Executive Home Care
Initial Investment Range
$99,950 to $143,700
Franchise Fee
$49,900
The franchisee will operate a business providing in-home comprehensive care to home care clients and supplemental healthcare staff to institutional clients.
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Executive Home Care April 23, 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The parent company's audited financial statements reveal significant and consecutive net losses, totaling over $14.4 million in the last two years. The FDD itself highlights this in a "Special Risks" section, explicitly stating the financial condition calls into question the franchisor's ability to provide services and support. This financial weakness could compromise the franchisor's capacity to grow the brand, support franchisees, and fulfill its obligations, despite a parent guaranty.
Potential Mitigations
- An experienced franchise accountant must thoroughly analyze the parent company's financial statements, including cash flow statements and all footnotes.
- Inquire with your business advisor about the impact of large intangible assets like goodwill on the balance sheet's stability.
- Your attorney should review the terms of the parent Guaranty of Performance to understand the scope and limitations of its protection.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a concerning pattern of franchisee exits. Over the last three years, the system experienced an annual churn rate from terminations and closures of between 7% and 11%. For a relatively small system, this consistent rate of franchisee departure is a significant red flag. It may suggest potential issues with the business model's profitability, the quality of franchisor support, or overall franchisee satisfaction, posing a risk to your long-term success.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Exhibit D to understand their reasons for leaving the system.
- Discussing these turnover rates with your franchise attorney can help you formulate appropriate questions for the franchisor and current franchisees.
- Your accountant should help you model worst-case financial scenarios based on the possibility that these exits reflect profitability challenges.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. Rapid growth can strain a franchisor's ability to provide adequate support to all franchisees. If a system expands faster than its support infrastructure, new franchisees may experience delays in training, site selection assistance, or operational guidance, which can negatively impact their opening and initial performance.
Potential Mitigations
- A business advisor can help you evaluate if the franchisor's support staff and infrastructure are growing in line with its unit expansion.
- In discussions with existing franchisees, it is useful to ask about the quality and timeliness of the support they currently receive.
- Your accountant can review the franchisor's financial statements to assess if they are reinvesting sufficiently in support systems.
New/Unproven Franchise System
Medium Risk
Explanation
This specific risk was not identified. While the franchisor entity was formed in 2012, its predecessor and the system have been operating since 2004, providing a significant operational history. However, the system was acquired by a private equity firm in late 2021, and much of the current executive team joined after this acquisition. This change in ownership and leadership could introduce risks associated with new management strategies and priorities.
Potential Mitigations
- A thorough review of the management team's experience in both the specific industry and in franchising should be conducted with your business advisor.
- It is wise to speak with franchisees who have been with the system both before and after the recent acquisition to understand any changes.
- Your attorney can help you understand the implications of the private equity ownership structure.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the disclosure documents. The in-home care industry serves a fundamental and growing demographic need, suggesting long-term demand rather than a short-term trend. Assessing the sustainability of a business model is crucial, as investing in a concept tied to a temporary fad could lead to declining customer interest and potential business failure long before your contractual obligations end.
Potential Mitigations
- It is beneficial to conduct independent market research with a business advisor to confirm the long-term demand for the services offered.
- Evaluating the franchisor's plans for innovation and service evolution can provide insight into its long-term strategy.
- An accountant can help you assess the business model's resilience against economic shifts and changing consumer preferences.
Inexperienced Management
Medium Risk
Explanation
Item 2 shows that the majority of the current executive management team, including the CEO, President, and CFO, joined the company between late 2021 and 2023, coinciding with the private equity acquisition. While some have industry experience, their tenure with this specific franchise system is relatively short. This newness in leadership could pose risks related to strategic continuity and a deep understanding of the system's historical challenges and strengths.
Potential Mitigations
- With your business advisor, you should carefully vet the new management team's specific track record in franchising and the home care industry.
- It is critical to ask current franchisees about the quality of support and strategic direction since the new leadership team took over.
- Your attorney can help formulate questions for the franchisor about their long-term vision and integration strategy.
Private Equity Ownership
Medium Risk
Explanation
Item 1 discloses that the franchisor is indirectly owned by Riverside Micro-Cap Fund VI-A, L.P., part of The Riverside Company, a global private equity firm. This ownership structure may introduce a focus on short-term financial returns over the long-term health of the brand. This could potentially lead to decisions like increasing fees, reducing support, or a quick resale of the franchise system, which could negatively impact your investment and operational stability.
Potential Mitigations
- Investigating the private equity firm's reputation and track record with other franchise systems is a prudent step to take with your business advisor.
- Your attorney should analyze the assignment clauses in the Franchise Agreement to understand your rights if the system is sold.
- You should discuss any observed changes in support or fees since the acquisition with current franchisees.
Non-Disclosure of Parent Company
Low Risk
Explanation
The franchisor is a subsidiary of EHC Holding Company, LLC, which provides a guaranty of performance. The FDD includes the parent company's consolidated financial statements. This is proper disclosure and provides financial transparency. Generally, risk arises if a franchisor is a thinly capitalized subsidiary and fails to provide financial information for a parent that guarantees performance or controls the system, as this can obscure the true financial health and backing of the franchise.
Potential Mitigations
- Have your attorney review the parent guaranty to understand the extent of the commitment and what obligations are covered.
- It is important for your accountant to analyze the parent company's financials, as they reflect the ultimate financial health backing your franchise.
- Seeking legal counsel to confirm that the provided disclosures meet all federal and state requirements is advisable.
Predecessor History Issues
Low Risk
Explanation
The franchisor does not disclose any predecessors. This risk is not applicable. This is important because a predecessor's history, including any past litigation, bankruptcies, or high franchisee turnover, could reveal inherited systemic problems or reputational damage that might affect your business. A clean slate, with no predecessor history, means the analysis focuses solely on the current franchisor's track record.
Potential Mitigations
- Confirming with your attorney that there are no undisclosed predecessors is part of thorough due diligence.
- A business advisor can help you focus your research on the current franchisor's operational history and performance.
- You should still ask long-tenured franchisees about the company's history to ensure no informal transfers of assets occurred.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a material lawsuit where an arbitrator denied the franchisor's claims against a former franchisee and awarded the franchisee over $215,000 in damages and costs. The franchisee's counterclaims included serious allegations such as fraudulent inducement and breach of contract. A franchisor losing a significant case to a franchisee on such grounds is a major red flag, suggesting potential systemic issues with the franchisor's representations or practices.
Potential Mitigations
- A thorough review of the details of all disclosed litigation with your franchise attorney is essential to understand the nature of the claims.
- Your attorney could perform independent research on the court dockets for these cases to gather more public information about the disputes.
- It is critical to ask current franchisees about their awareness of and perspective on the company's legal disputes.
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
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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
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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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