Kitchen Refresh Logo

Kitchen Refresh

Kitchen Refresh Franchising, LLC
http://www.kitchenrefresh.net
1-701-204-8924
2401 46 Avenue SE, Suite 202, Mandan, North Dakota 58554

Initial Investment Range

$21,280 to $133,950

Franchise Fee

$6,500 to $32,000

You will operate a business that offers refresh and remodeling of cabinets and drawers for kitchen, bathrooms and other interior spaces, as well as installation of backsplashes, flooring and countertops.

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Kitchen Refresh May 23, 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
3
2
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor’s audited financials reveal significant risks. Note 5 of Exhibit C states the company has had no cash flow from operations since inception, relying on its parent for funding. A massive, non-interest-bearing loan to an affiliate ($472,705) ties up its capital. Further, the North Dakota addendum reveals that the state imposed a deferral of your initial fee due to the franchisor’s financial condition. These factors suggest potential instability and a risk to their ability to support you.

Potential Mitigations

  • A thorough review of the audited financial statements, especially the notes regarding related-party transactions and cash flow, with your accountant is critical.
  • It is wise to ask the franchisor for details about the affiliate loan and the parent company's commitment and ability to continue funding operations.
  • Your attorney should analyze the implications of the state-mandated fee deferral as an indicator of financial risk.
Citations: Item 21, Exhibit C (Notes 5, 9), Exhibit H (North Dakota Addendum)

High Franchisee Turnover

High Risk

Explanation

The franchisee turnover rate is a significant concern. Item 20 data shows that in 2023, the system began with five outlets and one was terminated during the year, representing a 20% termination rate. For a very young and small system, such a high rate of failure could indicate systemic problems with the business model, franchisee profitability, or franchisor support, presenting a substantial risk to your potential for success.

Potential Mitigations

  • You should contact the former franchisee listed in Exhibit E to understand the reasons for their termination.
  • Discussing the high turnover rate directly with the franchisor may provide important context.
  • A business advisor can help you assess if this turnover rate is a sign of deeper issues within the franchise system.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. Rapid growth can strain a franchisor's ability to provide adequate support. The data in Item 20 shows the system is actually contracting, not growing rapidly, moving from five outlets to four in the most recent year. The risk here is more related to system stagnation or decline rather than unsustainable expansion.

Potential Mitigations

  • It would be prudent to discuss the franchisor's future growth plans and strategies for franchisee support with their management team.
  • An accountant can help analyze whether the franchisor has sufficient financial resources to support both current and future franchisees.
  • Speaking with existing franchisees about the current level of support can provide valuable insight.
Citations: Item 20

New/Unproven Franchise System

High Risk

Explanation

The franchise system is very new and lacks a significant operating history. Kitchen Refresh Franchising, LLC (KRF LLC) began franchising in March 2021 and had only four active outlets at the end of 2023. Furthermore, the initial investment estimates in Item 7 are based on the franchisor’s experience opening just one outlet. Investing in such an unproven system carries a higher risk of business model flaws, underdeveloped support systems, and potential instability.

Potential Mitigations

  • Conducting extensive due diligence on the viability of the business model with your business advisor is essential.
  • Engage in detailed discussions with all current franchisees to learn about their experiences and the franchisor's performance.
  • Your accountant should help you develop conservative financial projections, given the limited performance history.
Citations: Items 1, 2, 7, 20

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. A fad business is one tied to a fleeting trend, which can threaten long-term viability. The business of kitchen and bath remodeling is a well-established and enduring sector of the home improvement industry, not typically considered a fad.

Potential Mitigations

  • A business advisor can help you research the long-term stability and market trends for the home remodeling industry in your area.
  • It is still wise to ask the franchisor about their plans for innovation to keep the brand competitive over time.
  • An accountant can help you model the business's resilience to potential economic downturns.
Citations: Item 1

Inexperienced Management

Medium Risk

Explanation

The FDD indicates that while the brand has been operating since 2015, the franchisor entity is very new, having been formed in 2020 and starting to franchise in 2021. This suggests that the management team, while potentially experienced in the cabinet refresh industry, has limited experience specifically in managing and supporting a franchise system. This lack of a franchising track record could impact the quality of training, support, and strategic guidance you receive.

Potential Mitigations

  • A thorough investigation of the management team's specific experience in franchising, not just the industry, is recommended.
  • Discussing the quality and responsiveness of management's support with current franchisees would be very insightful.
  • A business advisor can help you assess whether the support systems described in Item 11 seem adequate for a new franchisor.
Citations: Items 1, 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Private equity ownership can sometimes lead to decisions that prioritize short-term returns over the long-term health of the system. According to Item 1, the franchisor is owned by Kitchen Refresh Holdings, Inc., and its management appears to be the founders, not an outside investment firm.

Potential Mitigations

  • You could ask your attorney to verify the ownership structure of the parent company through public records.
  • It is good practice to ask the franchisor if there are any plans to sell the company in the near future.
  • A business advisor can help you understand the potential impacts if the company were to be sold to a private equity firm later.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package, as the parent company, Kitchen Refresh Holdings, Inc., is disclosed in Item 1. A franchisor's failure to disclose a parent can hide financial weakness. While the parent is disclosed here, its financial statements are not provided, and it does not guarantee the franchisor's obligations.

Potential Mitigations

  • An accountant should analyze the franchisor's own financials to assess its viability independent of the parent.
  • Given the significant related-party loans, it is important to ask the franchisor about the financial health of the parent company.
  • Your attorney can advise on the legal relationship between the parent and franchisor entities.
Citations: Item 1, Item 21

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. A predecessor is a company from which the franchisor acquired the business. Undisclosed or problematic predecessor history can hide past failures or litigation. Item 1 of this FDD discloses affiliates but does not indicate the franchisor acquired the business from a predecessor.

Potential Mitigations

  • It is always a good practice for your attorney to confirm the business's lineage as disclosed in Item 1.
  • You can research the history of the “Kitchen Refresh” brand name with a business advisor to see if any other entities were involved.
  • Asking the earliest franchisees about the history of the system can sometimes reveal helpful information.
Citations: Not applicable

Pattern of Litigation

Medium Risk

Explanation

The franchisor has a concerning litigation history for a new company. Item 3 discloses a Consent Order with the Minnesota Department of Commerce for violating the state's franchise act by selling franchises without being properly registered. This required offering rescission to four franchisees and paying a penalty. A direct violation of franchise law is a significant indicator of compliance issues and operational risk, even if it is a single regulatory action rather than a pattern of franchisee lawsuits.

Potential Mitigations

  • Your attorney must review the details of the Consent Order and explain its implications.
  • This compliance failure should be discussed directly with the franchisor to understand how they have changed their processes.
  • A business advisor can help you weigh this regulatory issue as part of your overall risk assessment.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
7
1
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

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3

Financial & Fee Risks

Total: 10
4
3
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

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4

Legal & Contract Risks

Total: 16
5
7
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
0
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
4
1
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.

7

Franchisor Support Risks

Total: 4
2
1
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
4
7
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.

9

Term & Exit Risks

Total: 18
7
7
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.

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.