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GradePower Learning

G.B. Tokani, Inc.
https://gradepowerlearning.com
1-844-475-7323
747 Hyde Park Road, Suite 230, London, Ontario, Canada N6H 3S3

How much does GradePower Learning cost?

Initial Investment Range

$125,540 to $226,410

Franchise Fee

$61,400 to $65,410

You will operate a business which provides educational services and products.

Enjoy our partial free risk analysis below

Unlock the full risk analysis to access 9 more categories covering 100+ risks.

GradePower Learning April 2, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: August 19, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
3
3
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The FDD includes a “Special Risk” warning about the franchisor's financial condition. The 2024 audited financial statements in Exhibit G confirm this, showing accelerating net losses, negative working capital, and a shareholder's deficiency (negative net worth). This financial instability raises significant questions about G.B. Tokani, Inc.'s (G.B. Tokani) long-term viability and its ability to support franchisees.

Potential Mitigations

  • Your accountant must conduct a thorough review of the financial statements, including all footnotes and year-over-year trends.
  • A business advisor can help you assess if the franchisor has sufficient capital and cash flow to meet its support obligations.
  • Legal counsel should advise on the implications of a franchisor's potential insolvency.
Citations: Item 4, Item 21, FDD page 4, Exhibit G

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a high rate of U.S. franchisee cessations. In 2022, 3 of 23 outlets (13%) ceased operations, and in 2023, 2 of 19 outlets (10.5%) ceased. For a small system, this level of churn is a significant indicator of potential widespread franchisee failure, dissatisfaction, or issues with the business model's profitability. This turnover rate suggests a substantial risk to your investment.

Potential Mitigations

  • It is critical to contact a significant number of former franchisees listed in Item 20 to understand their reasons for leaving the system.
  • Your accountant should analyze the turnover rates over the past three years to evaluate the stability of the franchise system.
  • Discuss the high churn rate directly with the franchisor and have your business advisor evaluate the plausibility of their explanation.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. The data in Item 20 indicates system stagnation and contraction in the U.S. rather than overly rapid growth that might strain support resources. A stable or slow growth rate can be positive, but in this context, it appears to be a symptom of other systemic issues.

Potential Mitigations

  • A business advisor can help you evaluate whether the franchisor's growth plans are realistic and sustainable.
  • During due diligence, asking current franchisees about the quality and availability of franchisor support is a prudent step.
  • Your accountant can assess if the franchisor's financial resources align with its stated growth and support plans.
Citations: Not applicable

New/Unproven Franchise System

Medium Risk

Explanation

G.B. Tokani began franchising in the U.S. in 2017. While its Canadian parent has a longer history, the U.S. operation is relatively young. This limited track record in the U.S. market, combined with the franchisor's disclosed financial weakness and high rate of franchisee cessations, suggests that the business model's viability in the United States is not yet proven, posing a risk to new franchisees.

Potential Mitigations

  • A business advisor can help you conduct extensive due diligence on the U.S. system's performance and track record.
  • Speaking with the longest-operating U.S. franchisees is crucial to understand the evolution of the system and its support.
  • Your accountant should carefully review the financial statements to assess the stability and capitalization of the U.S. franchising entity.
Citations: Item 1, Item 20, Item 21

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. The supplemental education and tutoring industry is well-established and generally considered to have long-term consumer demand. The business model is not based on a short-lived trend or fad.

Potential Mitigations

  • Your business advisor can help you research the long-term outlook for the specific industry in your local market.
  • Investigating the business's adaptability to changing consumer preferences and economic conditions is a valuable exercise.
  • An accountant can help you assess the financial resilience of the business model outside of current trends.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

Item 2 shows that several key executives, including the CEO and the Vice President of Sales and Operations, have been in their current roles for a relatively short time (since 2023). While they may have experience with the parent company, this recent change in top leadership for the U.S. franchisor, concurrent with poor financial results and high turnover, suggests a potential lack of stable, proven leadership for this specific entity.

Potential Mitigations

  • A business advisor can help you research the professional backgrounds and track records of the key management team members.
  • When speaking with current franchisees, inquire about their confidence in and the effectiveness of the current leadership team.
  • Asking the franchisor about the strategic direction under the new leadership is an important due diligence step.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 indicates the franchisor is part of a corporate structure under Oxford Learning Centres, Inc. and BrightFutures 1 Inc., but there is no disclosure of ownership by a private equity firm. The sale of intellectual property to a royalty corporation presents a different, but related, type of risk.

Potential Mitigations

  • Your attorney can help you understand the complete ownership structure of the franchisor and its parent companies.
  • A business advisor can research the ownership entities to see if they have characteristics or operating styles similar to private equity firms.
  • Inquiring with other franchisees about any changes since shifts in ownership can provide valuable insight.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. The franchisor properly discloses its parent company, Oxford Learning Centres, Inc., in Item 1. However, given the franchisor's weak financial position and its large, on-demand debt to its parent, the absence of the parent's financial statements makes it difficult to fully assess the overall financial stability of the enterprise you would be depending on for support.

Potential Mitigations

  • Your attorney should review the corporate structure and any guarantees from the parent entity.
  • An accountant can analyze the significance of inter-company debts and the potential risks if the parent company is also unstable.
  • It is advisable to ask the franchisor why the parent company's financial statements are not included, given the subsidiary's condition.
Citations: Item 1, Item 21

Predecessor History Issues

Medium Risk

Explanation

This risk is present. The FDD discloses predecessors, and the litigation history in Item 3 involves these predecessors and the parent company. These past disputes, which include allegations of misrepresentation, indicate historical challenges within the franchise system that may have been inherited by the current franchisor. This history could suggest ongoing systemic issues.

Potential Mitigations

  • Your attorney should carefully analyze the disclosed litigation involving any predecessor entities.
  • A business advisor can assist you in researching the history and reputation of the predecessor companies, if possible.
  • Questioning long-term franchisees about their experiences under previous ownership can provide valuable historical context.
Citations: Item 1, Item 3

Pattern of Litigation

High Risk

Explanation

This is a significant risk. Item 3 discloses a pattern of litigation against the franchisor, its parent, and management. These cases include allegations of fraudulent misrepresentation and improper termination from franchisees and former employees. Crucially, the franchisor's parent company made payments to the plaintiffs or counter-claimants to settle these disputes, which suggests the claims may have had merit. This pattern indicates a higher-than-normal risk of serious disputes.

Potential Mitigations

  • A thorough review of the details of each disclosed lawsuit with your franchise attorney is essential.
  • Your attorney can advise on the potential implications of a franchisor with a history of settling fraud and misrepresentation claims.
  • This pattern of litigation should be a key topic of discussion when you interview current and former franchisees.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
2
2
11

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
2
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.

4

Legal & Contract Risks

Total: 16
7
4
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.

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
2
2
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.

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
11
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

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.