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Nurse Next Door

Nurse Next Door Home Healthcare Services (USA) Inc.
https://www.nursenextdoor.com
1-604-228-4357
Suite 300 – 1788 West 5th Avenue, Vancouver, British Columbia V6J 1P2

Initial Investment Range

$115,115 to $215,600

Franchise Fee

$80,000

You will operate a business, using the Nurse Next Door® business system that provides non-medical care and skilled nursing services to clients with varying needs within their home.

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Nurse Next Door November 29, 2024 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
2
3
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The FDD explicitly warns that the financial condition of Nurse Next Door Home Healthcare Services (USA) Inc. (NND) "calls into question" its ability to provide support. Audited financials in Item 21 confirm this risk, showing very low stockholder's equity relative to liabilities, despite a recent return to profitability in 2024. This thin capitalization could impact NND's ability to support its franchisees, invest in the system, or withstand economic downturns, potentially jeopardizing your investment.

Potential Mitigations

  • A comprehensive review of NND's financial statements, including all footnotes and trends over the past three years, with your accountant is essential.
  • It is vital to discuss the implications of the low stockholder's equity on NND's long-term stability with a qualified financial advisor.
  • Your attorney should verify if any financial assurances, such as a bond or escrow, are required by your state due to the financial condition.
Citations: Special Risks Section, Item 21, FDD Exhibit B

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals an exceptionally high rate of franchisee churn. In fiscal year 2024, 19 outlets (over 25% of the starting total) were terminated, not renewed, or ceased operations. Item 19 also notes that a significant number of territories ceased operating within their first year. This high turnover may indicate systemic issues with franchisee profitability, support, or the business model itself, posing a substantial risk to your potential for success.

Potential Mitigations

  • Engage your accountant to analyze the turnover data in Item 20 to calculate the precise churn rate over the last three years.
  • Speaking with a significant number of former franchisees listed in Exhibit C is critical to understand why they left the system.
  • Your attorney can help you formulate questions for the franchisor regarding the high turnover and assess the adequacy of their explanations.
Citations: Item 19, Item 20 (Tables 1, 3, 5), Special Risks Section

Rapid System Growth

Medium Risk

Explanation

Item 20 data shows the system has been growing, adding a net of 24 franchised outlets in 2023. However, this growth is paired with the franchisor's disclosed weak financial condition in Item 21. Rapid expansion without sufficient capital or robust support infrastructure can strain a franchisor's ability to provide adequate training, site selection assistance, and ongoing operational guidance to all franchisees, potentially diluting the quality of support you receive.

Potential Mitigations

  • Inquire directly with the franchisor about how they have scaled their support staff and systems to manage this growth.
  • A discussion with your business advisor can help assess whether the support infrastructure seems adequate for the system's size.
  • Questioning a mix of new and established franchisees about the quality and responsiveness of the support they currently receive is a crucial step.
Citations: Item 20, Item 21, FDD Exhibit B

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified in the FDD Package. The franchisor, NND, began offering franchises in 2010 and has an established system size, as detailed in Item 20. An unproven system can present higher risks due to untested operating procedures, minimal brand recognition, and a lack of historical performance data for franchisees. It's important to assess a franchisor's track record and experience before investing.

Potential Mitigations

  • For any franchise, it is wise to have your business advisor research the business experience of the key management personnel listed in Item 2.
  • An accountant should review the franchisor's financial statements to assess the company's maturity and stability.
  • Your attorney can advise on negotiating more favorable terms to offset the risks associated with a newer or less established franchise system.
Citations: Item 1, Item 2, Item 20, Item 21

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD Package. The home healthcare industry serves a fundamental and growing need, driven by demographic trends. A business based on a fad or fleeting trend carries the risk that consumer interest will decline, potentially leaving you with a worthless business and ongoing contractual obligations. Evaluating the long-term market demand for a franchise's products or services is a critical part of due diligence.

Potential Mitigations

  • Engage a business advisor to research the long-term market trends and sustainability for the specific industry.
  • An independent assessment of the product or service's resilience to economic shifts and changing consumer tastes is recommended.
  • Your accountant can help you model the financial viability of the business under various market scenarios.
Citations: Item 1

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD Package. The executives listed in Item 2 appear to have significant experience within the company and in relevant industries. Inexperienced management can be a major risk, as it may lead to poor strategic decisions, inadequate franchisee support, and an underdeveloped business system. It is always important to vet the team that will be supporting your investment.

Potential Mitigations

  • A thorough review of the backgrounds of the key personnel listed in Item 2 with your business advisor is always a prudent step.
  • Contacting current franchisees to inquire about their direct experiences with the management team can provide valuable insights.
  • Your attorney can help you assess whether the management team's experience aligns with the specific demands of the franchise system.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD Package. The franchisor does not appear to be owned by a private equity firm. When a franchise is owned by a PE firm, there can be a focus on short-term returns, which may lead to increased fees, reduced support, or a quick resale of the entire system. This can create instability and uncertainty for franchisees.

Potential Mitigations

  • Investigating the ownership structure of any franchisor with your attorney is important to understand who is making key decisions.
  • If a franchisor is PE-owned, a business advisor can help you research the firm's track record with other franchise brands.
  • Consulting with franchisees about any changes in operations or culture since a PE acquisition can offer valuable perspective.
Citations: Not applicable

Non-Disclosure of Parent Company

Medium Risk

Explanation

NND is a wholly-owned subsidiary of Nurse Next Door Corporate, a Canadian company. The FDD includes the parent's name and its significant role, including licensing the intellectual property to NND. However, the audited financials provided in Item 21 are only for the US franchisor (NND), not the Canadian parent. Without the parent's financials, your ability to fully assess the overall financial health and stability of the entire corporate structure is limited.

Potential Mitigations

  • Your accountant should carefully analyze the provided financials and note the absence of the parent company's financial statements.
  • It is important to ask your attorney to inquire why the parent company's financials are not included, given its central role.
  • Discuss with a financial advisor the potential risks associated with a subsidiary whose parent company's financial health is not fully disclosed.
Citations: Item 1, Item 13, Item 21, FDD Exhibit B

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD Package, as Item 1 does not disclose any predecessors for NND. When a franchisor acquires a business from a predecessor, it's crucial to understand the predecessor's history. Hidden issues like past litigation, high franchisee failure rates, or bankruptcy under the previous ownership could carry over and affect the health of the current system.

Potential Mitigations

  • Your attorney should always carefully review Item 1 for any mention of predecessors and investigate their history if they exist.
  • If a predecessor is identified, consulting with a business advisor to research public records and news archives can reveal potential issues.
  • Speaking with long-term franchisees who operated under the predecessor can provide invaluable firsthand information.
Citations: Not applicable

Pattern of Litigation

Medium Risk

Explanation

Item 3 discloses several past legal actions, including regulatory actions and franchisee-initiated arbitrations. Cases include violations of state franchise laws in Maryland and California, and disputes with franchisees alleging breach of contract. While most cases are resolved, this history suggests potential issues with franchise sales practices, disclosure compliance, and franchisee relations. The pattern of litigation, though not overwhelming, warrants careful consideration of the franchisor's operational and legal history.

Potential Mitigations

  • A detailed review of the nature, allegations, and outcomes of all litigation disclosed in Item 3 with your franchise attorney is critical.
  • Your attorney can help you understand the potential implications of the past regulatory actions and franchisee disputes on the franchisor's current practices.
  • Discussing these past legal issues with current and former franchisees may provide additional context and insight.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
8
3
4

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
4
5
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
7
5
4

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
2
2
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.

6

Regulatory & Compliance Risks

Total: 10
6
2
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.

7

Franchisor Support Risks

Total: 4
3
0
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.

8

Operational Control Risks

Total: 12
2
3
7

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
9
7
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: 2
2
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.