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One Hour Air Conditioning
How much does One Hour Air Conditioning cost?
Initial Investment Range
$84,570 to $286,702
Franchise Fee
$5,000 to $43,000
The franchised business offers residential and light commercial air conditioning and heating services, including indoor air quality services, maintenance, repairs, equipment replacement, and other related services (but excluding industrial and new construction services).
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One Hour Air Conditioning April 4, 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 the guarantor, AB Assetco LLC, show a significant net loss of over $14 million for the 2024 fiscal year. This represents a substantial negative swing from the net income reported in the prior two years. Such a financial downturn could potentially impact the franchisor's ability to provide support, invest in the brand, and fulfill its obligations to you, despite the presence of a guarantee.
Potential Mitigations
- A franchise accountant should thoroughly analyze the complete financial statements, including all footnotes and the statement of cash flows, to assess the company's financial health and stability.
- Discuss the reasons for the recent financial performance and the parent company's strategy for ensuring franchisee support with your business advisor.
- Your attorney should review the terms of the parent guarantee to understand its scope and enforceability.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data from the last three years shows a variable but notable number of franchise territories ceasing operations or not being renewed. In 2023, a total of 19 territories exited through termination, non-renewal, or ceasing operations, representing about 5.4% of the system. While the rate in 2024 was lower at approximately 2.8% (11 territories), the inconsistency and the number of exits in 2023 could suggest underlying issues with franchisee profitability or satisfaction.
Potential Mitigations
- It is crucial 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 three-year trend in exits compared to system growth to gauge overall health.
- Ask your attorney to help you formulate questions for the franchisor regarding the specific circumstances of franchisee turnover.
Rapid System Growth
Medium Risk
Explanation
The franchise system is large and continues to grow, with a net increase of 26 territories in 2024 and 33 in 2023. While growth can enhance brand recognition, this expansion coincides with a period where the guarantor, AB Assetco LLC, experienced a significant financial loss. This combination may create a risk that the franchisor's support infrastructure could become strained, potentially affecting the quality and timeliness of assistance available to you.
Potential Mitigations
- In discussions with current franchisees, inquire specifically about the quality and responsiveness of franchisor support during this growth period.
- Your business advisor can help you question the franchisor about their plans for scaling support services to match franchise growth.
- An accountant should evaluate if the franchisor's financials support the capacity for both expansion and robust franchisee assistance.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified. The One Hour Heating & Air Conditioning system has a long operational history, with its predecessor beginning franchising in 2003. A new or unproven system can be risky because the business model may not be validated, support systems can be underdeveloped, and brand recognition is minimal. This franchise appears to be well-established.
Potential Mitigations
- When evaluating any franchise, it is wise to have your business advisor assess the system's maturity and its track record through various economic cycles.
- An attorney should always review the franchisor's history and predecessor information in Item 1 for a complete picture.
- Speaking with the earliest franchisees in a system can provide your business advisor with valuable insights into its evolution and stability.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD Package. The franchisor operates in the heating, ventilation, and air conditioning (HVAC) services industry. This is a well-established sector providing essential home and commercial services, not a business model based on a fleeting trend or fad, which would present a risk of declining consumer demand over the long term.
Potential Mitigations
- For any business concept, having a business advisor help you conduct independent market research is vital to assess long-term consumer demand.
- Your financial advisor should help you evaluate the business model's resilience to economic shifts and changing consumer tastes.
- It is important to ask an attorney to review how the franchise agreement might restrict your ability to adapt if market trends do change.
Inexperienced Management
Low Risk
Explanation
This risk was not identified. Item 2 of the FDD lists the franchisor's key management personnel. The executive team appears to have extensive experience in the home services industry and in managing large franchise systems, including with the parent company, Authority Brands. Inexperienced leadership can be a significant risk, potentially leading to poor strategic decisions and inadequate franchisee support.
Potential Mitigations
- A thorough review of the executive biographies in Item 2 with your business advisor is a crucial step in due diligence.
- Inquiring with current franchisees about their perception of the management team's competence and vision provides valuable insight.
- Your attorney can help you investigate the public track record of key executives and the parent company.
Private Equity Ownership
High Risk
Explanation
The franchisor's ultimate owner is Apax Partners, a private equity firm, as disclosed in Item 1. This ownership structure may introduce a focus on maximizing short-term returns, which could potentially lead to increased fees, reduced franchisee support, or a sale of the franchise system. The Franchise Agreement gives the franchisor broad rights to sell or assign the agreement, which could change the ownership and operational philosophy you are buying into.
Potential Mitigations
- Engage a business advisor to research the private equity firm's reputation and history with other franchise brands in its portfolio.
- A review of the assignment clause in the Franchise Agreement with your attorney is important to understand your rights if the system is sold.
- Speaking with franchisees who have been in the system through ownership changes can provide valuable perspective.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. The FDD is transparent about its corporate structure, identifying One Hour Air Conditioning Franchising SPE LLC (One Hour SPE) as the franchisor and its parent entities, including the ultimate guarantor AB Assetco LLC. The FDD package includes audited financial statements for both the guarantor and the management company, Authority Brands Inc. Failure to disclose parent companies can obscure financial or operational risks.
Potential Mitigations
- Your attorney should always verify the legal relationship between the franchisor and any parent entities mentioned in Item 1.
- When a parent company guarantees the franchisor's performance, an accountant's review of that parent's financial statements is critical.
- It's important to have your attorney confirm that the entity you are contracting with is the same one described in the FDD.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD Package. The franchisor clearly discloses its predecessor, One Hour Air Conditioning Franchising, L.L.C., in Item 1. Information related to the predecessor, such as litigation history, is included in other relevant FDD items. There is no indication that the franchisor is obscuring or withholding negative information about the system's past, which would be a significant concern.
Potential Mitigations
- Always have your attorney review the predecessor history in Item 1 for any red flags or signs of instability.
- If a predecessor is named, your business advisor should help you research public information about that entity's performance and reputation.
- Asking long-term franchisees about their experience under any previous ownership can provide valuable context during your due diligence.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses several past and pending lawsuits. These include actions brought by the franchisor against franchisees for collections and enforcement of non-compete covenants, as well as a suit brought by a former franchisee for breach of contract. Additionally, a predecessor paid a significant settlement of $560,000 to a former franchisee. This history suggests a potentially litigious relationship between the franchisor and its franchisees, which could be a risk for you.
Potential Mitigations
- A thorough review of the details of all litigation disclosed in Item 3 with your franchise attorney is essential to understand the nature of the disputes.
- Your attorney can help you assess whether the number and type of lawsuits indicate a systemic problem or an overly aggressive enforcement culture.
- Discussing the litigation history with current and former franchisees can provide valuable context beyond the FDD's summary.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
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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