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Kitchen Wise
How much does Kitchen Wise cost?
Initial Investment Range
$139,100 to $198,000
Franchise Fee
$70,000
The franchise offered is for the establishment and operation of a home-based, mobile business that markets, designs, sells and installs custom products and shelving for kitchen, bathroom cabinets and closet shelving services.
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Kitchen Wise April 28, 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 financial statements for the guarantor, Premium Service Brands, LLC (PSB), show a members' deficit (negative net worth) of over $5.8 million in 2024, worsening from 2023, and consecutive annual net losses. Multiple state addenda confirm that financial assurances were required due to this condition. This financial weakness calls into question the company's ability to support you, invest in the brand, and fulfill its obligations, a risk explicitly disclosed by the franchisor.
Potential Mitigations
- A franchise accountant must thoroughly review the guarantor's audited financial statements, including all footnotes, to assess its viability and ability to support the system.
- Understanding the specific protections offered by state-mandated financial assurances (like deferred fees) requires consultation with your franchise attorney.
- Discuss the company's financial state and plans for achieving profitability directly with the franchisor's management, with guidance from your business advisor.
High Franchisee Turnover
High Risk
Explanation
The franchisor explicitly discloses a high turnover rate as a special risk. Item 20 data confirms this, showing the system collapsed from 24 to 8 units in 2022, primarily due to 18 outlets 'Ceasing Operations for Other Reasons'. This represents an extremely high annual churn rate. Such a significant number of franchisee departures in a short period is a critical red flag indicating potential systemic problems with profitability, support, or the business model itself.
Potential Mitigations
- Your franchise attorney should help you formulate specific questions for the franchisor regarding the reasons for this extremely high turnover.
- It is critical to contact as many former franchisees as possible from the list in Exhibit F to understand their reasons for leaving the system.
- A business advisor can help you assess whether the underlying issues that may have caused this turnover have been resolved.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. The data in Item 20 indicates the opposite issue: the system has experienced a significant contraction in recent years, not rapid growth. While the franchisor may be attempting to grow now, the primary risk stems from its small size and past failures, not an inability to support rapid expansion. A prospective franchisee should consider the challenges of joining a small or struggling system.
Potential Mitigations
- Engaging a business advisor to assess a franchisor's growth strategy and its alignment with their support capabilities is a wise step.
- An accountant can review the franchisor's financial statements to determine if they have allocated sufficient resources to support their stated growth plans.
- It is advisable to discuss the franchisor's historical growth and support quality with existing franchisees.
New/Unproven Franchise System
Medium Risk
Explanation
Kitchen Wise, LLC, as the current franchisor entity, was formed in 2019 and has a very small system size with a history of significant franchisee failure. While the management team from the parent company, Premium Service Brands, LLC (PSB), is experienced in franchising other brands, the Kitchen Wise specific system has a poor and limited track record. This presents a risk that the model itself may be unproven or possess inherent flaws, despite the parent's broader experience.
Potential Mitigations
- A thorough due diligence investigation into the specific performance and satisfaction of the few remaining Kitchen Wise franchisees is essential; your business advisor can guide this.
- An accountant should scrutinize the financial performance of this specific brand, separate from the larger parent portfolio, if possible.
- Your franchise attorney can help you question the franchisor on what has changed since the period of high franchisee failure.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The business model, which involves providing custom products and shelving for kitchens, bathrooms, and closets, operates within the well-established and durable home improvement and organization industry. This concept does not appear to be based on a short-term trend or fad. Long-term viability would depend more on execution and market conditions rather than the fleeting popularity of the service itself.
Potential Mitigations
- A business advisor can help you research the long-term market demand and competitive landscape for home organization services in your local area.
- Evaluating a company's plans for product innovation and adaptation with a business consultant can reveal its strategy for long-term relevance.
- It's prudent to review industry reports to understand the historical and projected stability of the home improvement sector.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 discloses that the executive team, drawn from the parent company Premium Service Brands, LLC (PSB), has extensive and long-term experience in franchising multiple home service brands. The CEO, Paul Flick, has been involved in franchising since 2013 across numerous concepts. The risk here appears to be less about management's inexperience with franchising in general and more about the specific performance of the Kitchen Wise brand itself.
Potential Mitigations
- When evaluating a franchise, it's always wise to have your business advisor research the track record of the key executives, both with the current brand and any prior companies.
- Your franchise attorney can help you ask targeted questions of current franchisees about the quality and effectiveness of the management team's support.
- An accountant can help assess if management's financial stewardship appears sound, based on the provided financial statements.
Private Equity Ownership
Medium Risk
Explanation
The franchisor is part of a large portfolio of brands under Premium Service Brands, LLC (PSB), which is owned by AE Capital, LLC, indicating a private equity ownership structure. This creates a risk that management decisions may prioritize short-term investor returns over the long-term health of franchisees. This could manifest as pressure to cut support costs, increase fees, or focus on new franchise sales over existing franchisee profitability, which aligns with the high turnover and financial instability seen elsewhere.
Potential Mitigations
- Engaging a business advisor to research the private equity firm's reputation and track record with other franchise systems is recommended.
- It is important to ask current franchisees about any changes in support, culture, or fee structures since the acquisition by the parent company.
- Your franchise attorney should analyze the assignment clauses in the Franchise Agreement to understand the implications if the brand is sold again.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 clearly discloses the parent companies, PSB Group, LLC and Premium Service Brands, LLC (PSB), and the ultimate parent, AE Capital, LLC. Furthermore, Exhibit B provides audited consolidated financial statements for the guarantor, PSB, and its subsidiaries, which is the relevant financial entity given the guarantee of performance. There does not appear to be an attempt to obscure the ownership structure or withhold relevant financial data.
Potential Mitigations
- Your franchise attorney should always verify that the entities disclosed in Item 1 align with the entities providing financial statements in Item 21 and guarantees in Item 22.
- An accountant's review of the provided financials is crucial to ensure they are for the correct entity and are prepared according to standards.
- If a franchisor is a subsidiary, a business advisor can help assess the relationship with and reliance upon the parent company.
Predecessor History Issues
Medium Risk
Explanation
Item 1 discloses that the franchisor acquired the assets of a predecessor, a Wisconsin entity, in 2019. However, the FDD provides no specific historical data on the performance, franchisee turnover, or litigation related to that predecessor. Given the massive franchisee failure rate that occurred in 2022 under the current entity, the lack of information about the predecessor's history is a concern, as it may obscure whether the system's problems are new or inherited.
Potential Mitigations
- A franchise attorney can help you formulate questions for the franchisor regarding the performance and franchisee satisfaction under the predecessor entity.
- In your discussions with any long-term franchisees, asking about their experience before the 2019 acquisition could provide valuable insight.
- Given the information gap, a business advisor may suggest placing greater weight on the current entity's poor track record.
Pattern of Litigation
High Risk
Explanation
Item 3 reveals a significant pattern of litigation and governmental actions involving the franchisor's affiliates and leadership. This includes franchisee lawsuits alleging fraud and misrepresentation. More critically, multiple government enforcement actions from states like Maryland, Illinois, Virginia, and California have been taken against the parent company and CEO, Paul Flick. The California action resulted in a multi-year bar against the CEO from selling franchises in that state and specifically named Kitchen Wise, LLC.
Potential Mitigations
- The extensive history of litigation and government actions requires a thorough review and risk assessment by your franchise attorney.
- It is advisable to discuss this pattern with your business advisor to evaluate the potential impact on the franchisor's reputation and culture.
- Given the allegations of misrepresentation, obtaining information from former franchisees listed in Item 3 and Exhibit F is crucial.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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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