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Hi-5 ABA

Hi-5 ABA, Inc.
https://www.hi5aba.com
1-703-598-7517
5306 Lee Highway, Warrenton, Virginia 20187

How much does Hi-5 ABA cost?

Initial Investment Range

$17,618 to $109,730

Franchise Fee

$2,500 to $50,000

The franchisee will operate a “Hi-5 ABA” business that specializes in providing behavioral therapy services to individuals with developmental disabilities using Applied Behavior Analysis (ABA) therapy conducted through licensed professionals.

Enjoy our partial free risk analysis below

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Hi-5 ABA June 19, 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.

1

Franchisor Stability Risks

Start Here
Total: 10
4
2
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The FDD explicitly warns that the franchisor's financial condition calls its ability to provide support into question. This is confirmed by several state regulators who have mandated the deferral of your initial franchise fee due to this financial weakness. While 2023 showed a profit after a 2022 loss, the audited financial statements contain significant internal contradictions regarding accounts receivable, creating uncertainty about the franchisor's stability and ability to support you.

Potential Mitigations

  • An experienced franchise accountant must thoroughly review the audited financials, including all footnotes and the auditor's report, to assess the franchisor's viability.
  • Discuss the inconsistencies in the financial statements and the reasons for state-imposed fee deferrals with your legal counsel.
  • Your business advisor should help you create contingency plans in case the franchisor fails to provide promised support due to financial constraints.
Citations: Special Risks Section, Item 21, Exhibit H, Exhibit I

High Franchisee Turnover

High Risk

Explanation

FDD Item 20 data reveals a pattern of high franchisee turnover. Over the past three years, the system has experienced annual churn rates between approximately 9.5% and 20% from terminations and ceased operations. This level of turnover is a significant warning sign and may indicate potential systemic problems with profitability, franchisor support, or the business model itself, which could affect your chances of success.

Potential Mitigations

  • Speaking with a significant number of former franchisees from the list in Exhibit G is critical to understand why they left the system.
  • Your attorney can help you formulate specific questions for the franchisor regarding the high termination and cessation rates.
  • A business advisor should help you weigh the risks revealed by this high turnover against any potential rewards of the franchise.
Citations: Item 20 (Tables 1, 3)

Rapid System Growth

High Risk

Explanation

The franchise system has quadrupled in size over the last three years. This very rapid expansion, especially when combined with the franchisor's disclosed financial weaknesses, suggests a significant risk that the franchisor’s support infrastructure, training, and operational oversight may be strained. You could experience a decline in the quality and availability of support as the franchisor struggles to serve a rapidly growing network of franchisees.

Potential Mitigations

  • It is important to question the franchisor about their specific plans and resource allocation for scaling support services to match this growth.
  • Engage with a wide range of franchisees, both new and established, to gauge their current satisfaction with the level and quality of support.
  • Your accountant should review the franchisor's financials in Item 21 to assess if they possess the capital to adequately support this expansion.
Citations: Item 20, Special Risks Section

New/Unproven Franchise System

High Risk

Explanation

Hi-5 ABA, Inc. (Hi-5 ABA) has only been offering franchises since March 2019. As a relatively new system, its business model and support structures may not be fully proven over the long term. This newness, combined with the franchisor's disclosed financial weaknesses and high franchisee turnover rates, elevates the investment risk. You are investing in a system that is still navigating its growth phase and faces significant challenges.

Potential Mitigations

  • Conducting extensive due diligence on the founders' and management's prior experience in both the ABA industry and in franchising is critical.
  • A discussion with the earliest franchisees about the evolution of the system and the quality of support is highly advisable.
  • Your accountant should help you assess the franchisor’s capitalization and its dependency on selling new franchises for revenue.
Citations: Item 1, Item 20, Item 21, Special Risks Section

Possible Fad Business

Low Risk

Explanation

This risk was not identified. Applied Behavior Analysis (ABA) is a well-established and scientifically validated therapy for individuals with developmental disabilities. While service delivery models can evolve, the underlying demand for these services is not based on a short-term trend or fad, which reduces the risk of the entire industry becoming obsolete.

Potential Mitigations

  • A business advisor can help you research long-term demand and the competitive landscape for ABA services in your specific market.
  • Discussing the evolution of ABA therapy and insurance reimbursement trends with your attorney is a prudent step.
  • Ongoing consultation with clinical advisors can help ensure your services remain aligned with best practices and evolving standards.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

While the CEO has long-standing industry experience, several key executives in franchising and operations roles appear to have gained their primary franchise management experience with Hi-5 ABA since its inception in 2018. This potential lack of deep, pre-existing experience in managing a franchise system, especially when viewed alongside the high turnover and financial issues, could impact the quality of strategic guidance and support you receive.

Potential Mitigations

  • It would be beneficial to thoroughly question the management team about their specific experience in managing franchise relationships and providing franchisee support.
  • Engage with existing franchisees to specifically ask about the effectiveness and experience level of the support team they interact with.
  • A business advisor can help you assess whether the management team's collective experience is adequate for navigating the system's current challenges.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified. The FDD does not indicate that the franchisor is owned or controlled by a private equity firm. Franchisees are generally not subject to the specific risks associated with PE ownership, such as a primary focus on short-term returns that could potentially compromise long-term brand health and franchisee support.

Potential Mitigations

  • Your attorney can help confirm the ownership structure of the franchisor during due diligence.
  • It is still valuable to ask the franchisor about their long-term vision and any plans for future sale or ownership changes.
  • A business advisor can help you assess the stability of any privately-held company's ownership structure.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. The FDD discloses its affiliate relationships with Cornerstone Missions, Inc. and Hi-5 Processing, Inc. It does not indicate the existence of a parent company whose financial information or identity is being withheld. This transparency allows for a more direct assessment of the franchisor and its related entities.

Potential Mitigations

  • Your attorney can verify the corporate structure disclosed in Item 1 through public record searches.
  • It is important to understand the specific roles and financial interdependence of all disclosed affiliates with assistance from your accountant.
  • Ensure all agreements with affiliates are provided and reviewed by your legal counsel.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified. FDD Item 1 indicates the franchisor was formed in 2018 and has no predecessors. The history of the system and its brand begins with the current franchisor entity, so there are no hidden risks from a prior operator.

Potential Mitigations

  • Your attorney can confirm the corporate history through public records to ensure no predecessor entities were omitted.
  • Even without predecessors, it's important to ask early franchisees about the system's evolution and any significant changes since inception.
  • A business advisor can help you evaluate the risks associated with a relatively new system that lacks a long history.
Citations: Not applicable

Pattern of Litigation

Medium Risk

Explanation

Item 3 discloses one piece of litigation involving the franchisor's CEO, David Maddox, in an unrelated business in Ghana. The lawsuit alleges "deceit" in a business transaction. While not a pattern of franchisee litigation, a pending legal action with such an allegation against the head of the company may raise concerns about leadership's business practices and integrity, which could potentially carry over into the franchise relationship.

Potential Mitigations

  • You should discuss the potential implications of this litigation with your franchise attorney, particularly as it relates to leadership character.
  • Questioning the franchisor about the status and nature of this lawsuit can help you gauge their transparency and response.
  • Contacting current franchisees to ask about their experiences with the franchisor's business practices and integrity is a crucial due diligence step.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
7
2
6

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
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.

4

Legal & Contract Risks

Total: 16
6
5
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
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.

6

Regulatory & Compliance Risks

Total: 10
5
1
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.

7

Franchisor Support Risks

Total: 4
3
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.

8

Operational Control Risks

Total: 12
3
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.

9

Term & Exit Risks

Total: 18
7
8
3

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.