Lightspeed Restoration Logo

Lightspeed Restoration

Lightspeed Restoration, LLC
https://www.lightspeedrestoration.com
1-877-800-2382
777 International Parkway, Suite 300, Flower Mound, TX 75022

Initial Investment Range

$154,230 to $334,000

Franchise Fee

$108,500 to $176,500

As a Lightspeed Restoration franchisee, you will offer water and fire damage restoration and indoor air quality services to residential and commercial customers.

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Lightspeed Restoration April 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
4
1
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The audited financial statements for Lightspeed Restoration, LLC (LSR) show significant and increasing net losses for 2023 and 2024. This is explicitly identified as a “Financial Condition” risk by the franchisor. While a parent company has committed to providing financial support through early 2026, the ongoing operational losses present a considerable risk to the franchisor’s long-term stability and its ability to support you. Several states require financial assurances due to this condition.

Potential Mitigations

  • Your accountant must conduct a thorough review of the audited financial statements in Exhibit C, including all notes and the parent company's support commitment.
  • Discuss with a business advisor the potential impact of the franchisor's unprofitability on brand development and support services.
  • It is crucial for your attorney to explain the protections offered by any state-mandated financial assurances, like deferred fee payments.
Citations: Special Risks, Item 21, Exhibit C, State Specific Addenda

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a high rate of franchisee failure. In 2024, three franchises were terminated out of a starting base of 18, representing a 16.7% termination rate in a single year for this very young system. This level of turnover is a significant warning sign that could indicate potential issues with the business model's viability, franchisee profitability, or the support provided by the franchisor. This turnover presents a substantial risk to your potential for success.

Potential Mitigations

  • Your attorney and accountant should help you analyze the turnover data in Item 20 and the list of former franchisees in Exhibit E.
  • Contacting former franchisees is critical to understanding why they left the system; a business advisor can help you prepare questions.
  • You should treat this high termination rate as a major red flag and discuss its implications for your investment with your financial advisor.
Citations: Item 20, Exhibit E

Rapid System Growth

High Risk

Explanation

The franchise system is expanding very quickly, growing from zero to 27 outlets in about 18 months as shown in Item 20. When combined with the franchisor's significant financial losses noted in Item 21, this rapid growth presents a risk that the company's support infrastructure, including training and operational assistance detailed in Item 11, may not be able to keep pace. This could potentially lead to inadequate support for you and other franchisees.

Potential Mitigations

  • It is important to discuss with a business advisor the franchisor's capacity to scale its support systems to match its rapid unit growth.
  • Interviewing a wide range of existing franchisees about the current quality and responsiveness of franchisor support is a prudent step.
  • Your accountant should review the financial statements to assess if LSR has the resources needed to sustain its growth.
Citations: Item 11, Item 20, Item 21

New/Unproven Franchise System

High Risk

Explanation

LSR is an emerging franchisor, having been formed in late 2022 and only beginning to offer franchises in mid-2023. The FDD's "Special Risks" section explicitly highlights this "Short Operating History." Investing in a new, unproven system carries higher risk, as the business model, brand recognition, and support systems are not yet well-established. This could affect your potential for success compared to investing in a more mature franchise system.

Potential Mitigations

  • A business advisor can help you conduct extensive due diligence on the backgrounds of the management team in both the industry and franchising.
  • Speaking with the earliest franchisees listed in Item 20 is essential to understand their experiences with the developing system.
  • Your attorney should review the offering for any additional protections that might offset the higher risk of a new system.
Citations: Special Risks, Item 1, Item 2, Item 20, Item 21

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD Package. The business offers water and fire damage restoration services, which is an established, needs-based industry rather than a temporary trend. A fad business carries the risk of declining consumer interest, which could jeopardize the long-term viability of your investment even if your contractual obligations continue.

Potential Mitigations

  • A business advisor can help you assess the long-term market demand and sustainability for any franchise concept you consider.
  • Evaluating a franchisor's plans for innovation and adaptation is a key piece of due diligence your financial advisor can assist with.
  • Your attorney can review the franchise agreement's term to ensure it aligns with the expected lifecycle of the business concept.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

While the direct management team for LSR is new, the franchisor is part of Home Franchise Concepts, LLC, a large parent company with extensive experience managing numerous other established franchise brands. This significantly mitigates the risk typically associated with an inexperienced management team. However, the specific team for this new brand is still developing its track record, which presents a moderate risk regarding the execution of support and strategy for this particular concept.

Potential Mitigations

  • It's advisable to question the franchisor about how the parent company's experience is leveraged to support this new brand.
  • Your business advisor can help you assess the specific experience of the direct management team listed in Item 2.
  • Talking to current franchisees about the quality of support they receive from the brand-specific team is an important diligence step.
Citations: Item 1, Item 2, Item 11

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 1 indicates the franchisor is owned by a large, privately-held family of companies, not a typical private equity firm. PE ownership can sometimes introduce risks related to prioritizing short-term investor returns over the long-term health of the franchise system, potentially leading to support cuts or pressure on franchisees.

Potential Mitigations

  • When considering any franchise, it is wise to have your attorney help you understand the ownership structure and any recent changes in control.
  • If a franchisor is PE-owned, a business advisor can help you research the firm's track record with other franchise brands.
  • Engaging with franchisees who have been through an ownership change can provide valuable insight.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 1 clearly discloses the parent company, Home Franchise Concepts, LLC, and the ultimate parent, JM Family Enterprises, Inc. A failure to disclose a parent entity can be a significant issue, as it may obscure the true financial backing and control structure of the franchisor, preventing a complete risk assessment.

Potential Mitigations

  • Your accountant should always review Item 21 to see if parent company financials are included or if a parent guarantee is provided.
  • It is important to have your attorney verify the corporate structure if there is any ambiguity about the franchisor's ownership.
  • A business advisor can help you understand the relationships between the franchisor and its parent or affiliates.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 1 states that the franchisor has no predecessors. When a franchisor has a predecessor, it is important to review that entity's history for issues like litigation or bankruptcy, as these could indicate historical problems with the system that may have been inherited by the current franchisor.

Potential Mitigations

  • Your attorney should carefully review Item 1 of any FDD for information about predecessors.
  • If a predecessor exists, researching its public records for litigation or financial trouble can be a valuable step for a business advisor.
  • Questioning long-term franchisees about their experience under any predecessor entities can provide important historical context.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package. Item 3 discloses one past action involving an affiliate under prior ownership, but reveals no pattern of litigation against LSR itself. A pattern of lawsuits filed by franchisees alleging fraud, or by the franchisor against franchisees, can be a major red flag indicating systemic problems or an overly aggressive franchisor.

Potential Mitigations

  • A thorough review of Item 3 with your attorney is crucial for any franchise you consider, to understand the nature of any disclosed litigation.
  • Your attorney can help you perform public record searches to see if any litigation exists beyond what is disclosed.
  • Contacting franchisees involved in past or present litigation, if possible, can provide invaluable firsthand information.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
4
4
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

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3

Financial & Fee Risks

Total: 10
7
2
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.

4

Legal & Contract Risks

Total: 16
6
3
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.

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
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.

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
6
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.

9

Term & Exit Risks

Total: 18
10
6
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.

10

Miscellaneous Risks

Total: 2
1
1
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.