Insulation Commandos
Initial Investment Range
$215,850 to $518,750
Franchise Fee
$150,000 to $175,000
We offer qualified individuals the right to operate a franchised business that installs customized insulation and other ancillary solutions at customers’ homes and commercial buildings, including blown-in and radiant barrier insulation, duct cleaning and maintenance, sound- and rodent-proofing services, disinfecting and sealing services, and rodent removal services.
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Insulation Commandos March 31, 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 own audited financial statements reveal significant financial weakness. For the year ending December 31, 2024, Insulation Commandos Franchising, LLC (Insulation Commandos) reported a net loss of over $200,000 and a negative net worth (deficit) of over $182,000. This insolvency raises substantial doubt about its ability to provide ongoing support and fulfill its obligations to you, a risk the franchisor explicitly highlights.
Potential Mitigations
- An experienced franchise accountant must review the franchisor's financial statements, including the negative equity position and cash flow, to assess its long-term viability.
- Your attorney should investigate if any states have required the franchisor to post a bond or escrow fees due to its financial condition.
- Discussing the franchisor's plan to achieve profitability and solvency with your financial advisor is a critical step.
High Franchisee Turnover
High Risk
Explanation
The data in Item 20 reveals a concerning rate of franchisee failure for such a new system. In its first full year of significant operations (2024), four franchisees ceased operating. This represents nearly 11% of all outlets that existed during the year. All four closures occurred in Texas, indicating a particularly high failure rate in that state. This high turnover could suggest potential issues with the business model, support, or franchisee profitability.
Potential Mitigations
- Contacting former franchisees, especially those from Texas listed in Exhibit I, is crucial to understand why they left the system; your attorney can help prepare questions.
- Your business advisor should help you question the franchisor directly about the high cessation rate and the steps being taken to improve franchisee success.
- A thorough review of the Item 20 data with your accountant can help quantify the real-world risk of failure in this system.
Rapid System Growth
High Risk
Explanation
The franchise system is expanding at an extremely rapid pace, growing from 1 to 32 outlets in a single year as shown in Item 20. When combined with the franchisor's financial losses disclosed in Item 21, this explosive growth raises concerns about whether their support infrastructure can keep up. This could potentially lead to inadequate training, operational assistance, and brand management for you and other new franchisees, despite the fees you pay.
Potential Mitigations
- Questioning the franchisor about their specific plans to scale support staff and systems to match this rapid growth is a key task for your due diligence.
- Speaking with franchisees who opened recently can provide insight into the current quality and responsiveness of the support system; your business advisor can help guide this.
- Your accountant should analyze whether the franchisor's financials show sufficient investment in support infrastructure to handle this expansion.
New/Unproven Franchise System
High Risk
Explanation
Insulation Commandos is a new franchisor, having been formed in April 2023 and only beginning to franchise in August 2023. The FDD's "Special Risks" section explicitly notes the company has a limited operating history. Investing in a new, unproven system carries higher risks, as the business model, support systems, and brand recognition are not yet well-established. Your success will depend heavily on this new company's ability to execute its plans effectively.
Potential Mitigations
- A business advisor can help you conduct extensive due diligence on the founders' and management's direct experience in both the insulation industry and in managing a franchise system.
- Scrutinizing the franchisor's capitalization and business plan with your accountant is critical to assess its potential for survival and growth.
- Your attorney should help you ask probing questions of the earliest franchisees listed in Exhibit H about their experience with the new system.
Possible Fad Business
Low Risk
Explanation
This risk was not identified. The business of providing insulation and related home services is a well-established industry with consistent consumer demand, not a business based on a short-term trend or fad. Long-term viability depends more on operational execution and market conditions rather than the fleeting popularity of the service itself.
Potential Mitigations
- Your business advisor can help you research local market demand and competition for home insulation services to build a solid business plan.
- To assess the long-term outlook, discuss industry trends, such as new materials or energy efficiency standards, with your business advisor.
- Investigating the historical stability of the home services market in your area with a local business professional is a wise step.
Inexperienced Management
Medium Risk
Explanation
While the CEO has prior franchise development experience, the management team is new to operating this specific franchise system, which they founded in 2023. This relative inexperience in system management, combined with the company's newness, could present challenges. The quality of training, support, and strategic decision-making may still be developing, which could impact your business as you navigate your initial years of operation.
Potential Mitigations
- When speaking with existing franchisees, specifically inquire about their assessment of the management team's competence and the quality of support provided.
- Your business advisor should help you evaluate whether the management team's combined skills are sufficient to navigate the challenges of a new, rapidly growing system.
- Ask the franchisor about any external franchise consultants or experienced board members they rely on for guidance.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD. The franchisor, Insulation Commandos, and its parent company appear to be owned by its principal managers, not by a private equity firm. Therefore, the specific risks associated with a PE firm's potentially short-term investment horizon and financial strategies do not seem to apply here.
Potential Mitigations
- Your attorney can help you confirm the ownership structure of the franchisor and its parent company through public records.
- Understanding the long-term vision of the current individual owners is an important discussion to have with your business advisor.
- Reviewing the assignment clause in the Franchise Agreement with your attorney will clarify your rights if the system is sold in the future.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. The FDD discloses that Insulation Commandos is wholly owned by its parent company, Commando Holdings, LLC. However, the financial statements for the parent company are not provided. Given the franchisor's weak financial position, the financial health of the parent could be a material factor in its ability to support the system.
Potential Mitigations
- Your attorney should request the financial statements of the parent company, Commando Holdings, LLC, to assess the overall financial health of the enterprise.
- An accountant should help you determine if the parent company guarantees the franchisor's obligations in any way.
- Clarifying the relationship and financial interdependence between the franchisor and its parent is a critical step for your accountant.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified. In Item 1, the franchisor states that it has no predecessors. Therefore, risks associated with an undisclosed or problematic history from a prior company that owned the system do not apply. You are dealing with a new entity.
Potential Mitigations
- Your attorney can help verify the franchisor's statement about having no predecessors through corporate record searches.
- Focus your due diligence on the history and experience of the current management team, as outlined in Item 2, with help from your business advisor.
- An accountant's review of the franchisor's own (albeit short) financial history in Item 21 is critical.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified. Item 3 of the FDD states that there is no litigation that requires disclosure. This suggests the franchisor has not been involved in legal disputes with franchisees or others concerning fraud, misrepresentation, or violations of franchise law. This is a positive sign for a new system, though its history is short.
Potential Mitigations
- Your attorney can conduct independent public record searches to confirm the absence of significant litigation involving the franchisor or its principals.
- When speaking with current or former franchisees, you can inquire about any disputes they may be aware of, even if not formally litigated.
- A business advisor can help you assess the franchisor's dispute resolution philosophy as outlined in the Franchise Agreement.
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
Unlock Full Risk Analysis
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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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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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