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How much does National Property Inspections cost?
Initial Investment Range
$41,000 - $54,950
Franchise Fee
$34,900
As a National Property Inspections franchisee, you will provide residential and commercial inspection services to prospective real estate buyers, lenders, insurance companies and other interested parties.
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National Property Inspections May 28, 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 audited financial statements for National Property Inspections, Inc. (NPI) show a significant net loss of $513,374 for the fiscal year ending March 31, 2024, and another net loss of $108,883 for the nine months ending December 31, 2024. This trend of operating losses, combined with a very low stockholder's equity of $93,299, may indicate financial weakness. This could potentially affect NPI’s ability to support you and grow the brand.
Potential Mitigations
- Your accountant must conduct a detailed review of the audited financial statements, including all footnotes and revenue versus profitability trends.
- A discussion with your business advisor is needed to assess whether the franchisor has sufficient capital to fund its operations and support franchisees.
- Ask the franchisor to explain the reasons for the recent losses and their strategy for returning to profitability.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a notable rate of franchisee turnover. In fiscal year 2023, 22 franchisees exited the system (10 terminations, 9 non-renewals, 3 ceased operations) against a starting base of 214 units, a turnover rate of over 10%. In 2024, another 14 franchisees exited. This pattern of terminations and non-renewals could suggest potential issues with the business model, franchisee profitability, or the franchisor-franchisee relationship, warranting further investigation.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Item 20 to understand their reasons for leaving the system.
- Your business advisor can help you analyze the turnover rates over the last three years and compare them to available industry benchmarks.
- When speaking with the franchisor, you should ask for a detailed explanation of the circumstances surrounding the high number of terminations and non-renewals.
Rapid System Growth
Low Risk
Explanation
The risk of a franchisor's support systems being strained by overly rapid growth was not identified. The number of outlets has seen a net decrease over the last two fiscal years, suggesting the system is shrinking rather than growing rapidly. Therefore, the risk of support infrastructure being outpaced by new unit openings appears low at this time.
Potential Mitigations
- It is still wise to ask current franchisees about the quality and responsiveness of the franchisor's support systems.
- A conversation with your business advisor can help you evaluate if the franchisor's current support structure is adequate for its existing franchisees.
- Your accountant should review the franchisor's financial statements to ensure they are investing sufficiently in franchisee support, even during periods of slow growth.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified. NPI has been offering franchises since 1987, indicating it is a mature and established system, not a new or unproven one. The business model has a long operational history, which reduces risks associated with unproven concepts.
Potential Mitigations
- Even with a mature system, it's beneficial to ask the franchisor about recent innovations and how they plan to stay competitive.
- A business advisor can help you analyze how the brand has evolved over time and its position in the current market.
- Legal counsel should still review the entire agreement, as even established systems can have unfavorable terms for franchisees.
Possible Fad Business
Low Risk
Explanation
This risk was not identified. The home and commercial property inspection industry serves a fundamental need in real estate transactions. This indicates a sustained market demand that is not dependent on short-lived trends, suggesting the business model is not a fad.
Potential Mitigations
- Engaging a business advisor to research the long-term outlook for the property inspection industry in your local market is a prudent step.
- You should still ask the franchisor about how they adapt to technological changes and shifts in the real estate market.
- An attorney can help you understand any contractual obligations that would remain even if market demand were to decline unexpectedly.
Inexperienced Management
Medium Risk
Explanation
Item 1 shows a recent acquisition (February 2024) and Item 2 lists a new CEO (January 2025) and several new directors. While the individuals may have executive experience elsewhere, their lack of a long tenure managing this specific NPI franchise system presents a risk. New leadership could introduce changes in strategy, support, or operational focus that may or may not benefit you.
Potential Mitigations
- A discussion with your business advisor should focus on researching the new parent company and the track record of the new executive team.
- It is important to ask the franchisor about their vision for the company and any planned changes to the system.
- Contacting franchisees to gauge their opinion on the new management and any changes since the acquisition is a critical due diligence step.
Private Equity Ownership
Medium Risk
Explanation
NPI was acquired in February 2024, and its ultimate parent is COGL, which appears to be part of a large group of companies. The FDD does not explicitly state that the ultimate parent is a private equity firm, but the complex corporate structure involving multiple holding companies could be indicative of an investment-focused ownership. Such ownership can sometimes prioritize short-term returns over the long-term health of franchisees.
Potential Mitigations
- A business advisor can help you research the ultimate parent company, COGL, to understand its business model and history with other companies.
- It's crucial to ask current franchisees about any changes in fees, support, or operational pressure since the 2024 acquisition.
- Your attorney should review the assignment clauses in the Franchise Agreement to understand how easily the system can be sold again.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. The FDD in Item 1 provides a detailed disclosure of the parent companies up to the ultimate parent, COGL. While the parent's financial statements are not included, there is no indication that the parent guarantees NPI's obligations, which is a common trigger for requiring them. The disclosure of the corporate structure appears to be transparent.
Potential Mitigations
- An accountant can confirm if, based on the FDD, the parent company's financials should have been included under franchise law.
- It is still prudent to have legal counsel review the corporate structure and any guarantees that might exist.
- You should ask the franchisor about the financial relationship and support provided by the parent company.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD. Item 1 does not mention any predecessors to NPI, and the company is shown to have operated under the same name since 1987. This indicates a consistent operational history without an apparent legacy of issues from a prior entity.
Potential Mitigations
- During discussions with long-term franchisees, it is still a good practice to inquire about the company's history to confirm the FDD's accuracy.
- A business advisor can assist in performing public record searches to verify the company's historical information.
- Your attorney can confirm that the disclosures in Item 1 appear complete regarding the company's lineage.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified. Item 3 of the FDD states, 'There is no litigation to be disclosed in this item.' This indicates a lack of recent or ongoing material lawsuits involving the franchisor, its predecessors, or key personnel, which is a positive sign regarding the franchisor's legal history and relationships with franchisees.
Potential Mitigations
- It is still advisable to perform independent online searches for any informal complaints or legal issues not meeting the technical threshold for FDD disclosure.
- Asking current and former franchisees about their experiences and whether they are aware of any disputes is a valuable due diligence step.
- An attorney can confirm the scope of what is required to be disclosed in Item 3 to ensure you understand what might be omitted.
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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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
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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
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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
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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
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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