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Dry Medic

Stop Franchising SPE LLC
https://www.drymedic.com
1-410-740-1900
7120 Samuel Morse Drive, Suite 300, Columbia, Maryland 21046

How much does Dry Medic cost?

Initial Investment Range

$65,870 to $318,860

Franchise Fee

$25,570 to $131,270

The franchise described in this disclosure document is for the operation of a Dry Medic business which offers residential and commercial restoration services, including cleaning, deodorizing and reconstruction of buildings and contents due to fire, smoke, water, mold, normal wear, or other causes of damage, and other related services.

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Dry Medic April 18, 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
1
4
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The audited financial statements for the franchisor’s parent and guarantor, AB Assetco LLC, show a net loss of over $14 million for the fiscal year ended December 31, 2024, a significant decline from net income in prior years. This was driven by a $17.7 million impairment loss. The ultimate parent, Authority Brands Inc., shows consistent and worsening net losses. This financial performance could potentially impact the resources available for franchisee support, brand development, and system innovation.

Potential Mitigations

  • A franchise accountant should meticulously review the consolidated financial statements for the guarantor and its parent, including all footnotes, to assess financial stability and trends.
  • In discussions with the franchisor, you and your business advisor should inquire about the reasons for the recent net loss and the steps being taken to ensure long-term profitability.
  • Your attorney should review the parent guarantee in Exhibit I to understand its strength and the specific obligations it covers.
Citations: Item 21, FDD Exhibit I

High Franchisee Turnover

Medium Risk

Explanation

Item 20 data reveals a notable rate of franchisee exits. Over the past three years (2022-2024), a total of nine franchised outlets have been terminated or ceased operations for other reasons. While the system is growing, an exit rate between 7% and 11% in recent years suggests potential challenges within the system related to profitability, support, or franchisee satisfaction that could affect your own prospects for success.

Potential Mitigations

  • It is critical to contact a representative number of current and former franchisees listed in Exhibits F and G to discuss their experiences and reasons for leaving.
  • Your accountant can help you analyze the turnover tables in Item 20 to calculate the effective annual churn rate and compare it to industry benchmarks.
  • A frank discussion with the franchisor about the reasons for these terminations and cessations is a necessary step your business advisor can help you prepare for.
Citations: Item 20

Rapid System Growth

Medium Risk

Explanation

The franchise system is experiencing rapid growth, with the number of franchised territories increasing from 27 to 67 in just two years. While growth can be positive, such a rapid expansion rate could strain the franchisor's ability to provide adequate and timely training, site selection assistance, and ongoing operational support to all franchisees. The quality of support you receive may be impacted if the franchisor's infrastructure has not kept pace with its growth.

Potential Mitigations

  • In your due diligence calls, ask both new and established franchisees about the current quality and responsiveness of the franchisor's support system.
  • Engaging a business advisor to help you question the franchisor about their specific plans for scaling support staff and infrastructure is recommended.
  • Your attorney should carefully review the support obligations outlined in Item 11 and the Franchise Agreement to understand what is contractually guaranteed.
Citations: Item 20

New/Unproven Franchise System

Medium Risk

Explanation

While the DRYmedic brand has some history, the current franchisor entity, STOP Franchising SPE LLC (STOP-SPE), was organized in 2021 as part of a larger securitization transaction. It operates within a complex private equity-owned structure. The combination of a relatively new franchising entity and rapid growth presents risks associated with evolving systems and support structures. You are investing in a system that is still establishing its long-term track record under its current ownership and operational structure.

Potential Mitigations

  • Conducting thorough due diligence on the direct experience of the current management team, as listed in Item 2, is essential; a business advisor can help assess this.
  • Speaking with the earliest franchisees under the current ownership structure will provide insight into how support and systems have evolved.
  • An accountant's review of the financials can help determine if the franchisor is adequately capitalized to support its system, independent of new franchise sales.
Citations: Item 1, Item 2, Item 20, Item 21

Possible Fad Business

Low Risk

Explanation

The risk of the business being a short-lived fad was not identified. The restoration services industry, which addresses damages from events like fire, water, and mold, serves a persistent market need rather than being based on a temporary trend. This suggests a degree of market stability. However, the competitive nature of the industry is a related factor to consider.

Potential Mitigations

  • A business advisor can help you conduct independent market research to confirm the long-term demand for restoration services in your specific local area.
  • It is wise to discuss the company’s strategies for innovation and staying competitive with the franchisor.
  • Your accountant should assist in creating financial projections that account for local competition and market dynamics.
Citations: Not applicable

Inexperienced Management

Low Risk

Explanation

This specific risk was not identified in the FDD. Item 2 shows that the key executives, such as the President and Vice President of Operations, have direct and extensive prior experience with the DRYmedic brand before it was acquired and integrated into the Authority Brands portfolio. This continuity of leadership can be a positive factor, potentially reducing risks associated with inexperienced management.

Potential Mitigations

  • When speaking with current franchisees, it's still valuable to inquire about their perception of the management team's competence and the quality of support provided.
  • A business advisor can help you research the broader track record of the parent company, Authority Brands, in managing its other franchise systems.
  • Your attorney can help you formulate questions for the franchisor about how the integration into a larger company has impacted operational leadership.
Citations: Item 2

Private Equity Ownership

Medium Risk

Explanation

Item 1 discloses the franchisor is ultimately owned by a fund advised by Apax Partners, LLP, a private equity firm. This ownership structure may prioritize investor returns over the long-term health of the system. Decisions about fees, support levels, and system-wide strategy could be influenced by the PE firm's typical investment timeline and exit strategy. The franchisor also retains the right to sell the entire system, potentially changing the nature of your franchise relationship.

Potential Mitigations

  • Engaging a business advisor to research the private equity firm's reputation and its history with other franchise brands is a prudent step.
  • It is crucial to ask current franchisees about any changes in operations, fees, or support since the private equity acquisition.
  • Your attorney should explain the implications of the 'Assignment' clause in the Franchise Agreement, which allows the franchisor to sell the system.
Citations: Item 1, Item 17, Item 21

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. The FDD clearly discloses the parent company structure, from the immediate parent, AB Assetco LLC, up to the ultimate owner, Apax Partners. Furthermore, the FDD includes audited financial statements for the parent company, AB Assetco LLC, which also provides a Guarantee of Performance. This level of disclosure provides significant transparency into the financial backing of the franchisor entity.

Potential Mitigations

  • Your accountant should still carefully review the provided parent company financial statements and the terms of the guarantee.
  • It is advisable to have your attorney confirm that the guarantee is legally sound and provides meaningful protection.
  • A business advisor can help you understand the complex corporate web and how the different entities interact.
Citations: Item 1, Item 21, FDD Exhibit I

Predecessor History Issues

Low Risk

Explanation

This risk was not identified. Item 1 clearly discloses the franchisor's predecessors, including STOP Franchising, Inc. and Service Team of Professionals, Inc., providing a history of the brand. Importantly, Items 3 and 4 state there is no material litigation or bankruptcy history required to be disclosed for the franchisor or these predecessors. This transparency and lack of negative history reduce the risks typically associated with predecessor entities.

Potential Mitigations

  • It's still a good practice to ask long-term franchisees who operated under the previous brand names about their experience and the transition.
  • A business advisor could help you conduct online searches for news or franchisee reviews related to the predecessor brands for additional context.
  • Your attorney can confirm that the disclosures in Items 1, 3, and 4 appear complete and compliant with franchise law requirements.
Citations: Item 1, Item 3, Item 4

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package. Item 3 explicitly states, "No litigation is required to be disclosed in this Item." The absence of disclosed litigation involving the franchisor, particularly claims of fraud or misrepresentation from other franchisees, is a positive indicator. However, this does not guarantee the absence of all disputes, only those meeting the legal threshold for disclosure.

Potential Mitigations

  • During your due diligence calls with current and former franchisees, it is still wise to inquire about any disputes or disagreements they may have had with the franchisor.
  • Your attorney can conduct independent searches of court records for any litigation that may not have met the specific disclosure requirements for Item 3.
  • A business advisor can help you assess the overall health of franchisee-franchisor relations based on your conversations.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
4
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

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3

Financial & Fee Risks

Total: 10
3
6
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

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4

Legal & Contract Risks

Total: 16
4
8
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

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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
4
5
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.

7

Franchisor Support Risks

Total: 4
1
1
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.

8

Operational Control Risks

Total: 12
2
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.

9

Term & Exit Risks

Total: 18
6
8
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: 1
0
1
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.