litigation, having legal counsel analyze the specifics of the claims and outcomes is a critical due diligence step.
- A business advisor can help you discuss any disclosed litigation with current and former franchisees to understand their perspectives.
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
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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
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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
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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
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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
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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.