Md Hyperbaric Center
Initial Investment Range
$129,550 to $524,200
Franchise Fee
$50,000
The franchise offered is for the development of a MD Hyperbaric Center franchised business that either offers and sells Hyperbaric Oxygen Therapy products and services to customers under the MD Hyperbaric Center name and marks at a bricks and mortar location.
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Md Hyperbaric Center February 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 audited 2024 financial statements for MDH Franchisor LLC (MDH Franchisor) show a net loss of over $57,000 and a negative net worth (Member's Deficit) of over $47,000. Additionally, its revenue is heavily dependent on initial franchise fees rather than ongoing royalties. This financial weakness in a new franchisor could potentially impact its ability to provide long-term support, invest in the system, or fulfill its obligations to you, presenting a significant risk to your investment.
Potential Mitigations
- A franchise accountant should thoroughly analyze the franchisor's financial statements, including footnotes and revenue sources, to assess its long-term viability.
- In discussions with the franchisor, your business advisor can help you inquire about their plans for achieving profitability and funding future support obligations.
- Your attorney should verify if any financial performance bonds or fee deferrals have been required by state regulators, as noted in the California addendum.
High Franchisee Turnover
Low Risk
Explanation
This risk was not identified. As a new franchisor that only began selling franchises in 2024, there is no history of franchisee terminations, non-renewals, or other cessations to report in Item 20. While this means high turnover is not a current issue, the lack of a track record is a risk in itself, making it difficult to assess franchisee satisfaction or the long-term viability of the business model. Your due diligence is therefore more critical.
Potential Mitigations
- It is important to have your business advisor help you conduct thorough due diligence on the franchisor's business model and support systems.
- Speaking with the very first franchisees listed in the FDD can provide early insights into the franchisor relationship.
- An accountant should review the franchisor's capitalization to assess if it has sufficient funds to support the system as it grows.
Rapid System Growth
Medium Risk
Explanation
Item 20 data indicates the system is in a very early and rapid growth phase, with 7 franchise agreements signed in its first year of operation but only one franchised unit open. While growth can be positive, rapid expansion by a new, financially unprofitable franchisor can strain its resources. There is a risk that support systems, training, and quality control may not keep pace with the number of new franchisees, potentially affecting the assistance you receive.
Potential Mitigations
- Your business advisor can help you ask the franchisor detailed questions about their staffing and infrastructure plans to support this rapid growth.
- When speaking with the earliest franchisees, inquire specifically about the quality and timeliness of the support they are currently receiving.
- Having an accountant analyze the franchisor's cash flow and working capital is important to assess if they can fund the necessary support infrastructure.
New/Unproven Franchise System
High Risk
Explanation
The franchisor explicitly discloses in the "Special Risks" section that it has a "Short Operating History." MDH Franchisor was formed in late 2023 and began franchising in 2024. The system is new and its business model is largely unproven in a franchise context, with only one franchised outlet open as of the end of 2024. This lack of a track record presents a higher-than-average risk regarding the concept's long-term viability and the franchisor's ability to support you.
Potential Mitigations
- A business advisor should help you perform extensive due diligence on the backgrounds of the management team, focusing on their experience in both healthcare and franchising.
- Engaging an accountant to scrutinize the financials of the single affiliate-owned location in Item 19 can provide some performance insight, though it may not be representative.
- Your attorney might be able to negotiate more franchisee-favorable terms to help offset the risks associated with investing in an unproven system.
Possible Fad Business
Medium Risk
Explanation
The business operates in the health and wellness sector, specifically focusing on Hyperbaric Oxygen Therapy (HBOT). While this is a legitimate medical treatment for certain conditions, its application in a retail franchise model for wellness could be subject to shifting consumer trends and evolving medical regulations. A prospective franchisee should consider whether the demand is sustainable long-term or if it is tied to current wellness fads, which could impact the business's viability after your initial investment.
Potential Mitigations
- Engaging a business advisor to research the long-term market trends for wellness-based HBOT services is essential.
- You should ask the franchisor about its plans for research, development, and service innovation to adapt to changing consumer demands and medical standards.
- Your financial advisor can help you model the financial risks if consumer interest in this specific wellness trend were to decline.
Inexperienced Management
Medium Risk
Explanation
Item 2 shows that while some members of the management team have extensive experience in their respective fields (medicine, finance), their direct experience in managing or operating a franchise system appears limited. The CEO's primary background is in operations and construction management for another wellness franchise, but not at an executive franchising leadership level. This lack of deep franchising experience at the top could present risks related to the development of support systems, marketing programs, and franchisee relations.
Potential Mitigations
- A thorough review of the entire management team's franchising experience with your business advisor is important.
- Speaking with the first few franchisees is critical to gauge the quality of the initial support and training provided.
- It may be prudent to ask the franchisor if they have retained experienced franchise consultants to guide their system development.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD. Item 1 does not indicate that the franchisor is owned by a private equity firm. This can be a positive, as it may suggest a focus on the long-term health of the brand rather than prioritizing a short-term exit strategy. However, you should remain aware that the franchisor has the right to sell the system in the future, which could introduce this risk later in your franchise term.
Potential Mitigations
- Your attorney should confirm the ownership structure of the franchisor and its parent company, MD Hyperbaric Holding Inc.
- Understanding the franchisor's long-term vision for the company during discussions can provide insight into their goals.
- A business advisor can help you research the background of the principals to assess their investment philosophy.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The franchisor, MDH Franchisor LLC, is a wholly-owned subsidiary of its parent, MD Hyperbaric Holding Inc. The franchisor itself is newly formed and has negative net worth. However, the FDD does not include financial statements for the parent company, nor does it state that the parent guarantees the franchisor's obligations. Without the parent's financials or a guarantee, it is difficult to assess the overall financial strength and backing of the franchise system you would be joining.
Potential Mitigations
- Your accountant must review the franchisor's financials in light of its subsidiary status and lack of a parent guarantee.
- It is advisable for your attorney to inquire whether the parent company would be willing to provide a performance guarantee.
- Your business advisor can help you assess the operational history of the affiliated companies mentioned in Item 1 to gauge the experience of the overall organization.
Predecessor History Issues
Low Risk
Explanation
This risk does not appear to be present. Item 1 indicates that the franchisor, MDH Franchisor LLC, is a new entity and does not list any predecessors from which it acquired the business. The business concept appears to have been developed within the same group of affiliated companies. Therefore, there are no hidden historical challenges from a predecessor to be concerned about. The primary risk stems from the newness of the franchisor itself, which is addressed in other risk items.
Potential Mitigations
- Verifying the corporate history with your attorney is a prudent step in due diligence.
- Your business advisor can help research the history of the affiliated companies mentioned in Item 1 for additional context.
- Focusing due diligence on the current management team and the performance of its affiliate-operated location is key, as there is no predecessor history.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified. Item 3 states, "No litigation is required to be disclosed in this Item." This indicates that the franchisor, its parent, and its management have not been involved in the types of legal or administrative proceedings that the FTC considers material for disclosure. This is a positive indicator, especially for a new franchise system. However, this could change in the future as the system grows and interacts with more franchisees.
Potential Mitigations
- An attorney can perform an independent public records search to verify the absence of litigation history.
- It is still wise to ask current franchisees about any disputes they may be aware of, even if not formal litigation.
- Your attorney should review the dispute resolution clauses in the Franchise Agreement to understand how future conflicts would be handled.
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.
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