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How much does Play Street Museum cost?
Initial Investment Range
$448,907 to $698,595
Franchise Fee
$240,807 to $317,595
Play Street Museum locations are clean, upscale and educationally-focused children’s museums, targeted primarily to children eight and under, to provide entertainment in a stimulating learning environment of creative and dramatic play.
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Play Street Museum October 25, 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor’s audited financial statements in Item 21 reveal a significant and worsening financial condition. For fiscal year 2024, PSM Worldwide, LLC (PSM) had a members' deficit over $1.1 million and a net loss over $515,000, continuing a trend of large annual losses. This is explicitly highlighted as a special risk in the FDD, raising potential questions about the company's long-term ability to provide support and meet its obligations.
Potential Mitigations
- Your accountant must conduct a thorough review of the franchisor's audited financial statements, including all footnotes and year-over-year trends.
- A frank discussion with your business advisor is needed to assess the viability of investing in a franchise with such a precarious financial position.
- Consult with your attorney regarding the protections offered by state-mandated fee deferrals mentioned in the addenda.
High Franchisee Turnover
Low Risk
Explanation
This specific risk was not identified in the FDD. Item 20 data shows a growing system with no terminations or non-renewals over the past three years. Low franchisee turnover can be a positive indicator of system health and franchisee satisfaction. Prospective franchisees should still contact former franchisees listed to understand their reasons for leaving.
Potential Mitigations
- It is still crucial to contact a representative sample of former franchisees listed in Item 20 to verify the reasons for their departure; your attorney can help frame questions.
- Ask your accountant to analyze the raw data in Item 20 tables to calculate the effective annual turnover rate for each of the past three years.
- Discuss the stability of the franchisee base with your business advisor to assess the long-term health of the system.
Rapid System Growth
High Risk
Explanation
Item 20 data reveals very rapid growth, with the number of franchised outlets increasing by more than 50% in the last fiscal year and another 14 units projected to open. When combined with the franchisor's weak financial condition, this pace of expansion may strain its ability to provide adequate training, site selection, and ongoing operational support to all new and existing franchisees.
Potential Mitigations
- You should question the franchisor about their specific plans and resources allocated to scale support infrastructure, a topic to review with your business advisor.
- Interviewing a range of franchisees, both new and established, about the current quality and responsiveness of franchisor support is essential.
- Have your accountant assess whether the franchisor's financial statements demonstrate sufficient reinvestment in support systems to match growth.
New/Unproven Franchise System
High Risk
Explanation
The franchisor began offering franchises in 2016 and is still in a high-growth phase. While the concept has been operating since 2014 via an affiliate, the franchise system itself is relatively young. This, combined with the franchisor's history of significant operating losses and negative members' deficit disclosed in Item 21, presents a risk as the system's long-term financial viability and support capacity may not be fully proven.
Potential Mitigations
- Extensive due diligence on the founders' and management's direct experience in the industry and in franchising should be conducted with your business advisor.
- Speaking with the earliest franchisees about their experience with the system's development and support is critical.
- Your accountant should help you assess the risks of investing with a financially unproven franchisor, despite their operational experience.
Possible Fad Business
Low Risk
Explanation
The business model, focused on children's 'edutainment,' does not appear to be based on a short-term fad. This type of service generally has a sustained market. However, any business catering to discretionary spending can be sensitive to economic cycles. Assessing local demand and competition is crucial for long-term viability.
Potential Mitigations
- A business advisor can help you research the long-term market demand for this type of service in your specific area.
- Evaluating the business's resilience to economic downturns and changing consumer trends is a prudent step to take with your financial advisor.
- Your attorney can review the franchise agreement for flexibility in adapting services to future market changes.
Inexperienced Management
Low Risk
Explanation
This risk was not identified. Item 2 indicates that the key founders and executives have been involved with the Play Street Museum concept since 2015-2016, suggesting they possess significant experience in this specific business. Newer operational hires appear to bring relevant franchise experience from other systems.
Potential Mitigations
- It is still wise to verify management's reputation and effectiveness by speaking with current and former franchisees.
- A business advisor can help you assess if the management team's skills align with the company's rapid growth strategy.
- Your attorney should confirm that key executives are secured by employment contracts to ensure management stability.
Private Equity Ownership
Low Risk
Explanation
This specific risk was not identified in the FDD. Item 1 and the financial statements in Item 21 do not indicate that the franchisor is owned or controlled by a private equity firm. The business appears to be privately held by its founding members.
Potential Mitigations
- It's still prudent to ask the franchisor about any potential plans for a future sale of the company, which your attorney can help phrase.
- A business advisor can help you research the ownership structure of the franchisor and its affiliates.
- Reviewing the assignment clauses in the Franchise Agreement with your attorney will clarify what happens if the franchisor is sold.
Non-Disclosure of Parent Company
High Risk
Explanation
The FDD discloses several critical affiliate companies that own the trademarks and act as required suppliers. However, Item 21 only provides financial statements for the franchisor entity, which has a significant members' deficit. The lack of financial statements for these crucial affiliates makes it impossible to assess the overall financial health and stability of the entire enterprise you will depend on.
Potential Mitigations
- Your accountant must help you assess the significant risk posed by the lack of financial transparency from these critical affiliates.
- Asking the franchisor to voluntarily provide financial statements for its parent and affiliated entities is a necessary step your attorney can take.
- A business advisor can assist in evaluating how the interdependent corporate structure could impact your operations and supply chain.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified. Item 1 of the FDD does not disclose any predecessor entities from which PSM acquired the business system. The operational history appears to have begun with the current founders and their affiliated companies.
Potential Mitigations
- You can conduct independent online research to verify the business's history with the help of a business advisor.
- Asking early franchisees about the history of the company is a good due diligence step.
- Your attorney can perform public records searches to confirm the corporate history of the franchisor and its affiliates.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified. Item 3 of the FDD states that there is no litigation that requires disclosure. This suggests the absence of a pattern of significant legal disputes with franchisees or regulatory bodies, which is a positive indicator.
Potential Mitigations
- It is still a good practice to ask current and former franchisees about any informal disputes they may have had with the franchisor.
- Your attorney can conduct a public records search for litigation involving the franchisor that may not have met the threshold for FDD disclosure.
- Understanding the dispute resolution process outlined in the Franchise Agreement with your attorney is important in case of future disagreements.
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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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.