Kid to Kid Logo

Kid to Kid

Franchise System, LLC
https://www.kidtokidfranchise.com
1-801-359-0071
39 East Eagle Ridge Drive, #100, North Salt Lake, Utah 84054

Initial Investment Range

$326,502 to $587,302

Franchise Fee

$40,000

Kid to Kid franchises the right to use its trade name and system to sell used and new children’s products and maternity items to the public.

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Kid to Kid April 11, 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
2
4
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor's parent company, BaseCamp Franchise Holdings, LLC, shows significant and consecutive net losses in its audited financial statements for 2023 and 2024. The net loss reported for the year ended December 31, 2024, was over $1.7 million. While the company has positive member's equity, these persistent losses may suggest financial strain, which could potentially impact its ability to support franchisees, invest in the brand, and grow the system effectively.

Potential Mitigations

  • Your accountant must conduct a thorough review of the audited financial statements, including all notes, to assess the company's financial stability and trends.
  • A business advisor can help you evaluate whether the franchisor has sufficient capital and cash flow to fund its operations and support obligations.
  • It is wise to ask the franchisor about their strategies for achieving profitability and how these losses might affect franchisee support.
Citations: Item 21, FDD Exhibit G (Consolidated Financial Statements)

High Franchisee Turnover

High Risk

Explanation

Item 20 data from 2024 shows that 7 of 79 U.S. franchised outlets (nearly 9%) left the system through reacquisition or cessation, a notable increase from prior years. Furthermore, Item 19 data excludes an additional 8 stores that underwent ownership transfers and 1 that ceased operations during the reporting period. This combined data suggests a significant level of franchisee turnover, which could indicate potential issues with profitability, franchisee satisfaction, or operational challenges within the system.

Potential Mitigations

  • A detailed analysis of Item 20 tables with your accountant is essential to calculate the true annual rate of franchisee churn.
  • Contacting a significant number of former franchisees listed in Exhibit F is crucial to understand why they left the system.
  • Your attorney can help you formulate specific questions for the franchisor regarding the high number of transfers and reacquisitions.
Citations: Item 19, Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. Rapid system growth can strain a franchisor's ability to provide adequate support. If a franchisor adds units faster than it builds its support infrastructure, new and existing franchisees may experience delays in training, site selection assistance, and operational problem-solving. This can dilute brand quality and negatively impact franchisee performance across the system, making it a key area for due diligence.

Potential Mitigations

  • A business advisor can help you analyze the franchisor's growth rate in Item 20 relative to its support staff and financial resources.
  • Asking current franchisees about the quality and timeliness of support they receive is a valuable step.
  • Your accountant should review the financial statements in Item 21 to assess if the franchisor is investing adequately in its support infrastructure.
Citations: Item 1, Item 20, Item 21

New/Unproven Franchise System

Medium Risk

Explanation

The current franchisor, Kid to Kid Franchise System, LLC, was formed in July 2022 and acquired the assets of a long-operating predecessor in September 2022. While the system itself has existed since 1992, the current ownership and management structure is relatively new. A new management team may introduce different strategies or support levels, creating a period of transition and potential uncertainty for franchisees compared to a system with long-standing, stable ownership.

Potential Mitigations

  • A thorough review of the business experience of the new management team in Item 2 with your business advisor is critical.
  • It is important to contact franchisees who have operated under both the old and new ownership to understand any changes in support or company direction.
  • Your attorney can help you understand the implications of the asset acquisition and the new corporate structure.
Citations: Item 1, Item 2

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. A franchise concept based on a short-term trend or fad carries the risk that consumer interest may decline, potentially harming your long-term business viability. Even if demand for the product or service wanes, your contractual obligations to pay royalties and adhere to system standards typically continue for the full term of the agreement. Evaluating a concept's long-term market relevance is a crucial piece of due diligence.

Potential Mitigations

  • Your business advisor can help you research the long-term market trends for the specific industry to gauge its sustainability.
  • It is wise to assess the franchisor's plans for innovation and adaptation to changing consumer tastes.
  • Evaluating the business's resilience to economic downturns and changing trends is a prudent step with a financial advisor.
Citations: Item 1, Item 11

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD package. Item 2 of the FDD details the professional backgrounds of the franchisor's key officers and directors. If this team lacks significant experience in franchising or in the specific industry, it could lead to strategic errors, weak operational systems, and inadequate franchisee support. Assessing the depth and relevance of the management team's experience is a critical step in evaluating the potential for strong leadership and effective system management.

Potential Mitigations

  • A business advisor can help you review the backgrounds of the management team in Item 2 to assess their relevant industry and franchising experience.
  • Inquiring with current franchisees about their confidence in the management team's leadership and strategic direction is beneficial.
  • Your attorney should be consulted if there are any concerning gaps in management's disclosed experience.
Citations: Item 2

Private Equity Ownership

Medium Risk

Explanation

Item 1 indicates the franchisor is part of a larger structure under BaseCamp Parent, LLC, and the management team in Item 2 includes individuals from Horizon Point Capital, LLC. While not explicitly stated to be a traditional private equity fund, this structure suggests ownership by an investment-focused group. Such ownership can introduce risks, as decisions may prioritize investor returns over the long-term health of franchisees, potentially affecting fees, support levels, and overall system strategy.

Potential Mitigations

  • A business advisor can help you research the parent company's background and its track record with other investments or franchise brands.
  • Speaking with franchisees about their experience since the 2022 ownership change is crucial to understand any shifts in operational philosophy.
  • Your attorney should analyze the transfer and assignment clauses in the Franchise Agreement to understand the implications if the system is sold again.
Citations: Item 1, Item 2

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. The franchisor clearly discloses its parent companies in Item 1. Furthermore, Item 21 and Exhibit G provide the audited consolidated financial statements of the parent, BaseCamp Franchise Holdings, LLC. Exhibit I also includes a Guarantee of Performance from the parent, ensuring transparency regarding the financial backing and overall corporate structure. This level of disclosure provides a more complete picture for risk assessment.

Potential Mitigations

  • Your accountant should review the provided parent company financials in Exhibit G to assess the overall health of the consolidated entity.
  • It is important for your attorney to review the terms of the parent company's Guarantee of Performance to understand its scope and limitations.
  • A business advisor can help you understand the relationships between the various affiliated companies disclosed in Item 1.
Citations: Item 1, Item 21, FDD Exhibit I

Predecessor History Issues

Medium Risk

Explanation

Item 1 discloses that the current franchisor entity was formed in 2022 and acquired the assets of a predecessor, K2KF, which had operated since 1993. Item 3 discloses litigation involving this predecessor. While the information appears to be disclosed as required, you are relying on the new entity to manage a long-standing system. It is important to assess whether any historical issues from the predecessor's tenure could carry over or impact the brand's reputation under new management.

Potential Mitigations

  • Your attorney should carefully review the disclosures related to the predecessor in Items 1, 3, and 4.
  • Inquiring with long-term franchisees about their experiences under both the predecessor and current management is a vital due diligence step.
  • A business advisor can help you evaluate how the transition from the predecessor might impact the system's culture and support.
Citations: Item 1, Item 3

Pattern of Litigation

Medium Risk

Explanation

Item 3 discloses one prior arbitration action from 2014 against the predecessor entities. The arbitrator found that the franchisee had breached the agreement but also that the franchisor's affiliate had failed to advise the franchisee to seek legal counsel on a lease, resulting in a monetary award of $186,750 to the franchisee. While not a recent pattern of litigation, this historical case involves a significant finding against a predecessor, which could be relevant to understanding the system's history.

Potential Mitigations

  • A thorough review of the litigation disclosure in Item 3 with your franchise attorney is essential to understand the specific claims and outcome.
  • It is beneficial to ask the franchisor about any changes in procedures or training that were implemented following this arbitration award.
  • You might discuss this past litigation with long-tenured franchisees to get their perspective on the matter.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
7
0
8

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
6
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

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4

Legal & Contract Risks

Total: 16
7
6
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.

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
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
1
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.

8

Operational Control Risks

Total: 12
2
7
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.

9

Term & Exit Risks

Total: 18
9
6
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.