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Madabolic

Madabolic Franchise System, LLC
https://www.madabolic.com
1-980-217-4770
2610 South Blvd, Charlotte, North Carolina 28209

Initial Investment Range

$295,540 to $583,300

Franchise Fee

$70,000 to $203,000

Madabolic Franchise System, LLC offers franchises for the operation of a strength training fitness business featuring workouts commonly used by professional athletes that have been modified for everyday people to improve their overall health and wellness.

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Madabolic March 25, 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
3
3

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

Madabolic Franchise System, LLC (Madabolic LLC) explicitly flags its financial condition as a special risk. The audited financial statements in Exhibit F for the year ending December 31, 2024, show a negative Member's Equity of ($558,752), meaning liabilities exceed assets. This negative net worth raises significant questions about the company's long-term stability and its ability to support franchisees, fund growth, and weather economic challenges, which could jeopardize your investment.

Potential Mitigations

  • Your accountant must conduct a thorough analysis of the franchisor's financial statements, including the notes, to assess its viability and cash flow.
  • Discuss the implications of the negative net worth and reliance on franchisee fees for revenue with your financial advisor.
  • An attorney should review any state-mandated financial assurances, like bonds or fee deferrals, required due to this condition.
Citations: FDD Cover Page, Item 21, Exhibit F, Virginia State Addendum (Exhibit G-1)

High Franchisee Turnover

High Risk

Explanation

This is a significant risk. While the tables show low turnover for open stores, Note 2 in Item 20 reveals a critical fact: ten franchisees terminated their agreements in 2024 *before* opening their outlets. This extremely high number of pre-opening terminations suggests potential systemic issues with the pre-opening process, franchisee financing, site selection, or mismatched expectations. This could indicate a higher risk of failing to open successfully after investing.

Potential Mitigations

  • You must ask the franchisor for a detailed explanation of why ten franchisees terminated before opening in a single year.
  • It is critical to contact former franchisees listed in Exhibit E, especially those who left before opening, to understand their reasons; your attorney can help frame questions.
  • Your accountant should help you create a very conservative pre-opening budget to mitigate potential for under-capitalization.
Citations: Item 20 (Table 3 and Note 2)

Rapid System Growth

Medium Risk

Explanation

Item 20 data shows the system has grown from 17 to 38 franchised outlets over the past three years, with 48 more agreements signed but not yet open. While growth can be positive, this pace, combined with the franchisor's negative net worth (Item 21), presents a risk that its support infrastructure may not be able to keep pace. Resources could be strained, potentially leading to inadequate assistance for new and existing franchisees.

Potential Mitigations

  • In discussions with the franchisor, inquire specifically about how they have scaled their support staff and systems to manage this growth.
  • A business advisor can help you assess whether the franchisor’s support commitments in Item 11 are realistic given its financial state and growth rate.
  • Contacting a mix of new and established franchisees from the list in Exhibit E is essential to gauge the current quality of support.
Citations: Item 20

New/Unproven Franchise System

Medium Risk

Explanation

The current franchisor entity, Madabolic LLC, was formed in 2019, taking over from a predecessor. While the brand concept has existed since 2011, the franchising entity itself is relatively young. This, combined with negative net worth in Item 21 and a high number of pre-opening terminations in Item 20, suggests the franchise system's operational model and support structure may still be maturing, which can increase risks for franchisees.

Potential Mitigations

  • A business advisor should help you perform extensive due diligence on the management team's specific experience in successfully managing a franchise system.
  • Your accountant must carefully review the financial statements to assess the stability and capitalization of this specific franchising entity.
  • Speaking with the earliest franchisees under the current entity (from Exhibit E) is crucial to understanding the evolution of its support systems.
Citations: Items 1, 2, 20, 21

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. A fad business is one tied to a short-lived trend, which can create long-term risk for franchisees who are locked into a 10-year agreement. The long-term viability of any business model is a critical consideration for a prospective franchisee.

Potential Mitigations

  • Engage a business advisor to help you conduct independent market research on the long-term consumer demand for boutique fitness concepts.
  • Evaluate the franchisor's history and plans for innovation and adaptation to changing fitness trends.
  • Your financial advisor can help you assess the business model's resilience to economic shifts and evolving consumer preferences.
Citations: Item 1

Inexperienced Management

High Risk

Explanation

Item 2 shows the CEO, Rick Del Sontro, has executive experience with other franchise concepts, including ZGrowth Partners and Zippy Shell. However, the litigation detailed in Item 3 related to his time at Zippy Shell is a significant concern. While the founders have been with the Madabolic brand since 2011, the overall management team's history presents a mixed picture of experience and potential risk that warrants careful consideration.

Potential Mitigations

  • A thorough review of the management team's full history, including the context of the litigation in Item 3, is critical; your attorney should lead this.
  • Speak with current franchisees about their direct experiences and the quality of guidance they receive from the current management team.
  • A business advisor can help you weigh the management team's industry experience against the risks indicated by their legal history.
Citations: Items 2, 3

Private Equity Ownership

Medium Risk

Explanation

The franchisor's parent company is Madabolic Holdings, LLC, which is majority-owned by ZGrowth Acquisitions 5, LLC. This indicates a potential private equity or investment firm ownership structure. Such ownership can introduce risks if the parent's focus is on short-term returns, which might lead to cost-cutting on franchisee support, increased fees, or a quick sale of the franchise system, potentially impacting your long-term success.

Potential Mitigations

  • It is wise to research ZGrowth and its track record with other franchise brands with the help of a business advisor.
  • Ask current franchisees if they have observed any changes in support, culture, or strategy since the acquisition.
  • Your attorney should analyze any rights the franchisor has to sell or assign the system and explain the potential impact on your agreement.
Citations: Item 1

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. The FDD clearly discloses the parent companies in Item 1. However, the financials provided are only for the franchisor entity, Madabolic Franchise System, LLC, and not the parent companies. Since the parent does not guarantee the franchisor's obligations, their financials are not required, but this means your investment relies solely on the financial strength of the subsidiary, which currently has negative net worth.

Potential Mitigations

  • Your accountant should focus their analysis on the provided financials for Madabolic Franchise System, LLC, as that is the entity you are contracting with.
  • Understand that there is no financial backing from the parent company disclosed in the FDD.
  • Your attorney can confirm if, under these specific circumstances, parent financials would be required by state law.
Citations: Items 1, 21

Predecessor History Issues

Low Risk

Explanation

The FDD discloses that Madabolic, Inc. was the predecessor entity, offering franchises from 2012 to 2019. It states the predecessor sold 11 franchises. While the disclosure appears to meet legal requirements, the transition to the new entity, Madabolic Franchise System, LLC, in 2019 marks a change in control and management that should be carefully considered, especially in light of the new entity's financial condition.

Potential Mitigations

  • Your attorney should review the information on the predecessor to ensure the disclosure is complete.
  • When speaking with franchisees, it would be beneficial to talk to some who have been in the system since before the 2019 changeover.
  • Inquire with the franchisor about the reasons for the change in corporate structure from the predecessor to the current entity.
Citations: Item 1

Pattern of Litigation

High Risk

Explanation

This is a significant risk. Item 3 discloses extensive, material litigation involving the current CEO, Rick Del Sontro, from his time at a previous franchise, Zippy Shell. The allegations included fraud, breach of contract, and RICO violations, resulting in a $1.46M judgment and several large settlements. Additionally, the franchisor and its management recently entered into Consent Orders with Washington state for offering franchises while unregistered. This history could indicate a higher risk of future disputes.

Potential Mitigations

  • Your attorney must carefully review and explain the potential implications of the CEO's litigation history and the Washington state consent orders.
  • Consider the management's past conduct as a significant indicator of how disputes might be handled in this system.
  • A business advisor can help you assess whether this history constitutes an acceptable level of business risk for your investment.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
5
2
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
3
6
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

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4

Legal & Contract Risks

Total: 16
5
5
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.

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
4
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.

7

Franchisor Support Risks

Total: 4
0
4
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
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
9
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: 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.