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Pet Evolution
How much does Pet Evolution cost?
Initial Investment Range
$142,500 to $896,000
Franchise Fee
$78,000 to $650,000
Pet Evolution Franchising LLC is offering franchises for the operation of a regional development business promoting the sale of Pet Evolution unit franchises and providing certain support services to these franchisees.
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Pet Evolution May 23, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 22, 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
Pet Evolution Franchising LLC's (Pet Evolution) audited financial statements reveal significant instability. As of year-end 2024, the company had a members' deficit (negative net worth) of over $4.3 million and has reported substantial net losses for the past three years. This financial weakness is so concerning that multiple states, including California and Virginia, have required the franchisor to defer collecting initial fees from you, which may impact its ability to provide support.
Potential Mitigations
- Your accountant must conduct a thorough review of the audited financials, including the significant negative equity and history of losses.
- A discussion with your financial advisor is essential to assess if the company can sustain operations and support you without relying on new franchise sales.
- It is crucial for your attorney to explain the implications of the fee deferrals mandated by state regulators.
High Franchisee Turnover
High Risk
Explanation
While Item 20 tables for unit franchises show low turnover, Exhibit D reveals a more concerning situation for regional developers like you. A significant number of regional developers are listed as leaving the system in 2025. Additionally, the franchisee currently suing the franchisor for fraud was terminated earlier in the year. This suggests a high level of dissatisfaction and potential instability within the regional developer network you would be joining.
Potential Mitigations
- Your attorney should help you contact the regional developers listed in Exhibit D, especially those noted as leaving the system, to understand their experiences.
- Discussing the reasons for this high developer turnover with a business advisor is critical to evaluate the viability of the opportunity.
- You should ask the franchisor to provide a clear explanation for this developer exodus.
Rapid System Growth
Medium Risk
Explanation
The system experienced rapid growth in unit franchises from 2022 to 2023. This expansion, combined with the franchisor's financial losses and inexperience in the regional developer model, may have strained its resources. The subsequent exodus of numerous regional developers in 2025, as noted in Exhibit D, could be a result of support systems failing to keep pace with growth, presenting a risk to the remaining network.
Potential Mitigations
- A business advisor can help you assess whether the franchisor's support infrastructure is adequate for its current system size.
- It is prudent to ask current and former regional developers about the quality and consistency of franchisor support over time.
- Your accountant should review the financial statements to determine if the company is investing sufficiently in support infrastructure.
New/Unproven Franchise System
High Risk
Explanation
Pet Evolution is a very new franchisor, formed in January 2021. Critically, Item 1 states, "We have never operated a Pet Evolution regional development business." This means you would be buying a business model that the franchisor itself has no direct operational experience in running. This lack of a proven track record for the specific opportunity offered, combined with its weak financial state, presents a very high level of risk.
Potential Mitigations
- You and your business advisor should carefully scrutinize the management team's prior experience in supporting a regional developer network.
- Speaking with the few remaining regional developers about the franchisor's actual capabilities is essential.
- Your attorney might be able to negotiate for more franchisee-favorable terms to compensate for this elevated risk.
Possible Fad Business
Low Risk
Explanation
The business operates in the pet food, grooming, and self-wash service industry. This market is well-established and generally not considered a short-term fad. The concept appears to be based on sustained consumer demand for pet-related products and services rather than a fleeting trend. Therefore, this specific risk was not identified as a primary concern in the documents.
Potential Mitigations
- Engage a business advisor to research local market competition and long-term demand for these specific pet services in your area.
- It is wise to review the franchisor's plans for future innovation and adaptation to stay competitive with your business advisor.
- An accountant can help you model the financial sustainability of the business under various economic conditions.
Inexperienced Management
High Risk
Explanation
A significant risk exists as Pet Evolution states in Item 1 that it has never operated a regional development business. While some executives have prior franchise sales experience, the franchisor entity itself lacks direct, hands-on experience in managing the specific business model it is selling to you. This could impact the quality of guidance, tools, and support provided for your role as a regional developer, which is distinct from operating a unit store.
Potential Mitigations
- A thorough investigation with your business advisor into the management team's specific history with two-tier franchise systems is warranted.
- Inquiring with the remaining regional developers about the effectiveness of the support and systems provided is crucial.
- Your attorney should ask the franchisor how they compensate for this direct lack of experience, for instance, through specialized consultants.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD Package. Ownership by a private equity firm can sometimes lead to a focus on short-term profits over the long-term health of the franchise system. This may manifest as reduced franchisee support, increased fees, or pressure to use affiliated vendors to maximize returns for the fund's investors before a planned exit.
Potential Mitigations
- Your attorney can help you research the franchisor's ownership structure to confirm if any private equity firms are involved.
- If PE ownership exists, a business advisor can help investigate the firm's track record with other franchise brands.
- It's valuable to discuss with your attorney any contractual clauses that allow the franchisor to easily sell the entire system.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD Package. If a franchisor is a subsidiary of a larger parent company, a prospective franchisee's ability to assess risk can be limited if the parent company's financial information is not also provided, especially if the parent guarantees the franchisor's performance or is a critical supplier. This FDD does not indicate the existence of a parent company.
Potential Mitigations
- Your attorney can perform a corporate search to confirm the franchisor's ownership and identify any parent companies.
- If a parent exists, an accountant should determine if its financial statements are necessary for a complete risk assessment.
- Ensure any performance guarantees from a parent company are reviewed by your legal counsel for enforceability.
Predecessor History Issues
Medium Risk
Explanation
The franchisor discloses a predecessor, Pet Evolution, LLC, from which it acquired its intellectual property in 2021. The audited financials in Item 21 reveal that a significant accounting error from 2022 had to be retroactively corrected. This error in properly recording revenue so early in the company's history after the transition from the predecessor could indicate operational or financial management challenges inherited or created during that period, posing a risk to you.
Potential Mitigations
- An experienced franchise accountant should review the details of the predecessor and the nature of the accounting restatement.
- Your attorney can help you question the franchisor about the transition process and the reasons for the past accounting errors.
- In discussions with your business advisor, consider the stability and competence demonstrated since the transition from the predecessor.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses ongoing litigation brought by a former regional developer against Pet Evolution. The lawsuit includes serious allegations of misrepresentation, fraud, and breach of contract related to sales volume, earnings, and required investments. While the franchisor denies the allegations, the existence of such a lawsuit from a peer franchisee is a major red flag that suggests potential systemic issues with the franchisor's sales process and representations.
Potential Mitigations
- A thorough review of the lawsuit's specific allegations and current status with your attorney is critical.
- Your attorney can advise on the potential impact this litigation could have on the franchisor's financial stability and reputation.
- This situation makes it imperative to conduct extremely thorough due diligence with other current and former developers.
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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