Generator Supercenter
Initial Investment Range
$474,950 to $868,250
Franchise Fee
$50,000
As a franchisee, you will operate a Generator Supercenter franchise offering standby generators to the residential and commercial markets, including installation, maintenance and monitoring services.
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Generator Supercenter 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor's 2024 financial statements show that distributions to owners ($8.98M) significantly exceeded net income ($6.89M), leading to a reduction in equity from $5.4M to $3.2M. The company also took on a new $2.3M line of credit. While profitable, pulling this much capital out of the business could potentially weaken its ability to provide long-term support, fund growth, and withstand economic downturns, increasing your risk as a franchisee.
Potential Mitigations
- An experienced franchise accountant should thoroughly analyze the franchisor's financial health, paying close attention to cash flow and the implications of large owner distributions.
- Engaging a business advisor to discuss the franchisor's capitalization strategy and its potential impact on franchisee support is recommended.
- Seeking your attorney's counsel on whether financial assurance, like a bond, is required by your state due to these financial indicators is prudent.
High Franchisee Turnover
High Risk
Explanation
Item 20 data from 2024 shows an emerging pattern of turnover, with 3 terminations and 2 franchisor reacquisitions, representing a notable churn rate of operating units. More concerningly, Exhibit E lists numerous franchisees who terminated their agreements prior to opening. This, combined with the franchisor's own "Unopened Franchises" special risk warning, suggests potential systemic problems in the pipeline from signing an agreement to successfully opening and operating a franchise.
Potential Mitigations
- It is critical to contact a significant number of former franchisees from Exhibit E, especially those who never opened, to understand the reasons for their departure.
- Your accountant should help you calculate the true turnover rates for both operating and non-operating franchisees over the past three years.
- Discussing these turnover statistics and the disclosed "Unopened Franchises" risk with your franchise attorney is essential before proceeding.
Rapid System Growth
Medium Risk
Explanation
Item 20 shows a rapid increase in franchised outlets, from 27 to 61 in two years, with another 24 agreements signed but not yet open. This very fast growth, coupled with the financial distributions noted in Item 21, may strain the franchisor's ability to provide adequate and timely training, site selection assistance, and ongoing operational support to all franchisees. Over-expansion can dilute the quality of support you receive.
Potential Mitigations
- Question the franchisor directly about their specific plans and resources for scaling support infrastructure to match unit growth.
- A conversation with a range of existing franchisees—both new and established—can provide insight into the current quality and responsiveness of franchisor support.
- A business advisor can help you assess whether the franchisor's support team and systems seem adequate for the system's size and growth rate.
New/Unproven Franchise System
Medium Risk
Explanation
The franchisor, Generator Supercenter Franchising, LLC (Generator Supercenter), began offering franchises in January 2017, giving it a relatively moderate history. While its parent company has been in business since 2005, the franchising entity itself is newer. A younger franchise system can carry risks such as less-developed support structures and unproven long-term success across diverse markets. The significant number of unopened franchises noted in Item 20 could indicate challenges in the development process for a growing system.
Potential Mitigations
- With a business advisor, conduct thorough due diligence on the management team's specific experience in supporting a franchise system of this size.
- It is important to speak with the earliest franchisees listed in Item 20 to understand their experiences and the evolution of the support system.
- An accountant should review the franchisor's financials to assess its stability and ability to support its franchisee network.
Possible Fad Business
Low Risk
Explanation
The generator installation and service industry is well-established and not typically considered a fad. However, the business is tied to factors like weather events, power grid reliability, and economic conditions which can influence consumer demand. A prospective franchisee should consider the long-term demand drivers in their specific market beyond any recent trends or events that may have temporarily increased interest in standby power solutions.
Potential Mitigations
- Researching long-term energy trends and local infrastructure plans with a business advisor can help gauge sustained market demand.
- Evaluate the franchisor's plans for innovation and adaptation to new technologies, such as battery and solar power, which are mentioned as reserved rights in FA § 1.3.
- An accountant can help you model the business's potential resilience to economic shifts or periods of lower demand.
Inexperienced Management
Low Risk
Explanation
This risk was not identified. Item 2 indicates that the key executives, such as Matthew Metcalfe and Stephen Cruise, have been with the parent company or affiliates since 2005 and 2009 respectively, suggesting significant industry experience. Other managers also have backgrounds with major industry players like Generac. Inexperienced management can be a major risk, as it may lead to poor strategic decisions and inadequate franchisee support.
Potential Mitigations
- It is still valuable to have a business advisor help you research the professional backgrounds of the key management team members listed in Item 2.
- When speaking with current franchisees, asking about their direct experiences with the management team's accessibility and competence is a good practice.
- Your attorney can help you understand the roles and responsibilities of the officers as described in the documents.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD. Item 1 does not indicate that Generator Supercenter is owned by a private equity firm. When a franchise is PE-owned, there can be a risk that short-term investor returns are prioritized over the long-term health of the system, potentially leading to increased fees, reduced support, or a quick resale of the brand, which can create uncertainty for franchisees.
Potential Mitigations
- Your attorney can help you research the ownership structure of the franchisor to confirm the identity of its ultimate parent company.
- A business advisor can help investigate if there are any pending sales or investment activities involving the franchisor.
- Asking the franchisor directly about their long-term ownership plans is a reasonable part of due diligence.
Non-Disclosure of Parent Company
Medium Risk
Explanation
Generator Supercenter fully discloses that it is a wholly owned subsidiary of Generator Supercenter, Inc. (the Parent Company). However, the FDD only provides the financial statements for the franchising entity, not the parent. Since the parent owns the trademarks and operates its own locations, its financial health is material to the overall stability of the brand. Without the parent's financials, you have an incomplete picture of the entire enterprise's financial strength, which is a significant information gap.
Potential Mitigations
- Your attorney should request the financial statements for the parent company, Generator Supercenter, Inc., to get a complete view of the enterprise's financial health.
- An accountant should analyze the provided franchisor financials to assess its viability as a standalone entity.
- Inquire with a business advisor about the inter-company relationship and dependencies between the franchisor and its parent.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD. Item 1 states that the franchisor has no predecessors. This is a positive factor, as it means there is no hidden history of prior business failures, litigation, or other problems under a different corporate name that could be inherited by the current system. A disclosed predecessor requires careful investigation into its historical performance and any issues that might carry over to the new entity.
Potential Mitigations
- It is still a good practice for your attorney to conduct an independent public records search to confirm the franchisor's corporate history.
- Asking long-tenured employees or franchisees about the company's history can sometimes reveal informal predecessor activities.
- Your business advisor can help you verify the information presented in Item 1 of the FDD.
Pattern of Litigation
Medium Risk
Explanation
Item 3 discloses three arbitration actions initiated by Generator Supercenter against franchisees in the last few years, including one with counterclaims from the franchisee. While franchisors must enforce their agreements, a pattern of litigation can signal underlying issues. In this case, two of the arbitrations were initiated by the franchisor in 2024. While not an overwhelming number, these recent actions suggest an increased willingness to resort to legal proceedings to resolve disputes with franchisees.
Potential Mitigations
- Your franchise attorney must carefully review the nature, allegations, and outcomes of the litigation disclosed in Item 3.
- It is advisable to contact the franchisees involved in these disputes, if possible, to understand their perspective on the matter.
- A business advisor can help you assess whether the litigation seems to stem from routine contract enforcement or indicates deeper systemic problems.
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
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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