Novus
Initial Investment Range
$69,500 to $284,590
Franchise Fee
$50,700 to $77,910
The franchise offered is for the operation of a retail or mobile business that provides the public with high quality automotive glass, commercial and residential glass repair and replacement services, and certain other automotive after-market products and services under the name Novus.
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Novus March 29, 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 2023 audited financial statements show current liabilities exceeded current assets, indicating potential short-term liquidity issues. Furthermore, the Maryland and Minnesota state addenda required NOVUS Franchising 2 LLC (Novus LLC) to obtain a financial assurance, deferring your initial fees until pre-opening obligations are met. This explicitly signals that regulators had concerns about the franchisor's financial condition, which could impact its ability to provide support or fulfill its obligations.
Potential Mitigations
- Your accountant must review all financial statements, including footnotes and the auditor's opinion, to assess the franchisor's financial health and dependency on franchise fees.
- Understanding the specific protections afforded by the state-mandated financial assurance requires consultation with your franchise attorney.
- A business advisor can help you evaluate if the franchisor's resources are sufficient to support the system and its growth plans.
High Franchisee Turnover
High Risk
Explanation
Item 20 data for 2023 reveals a significant franchisee churn rate of approximately 19%. There were 28 total exits (9 terminations, 18 non-renewals, 1 ceased operation) from a starting base of 148 franchised units. While turnover slowed in 2024, such a high recent rate of franchisees leaving the system could indicate systemic issues, such as franchisee unprofitability, dissatisfaction with the business model, or inadequate franchisor support, presenting a substantial risk to your investment.
Potential Mitigations
- With your accountant, calculate and analyze the turnover rates from Item 20 tables for the last three years to identify trends.
- It is crucial to contact a significant number of former franchisees listed in Item 20 to understand their reasons for leaving the system.
- Your franchise attorney can help you frame specific questions for the franchisor regarding the high 2023 turnover.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. Item 20 data does not show a pattern of excessively rapid growth that might strain franchisor resources. In fact, the system experienced a net decrease in units in 2023. Rapid growth can be a risk because it may outpace a franchisor's ability to provide adequate training, site selection, and ongoing operational support to its franchisees.
Potential Mitigations
- A business advisor can help evaluate whether the franchisor's support infrastructure is appropriately scaled for its current size and any future growth.
- Engaging with current franchisees provides insight into whether they feel the level of support is adequate.
- An accountant's review of the franchisor's financial statements can offer clues about its investment in support staff and systems.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor and its predecessors have been in operation since 1993, as stated in Item 1. Therefore, this is not a new or unproven system. A new system carries higher risk due to a lack of a long-term track record, underdeveloped support systems, and minimal brand recognition, which can impact a franchisee's potential for success.
Potential Mitigations
- When considering a new franchise system, it is vital to have a business advisor help you conduct extra due diligence on the founders' experience and the business model's viability.
- An accountant should be consulted to scrutinize the financials of a new franchisor for adequate capitalization.
- A franchise attorney may be able to negotiate more favorable terms to compensate for the higher risk of joining an unproven system.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The automotive glass repair and replacement industry is a long-established service sector with consistent consumer demand. A fad business is tied to a potentially short-lived trend, creating risk that consumer interest will decline, leaving you with a long-term contract for an obsolete business. This does not appear to be the case here.
Potential Mitigations
- A business advisor can help you research the long-term market demand and historical resilience of the industry before investing.
- Examining the franchisor's plans for innovation and adaptation in Item 11 is important for any business.
- An accountant can help you model the financial impact of potential shifts in consumer trends on your projected revenues.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 discloses that the key executives have extensive experience in the franchise and automotive service industries, many having served in leadership roles with the franchisor and its parent companies for several years. Inexperienced management can be a significant risk, as it may lead to poor strategic decisions, weak operational systems, and inadequate franchisee support.
Potential Mitigations
- Before investing, it's wise to have a business advisor help you research the backgrounds of the key management team members listed in Item 2.
- Speaking with current franchisees about their direct experiences with the management team can provide valuable, real-world insights.
- If management is new to franchising, your attorney might inquire if they have retained experienced franchise consultants.
Private Equity Ownership
Medium Risk
Explanation
The franchisor is owned by Mondofix USA LLC, which is part of a larger corporate structure including private equity influence. This can create a focus on short-term investor returns over the long-term health of franchisees. The Franchise Agreement also gives Novus LLC the right to sell or assign the agreement without your consent. This could result in a new owner with different priorities or less capability, creating uncertainty for your business.
Potential Mitigations
- A business advisor can help you research the parent company's reputation and track record with other franchise systems.
- Discussing any changes in support or system direction since the acquisition with current franchisees is a valuable due diligence step.
- Your attorney should explain the implications of the assignment clause and the limited control you have if the system is sold.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 clearly discloses the parent company, Mondofix USA LLC, and the ultimate parent, Mondofix Inc. Item 21 includes the franchisor's audited financial statements. A failure to disclose a parent company or provide its financials when it guarantees the franchisor's obligations can hide significant risks about the true financial stability and backing of the franchise system.
Potential Mitigations
- An attorney should always verify the corporate structure disclosed in Item 1, especially if the franchisor entity appears to be thinly capitalized.
- It is important to have an accountant confirm that if a parent company guarantee is provided, the parent's financials are also included and audited.
- If a parent entity is a key supplier, a business advisor can help assess the potential risks of that dependent relationship.
Predecessor History Issues
Medium Risk
Explanation
Item 1 discloses that the current franchisor acquired the system from predecessors, NFI and TCG, in 2017. Item 3 details past litigation involving predecessor NFI against its franchisees, including franchisee counterclaims alleging fraud and misrepresentation. While these specific cases were concluded, this history is part of the system's legacy and could indicate past issues that may or may not have been fully resolved, presenting a potential risk.
Potential Mitigations
- Your attorney should carefully review the disclosed history of any predecessors in Items 1, 3, and 4.
- In discussions with long-term franchisees, a business advisor can help you inquire about their experiences under the previous ownership.
- Ask the franchisor what specific changes were made to address the issues that may have led to predecessor litigation.
Pattern of Litigation
Medium Risk
Explanation
While Novus LLC itself has no disclosed litigation, its predecessor, NFI, was involved in lawsuits where former franchisees brought counterclaims alleging fraud and violation of the Minnesota Franchise Act. Although NFI ultimately prevailed or settled favorably, a history of such serious allegations within the system's lineage is a risk factor. It suggests that in the past, some franchisees felt they were misled, which warrants careful due diligence on your part.
Potential Mitigations
- A franchise attorney must carefully review all litigation details in Item 3, including the specific allegations and outcomes.
- It's crucial to ask the franchisor to explain the circumstances of any past litigation involving serious allegations like fraud.
- Discussing the business climate and franchisor relationship with a broad set of current franchisees can provide context to past disputes.
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
Unlock Full Risk Analysis
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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
Unlock Full Risk Analysis
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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
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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