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PlumbingPro

SystemForward America, LLC
https://www.callplumbingpro.com
1-337-233-6211
1018 Harding Street, Suite 101, Lafayette, Louisiana 70503

Initial Investment Range

$380,675 to $393,725

Franchise Fee

$147,500

PlumbingPro® franchises provide commercial and residential Plumbing services and repairs.

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PlumbingPro June 15, 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 franchisor's audited 2023 financial statements show a negative stockholders' equity of ($1,885,976), meaning liabilities exceed assets. This is a significant indicator of financial instability and is explicitly highlighted by the franchisor as a 'Special Risk'. This condition could potentially impact their ability to provide ongoing support, invest in the brand, or meet their obligations to you, posing a substantial risk to your investment.

Potential Mitigations

  • Your accountant must conduct a thorough analysis of the franchisor's complete financial statements, including footnotes, to assess their viability.
  • Discuss the implications of the negative equity and any associated state-mandated financial assurances, like bonds or escrow, with your franchise attorney.
  • Engaging a business advisor to evaluate the franchisor's business plan for returning to solvency is a critical step.
Citations: Item 4, Item 21, Exhibit G, Special Risks

High Franchisee Turnover

Low Risk

Explanation

This risk was not identified as the FDD's Item 20 tables show zero franchised outlets operating in the last three years, meaning no turnover data exists. However, Exhibit I contradicts this by listing one franchisee who left the system in 2023. The absence of a franchisee population means there is no track record of success or failure to analyze, which is a risk inherent in a new system. This contradiction should be investigated.

Potential Mitigations

  • Your attorney should demand a clear, written explanation from the franchisor regarding the contradiction between Item 20 and Exhibit I.
  • A business advisor can help you assess the heightened risks of joining a system with no operating history or franchisee validation.
  • Discussing the lack of historical franchisee data and its impact on your financial projections with an accountant is crucial.
Citations: Item 20, Exhibit I

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. The data in Item 20 shows that the system has not yet begun to grow, as there were zero franchised outlets reported at the start and end of the last three years. Rapid, unsupported growth can strain a franchisor's ability to provide adequate training and support, but this is not a current risk for this system.

Potential Mitigations

  • A business advisor can help you evaluate the franchisor's strategic plan for future growth and the infrastructure in place to support it.
  • It is prudent to have your attorney review the franchisor's obligations for support as the system expands.
  • Your accountant can assess if the franchisor's financial projections align with sustainable growth plans.
Citations: Not applicable

New/Unproven Franchise System

High Risk

Explanation

The franchisor explicitly flags 'Short Operating History' as a 'Special Risk'. This is confirmed by Item 20, which shows zero PlumbingPro franchisees have operated in the last three years, despite franchising beginning in 2018. Investing in an unproven system with no operating franchisees carries a significantly higher risk of business model flaws, inadequate support, and minimal brand recognition, as there is no track record of franchisee success to evaluate.

Potential Mitigations

  • Due to the lack of franchisee validation, a business advisor should help you conduct extensive due diligence on the viability of the business model.
  • Your accountant must help you create highly conservative financial projections, as there is no historical franchisee performance data.
  • Seeking more favorable terms, such as reduced fees or enhanced support commitments, with your attorney is advisable to offset the increased risk.
Citations: Item 1, Item 20, Special Risks

Possible Fad Business

Low Risk

Explanation

This risk was not identified. The franchise offers plumbing services, which is a fundamental and established industry with consistent consumer demand. It is not tied to a fleeting trend or novelty product, suggesting that the core business concept is sustainable and not a short-term fad. This provides a stable underlying market for your potential business.

Potential Mitigations

  • A business advisor can help you research the long-term outlook for the plumbing services industry in your local market.
  • It is wise to assess local competition and market saturation with a marketing professional.
  • Review the franchisor’s plans for innovation and adaptation with your attorney to ensure long-term relevance.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

The franchisor entity, SystemForward America, LLC (SFA LLC), has experience franchising other brands since 2003. However, the PlumbingPro system itself is new and has no operating franchisees according to Item 20. This indicates a lack of experience in supporting this specific business model. The 'Special Risk' disclosure regarding 'Previous Experience Required' suggests you must bring your own expertise, as their training may be insufficient, reflecting their limited operational history with this brand.

Potential Mitigations

  • A thorough review of the management team's direct experience in the plumbing industry, not just franchising, with a business advisor is crucial.
  • Your attorney should clarify the extent of support you can expect for the PlumbingPro system specifically.
  • Understanding what knowledge you must provide yourself is essential; have an industry expert review the operational plan.
Citations: Item 1, Item 2, Item 11, Item 20

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. There is no disclosure in Item 1 or elsewhere that suggests the franchisor is owned or controlled by a private equity firm or similar investment group. Such ownership can sometimes lead to a focus on short-term profits over the long-term health of the franchise system. The ownership structure appears to be a standard limited liability company.

Potential Mitigations

  • Your attorney can verify the franchisor's corporate ownership structure through public records to confirm the absence of PE ownership.
  • A business advisor can help you understand the potential impacts if the franchisor were to be sold in the future.
  • Asking the franchisor about their long-term plans for the company can provide insight into their operational philosophy.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. Item 1 of the FDD does not disclose the existence of any parent company for the franchisor, SystemForward America, LLC. Therefore, the issue of a parent company's financial statements being required but not provided does not apply. You must rely solely on the financial statements of the franchisor entity itself for your analysis.

Potential Mitigations

  • An accountant should review the provided franchisor financials to ensure they are complete and prepared according to accounting standards.
  • Your attorney can confirm the corporate structure to ensure there are no undisclosed parent entities with controlling interests.
  • A business advisor can help assess the risks associated with a standalone franchisor without the backing of a larger parent.
Citations: Not applicable

Predecessor History Issues

Medium Risk

Explanation

The franchisor discloses two predecessors in Item 1, The LSR Group and Sig 5 D. These entities were involved in the Pop-A-Lock franchise system, not PlumbingPro. While their history is part of the franchisor's corporate lineage, the disclosure does not indicate any negative history such as litigation or bankruptcy related to them. The risk here is moderate, as their experience is in a different, though related, service industry.

Potential Mitigations

  • A discussion with your attorney can help you understand the legal relationship and transfer of assets from these predecessors.
  • Engaging a business advisor to research the public reputation of the predecessor brands could provide useful context.
  • You should ask the franchisor how the experience from these predecessor systems informs the new PlumbingPro model.
Citations: Item 1

Pattern of Litigation

Medium Risk

Explanation

Item 3 discloses one recent franchisor-initiated arbitration against a franchisee to enforce covenants and collect royalties. While not a broad pattern, it shows a willingness to litigate. More concerning is the contradiction between Item 20 showing zero franchisees and Exhibit I listing a franchisee who left in 2023. This discrepancy raises questions about disclosure integrity, which is a more significant risk than the single lawsuit itself.

Potential Mitigations

  • Your attorney must review the details of the disclosed litigation and the significant contradiction regarding the former franchisee.
  • It is wise to ask the franchisor for a written explanation of the discrepancy between the Item 20 tables and Exhibit I.
  • A discussion with your business advisor should address the overall health of franchisor-franchisee relationships given these facts.
Citations: Item 3, Exhibit I
2

Disclosure & Representation Risks

Total: 15
10
0
5

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
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.

4

Legal & Contract Risks

Total: 16
6
4
6

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
0
2
3

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
4
3
3

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
2
2
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.

8

Operational Control Risks

Total: 12
6
4
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.

9

Term & Exit Risks

Total: 18
9
6
3

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.