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Inter-State Studio

Inter-State Studio Franchise, LLC
https://www.inter-state.com
1-660-826-1766
3500 Snyder Ave, Sedalia, MO 65301

How much does Inter-State Studio cost?

Initial Investment Range

$13,100 to $51,450

Franchise Fee

$2,550 to $30,100

Inter-State Studio Franchise, LLC offers individual unit franchises for the operation of an Inter-State Studio® franchised business offering school pictures, undergraduate portraits, sports and event portraits, packages and yearbooks, and other related services and products.

Enjoy our partial free risk analysis below

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Inter-State Studio March 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.

1

Franchisor Stability Risks

Start Here
Total: 10
2
3
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor, Inter-State Studio Franchise, LLC (Inter-State LLC), explicitly warns of its financial condition. The audited financial statements in Exhibit A confirm this risk, showing a Members' Deficit (negative net worth) at the end of 2023 and an operating loss for that year. While profitability improved notably in 2024, this historical weakness could impact Inter-State LLC's ability to provide support or invest in the system, posing a significant risk to your business.

Potential Mitigations

  • An experienced franchise accountant must thoroughly analyze the franchisor's financial statements, including all footnotes and recent performance trends.
  • Discussing the franchisor's capitalization and plans for ensuring long-term stability with your financial advisor is essential.
  • Your attorney should investigate if any financial assurances, like a state-mandated bond or escrow, are in place due to this condition.
Citations: Item 21, FDD Special Risks to Consider About This Franchise, Exhibit A

High Franchisee Turnover

Low Risk

Explanation

This risk was not identified in the FDD. Item 20 data does not show a pattern of high franchisee turnover through terminations, non-renewals, or other cessations. Generally, high turnover can be a major red flag, often indicating systemic problems with profitability, franchisor support, or the business model. A growing and stable franchise system is a positive indicator for a prospective franchisee.

Potential Mitigations

  • Even with low reported turnover, it is wise to have your business advisor help you contact a range of current franchisees to discuss their satisfaction.
  • An attorney can help you frame questions for former franchisees, if any are listed, to understand their reasons for leaving.
  • Continuously monitoring system health and franchisee sentiment should be part of your long-term strategy, guided by your business advisor.
Citations: Not applicable

Rapid System Growth

Medium Risk

Explanation

Item 20 data shows franchised units more than doubled from 8 to 18 between 2022 and 2024, while company-owned outlets declined. This rapid franchise growth, combined with the franchisor's disclosed historical financial weakness, may strain its ability to provide adequate support, training, and resources to all new franchisees. A system expanding faster than its support infrastructure can lead to quality control issues and insufficient assistance for you.

Potential Mitigations

  • A business advisor can help you question the franchisor about its specific plans for scaling support infrastructure to match unit growth.
  • It is important to interview a broad range of existing franchisees, both new and established, about the current quality and responsiveness of franchisor support.
  • Your accountant should review the financial statements in Item 21 to assess if the franchisor has the resources to sustain this growth.
Citations: Item 20, Item 21, Exhibit A

New/Unproven Franchise System

High Risk

Explanation

The franchisor entity, Inter-State LLC, was formed in September 2020 and began franchising in October 2020. The FDD explicitly highlights its own "Short Operating History" as a special risk. While its affiliate has operated a similar business since 1933, the franchisor itself is new and unproven in managing a franchise system. This newness increases the risk of underdeveloped support systems and potential instability compared to a mature franchisor.

Potential Mitigations

  • Your business advisor should help you conduct extensive due diligence on the management team's direct experience in franchising, not just the photography industry.
  • Speaking with the earliest franchisees from the Item 20 list is critical to understand their experience with the new system.
  • An attorney may be able to negotiate more favorable terms to compensate for the higher risk associated with a new franchise system.
Citations: Item 1, Item 2, FDD Special Risks to Consider About This Franchise

Possible Fad Business

Low Risk

Explanation

This risk does not appear to be present. The business model, school and sports photography, is a well-established industry with a long history of consumer demand, not a recent trend. The franchisor's affiliate, ISS Publishing, has operated in this market since 1933. A fad business, tied to a fleeting trend, carries a high risk of failure once consumer interest wanes, which does not seem to be the case here.

Potential Mitigations

  • A business advisor can help you assess the long-term market demand and competitive landscape for school photography in your specific territory.
  • It is still prudent to evaluate the franchisor's plans for innovation and adapting to new technologies with your business advisor.
  • Your financial advisor can help you consider the business model's resilience to economic shifts or changes in school funding.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

The franchisor entity itself is very new, formed in 2020. While Item 2 lists executives with extensive experience in the school photography industry through the affiliate, their experience in specifically managing a franchise system is more limited. A lack of deep franchising expertise can sometimes lead to challenges in providing the type of support, systems, and strategic guidance that franchisees require, which is different from managing a corporate-owned operation.

Potential Mitigations

  • A thorough review of the management team's background in franchising, distinct from industry experience, with your business advisor is important.
  • Discussing the quality of system support and management's understanding of franchisee needs with existing franchisees is crucial.
  • Inquiring about any experienced franchise consultants or staff hired to guide the new system can provide valuable insight.
Citations: Item 1, Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD. Item 1 does not indicate that Inter-State LLC is owned by a private equity firm. This type of ownership can sometimes introduce risks related to prioritizing short-term investor returns over the long-term health of the franchise system. Since this ownership structure is not present, this specific risk does not apply.

Potential Mitigations

  • It is still good practice for your attorney to confirm the ownership structure and identify all controlling parties.
  • A business advisor can help you research the reputation and track record of the principal owners.
  • Understanding the franchisor's long-term vision for the brand, regardless of ownership type, is a valuable discussion to have.
Citations: Not applicable

Non-Disclosure of Parent Company

Medium Risk

Explanation

The franchisor, Inter-State LLC, is a legally separate entity from its long-operating affiliate, Inter-State Studio & Publishing Co. (ISS Publishing). While the FDD discloses this relationship, it also states Inter-State LLC has not directly operated this type of business. The franchisor's viability appears heavily dependent on its affiliate, which is also the primary supplier. The FDD does not include financial statements for the parent/affiliate, which could obscure a complete picture of the overall enterprise's financial health.

Potential Mitigations

  • Your attorney and accountant must carefully review the relationship and obligations between the franchisor and its affiliate.
  • Inquire about the long-term stability of the affiliate and any formal support agreements it has with the franchisor.
  • Understanding your dependency on the affiliate for both brand legacy and essential supplies is a key discussion for your business advisor.
Citations: Item 1, Item 8, Item 21

Predecessor History Issues

Low Risk

Explanation

This risk was not identified. Item 1 describes the relationship with an affiliate, Inter-State Studio & Publishing Co., but does not identify any legal predecessors from which Inter-State LLC acquired its assets or the system. Predecessor history is important because it can reveal past issues like litigation or bankruptcy that may still affect the brand. The absence of a disclosed predecessor means this specific risk is not applicable.

Potential Mitigations

  • Your attorney can still conduct public record searches to confirm the corporate history of the franchisor and its affiliates.
  • A discussion with your business advisor about the full history of the "Inter-State Studio" brand is worthwhile.
  • Asking long-term employees or franchisees about the brand's history can provide valuable context.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD. Item 3 states that no litigation is required to be disclosed. This is a positive sign, as a pattern of lawsuits, especially those initiated by franchisees alleging fraud or misrepresentation, can indicate systemic problems within a franchise. The absence of such disclosed litigation suggests a cleaner legal history for the franchisor at this time.

Potential Mitigations

  • An attorney can still perform independent searches of court records to verify the absence of material litigation.
  • It remains valuable to discuss any informal disputes or issues with current franchisees, with the help of your business advisor.
  • Understanding the dispute resolution process in the Franchise Agreement is crucial should any future conflicts arise.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
2
4
9

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
4
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
6
6
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.

5

Territory & Competition Risks

Total: 5
3
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.

6

Regulatory & Compliance Risks

Total: 10
5
2
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.

7

Franchisor Support Risks

Total: 4
0
3
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.

8

Operational Control Risks

Total: 12
2
4
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

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
5
6
7

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: 1
1
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.