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How much does Madabolic cost?
Initial Investment Range
$380,900 to $583,300
Franchise Fee
$177,000 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 April 29, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 19, 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 franchisor explicitly flags its own financial condition as a special risk. The audited financial statements in Exhibit F confirm this, showing a negative Member's Equity (deficit) of $558,752 as of year-end 2024. This negative net worth could indicate financial instability and may impact the franchisor's ability to provide long-term support, invest in the brand, or fulfill its obligations, potentially increasing your risk.
Potential Mitigations
- A franchise accountant should perform a detailed review of the franchisor's complete financial statements, including all notes and trends.
- It is wise to ask your business advisor to assess whether the franchisor's cash flow appears sufficient to support the system without relying on new franchise sales.
- Your attorney can explain the implications of any state-required financial assurances, like bonds or fee deferrals, that may be in place.
High Franchisee Turnover
High Risk
Explanation
Item 20, Note 2, reveals a significant risk: ten franchisees terminated their agreements in 2024 before their outlets even opened. While post-opening turnover appears low, this high rate of pre-opening failure is a major red flag. It may suggest serious problems in the site selection, build-out support, or financing process, or that franchisees discovered significant issues after signing the agreement, leading them to abandon their investment early.
Potential Mitigations
- A discussion with your attorney is crucial to understand the potential reasons and implications of such a high number of pre-opening terminations.
- You should insist on speaking with some of the franchisees who terminated prior to opening to understand their experience; a business advisor can help prepare questions.
- Careful financial planning with your accountant for contingencies during the pre-opening phase is essential given this disclosed risk.
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. While Madabolic Franchise System, LLC (Madabolic LLC) is growing, adding 8 units in 2024, the pace does not appear dangerously rapid on its own, though it should be monitored in conjunction with the franchisor's financial condition and support capabilities.
Potential Mitigations
- Engaging a business advisor to question the franchisor about their plans for scaling support infrastructure to match growth is a prudent step.
- It is wise to speak with a range of existing franchisees, both new and established, to gauge the current quality and responsiveness of franchisor support.
- Your accountant can review the franchisor's financials to assess whether they appear to have the capital resources required to support continued expansion.
New/Unproven Franchise System
Medium Risk
Explanation
The current franchisor entity, Madabolic LLC, was formed in 2019, taking over from a predecessor that began franchising in 2012. While not a brand-new concept, the current ownership and management structure is relatively recent. The system is still small, with 38 franchised outlets at the end of 2024. The combination of recent ownership changes, small system size, and disclosed financial weakness increases the risks associated with an emerging franchise system.
Potential Mitigations
- A thorough review of the management team's experience in both the fitness industry and franchise management with your business advisor is essential.
- Speaking with franchisees who have been with the system through the ownership transition can provide valuable insight.
- Your accountant should carefully assess the franchisor's capitalization and financial stability disclosed in Item 21.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD Package. A fad business relies on a temporary trend, creating long-term risk. The business model, focused on strength training and athletic conditioning, is part of the broader, well-established health and fitness industry. While specific workout styles can trend, the fundamental offering appears to have a basis in established fitness principles, suggesting it is less likely to be a short-lived fad.
Potential Mitigations
- It is beneficial to conduct your own market research with a business advisor to assess the long-term consumer demand for this specific type of fitness service in your area.
- Asking the franchisor about their plans for program innovation and adaptation to stay relevant in the competitive fitness market is a sound practice.
- An accountant can help you model the business's potential resilience to economic shifts and changes in fitness trends.
Inexperienced Management
High Risk
Explanation
Item 2 shows that key executives, including the CEO Rick Del Sontro, have prior experience in other franchise systems. However, Item 3 discloses significant, franchisee-initiated litigation against that prior system (Zippy Shell) which involved Mr. Del Sontro. The litigation resulted in findings of fraudulent inducement and breach of good faith. This history from a prior, separate franchise system could be a concern for a prospective franchisee.
Potential Mitigations
- A detailed review of the litigation history in Item 3 with your attorney is critical to understanding the context and potential implications.
- You should discuss the management team's specific experience and track record with current and former franchisees.
- Engaging a business advisor to help vet the leadership team's reputation and capabilities is a wise precaution.
Private Equity Ownership
Medium Risk
Explanation
Item 1 identifies ZGrowth Acquisitions 5, LLC as the indirect parent company. The CEO of the parent's consulting affiliate, ZGrowth Partners, LLC, is also the CEO of the franchisor. This structure, common with investment funds, can create a focus on maximizing returns, which may not always align with the long-term interests of individual franchisees. Decisions could prioritize system sale or fee maximization over franchisee-level support and profitability.
Potential Mitigations
- Researching the parent company and its track record with other franchise brands, if any, can provide useful context; a business advisor can assist.
- It is wise to ask current franchisees about any changes in support, fees, or company direction since the current ownership took control.
- Your attorney should review any rights the franchisor has to sell the system and the potential impact on your agreement.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The FDD discloses the parent companies, Madabolic Holdings, LLC and ZGrowth Acquisitions 5, LLC. However, the financial statements provided in Item 21 are only for the franchisor, Madabolic Franchise System, LLC. Given the franchisor's negative net worth and its reliance on a consulting agreement with an affiliate of the parent company, the financial health of the parent entities is material. The lack of parent financial statements makes a complete assessment of the overall enterprise's stability difficult.
Potential Mitigations
- Your accountant should carefully review the provided financials and note the dependency on parent-affiliated entities for key services.
- Asking the franchisor for financial statements of the parent entities is advisable, although they may not be obligated to provide them.
- Your attorney can help you understand the risks of investing in a subsidiary with negative equity without a formal financial guarantee from its parent.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD Package. The document clearly discloses a predecessor, Madabolic, Inc., which operated from 2012 to 2019. The FDD appears to provide the required historical information regarding this predecessor, allowing for an evaluation of the system's lineage. There are no apparent attempts to obscure this history.
Potential Mitigations
- A review of the predecessor's history with your attorney is still a good practice to ensure you understand the system's evolution.
- When speaking with long-term franchisees, asking about their experiences under the predecessor entity can offer valuable perspective.
- Your business advisor can help you investigate the public record or news archives for any additional information on the predecessor company.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses extensive and material litigation involving the franchisor's CEO, Rick Del Sontro, from his time at a previous franchise, Zippy Shell. The cases involved multiple franchisees and resulted in settlements and a significant arbitration award against Zippy Shell and Mr. Del Sontro for fraudulent inducement and breach of good faith. Additionally, Madabolic LLC and its executives entered into a Consent Order with Washington state for offering franchises without proper registration.
Potential Mitigations
- A thorough review of all disclosures in Item 3 with your franchise attorney is absolutely essential.
- Understanding that this history involves allegations of fraud and misrepresentation in a different franchise system managed by the same CEO is a critical data point.
- You should consider this litigation history a significant red flag and discuss the potential risks with your attorney before proceeding.
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
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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
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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
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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.