Poolwerx
Initial Investment Range
$94,400 to $350,500
Franchise Fee
$67,000 to $160,000
You will establish and operate a vehicle only or vehicle and retail location offering pool maintenance services, pool cleaning, installation and remodel services and retail pool supplies and services under the POOLWERX trademark.
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Poolwerx May 1, 2025 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
Poolwerx Franchise Management LLC (Poolwerx LLC) explicitly warns of its financial condition as a special risk. The audited financial statements in Exhibit B confirm this, showing a significant and growing Member's Deficit of over $4.9 million in 2024 and substantial net losses in recent years. This financial weakness may impact the franchisor's ability to provide support, invest in the system, or fulfill its obligations, posing a significant risk to your investment.
Potential Mitigations
- An experienced franchise accountant must thoroughly review the franchisor's financials, including all footnotes and trends over several years.
- Engaging a business advisor to assess the franchisor’s long-term viability and its ability to support franchisees is critical.
- Your attorney should review any state-mandated financial assurances, such as bonds or fee deferrals, to understand the protections they offer.
High Franchisee Turnover
High Risk
Explanation
The FDD discloses a high franchisee turnover rate as a special risk. Item 20 data reveals a significant number of cessations over the past three years, including 22 terminations in 2023 out of a starting base of 61 franchises. This very high rate of attrition may indicate systemic problems, potential franchisee dissatisfaction, or issues with profitability, representing a critical risk to new investors considering the stability and health of the franchise system.
Potential Mitigations
- It is crucial to contact a significant number of former franchisees from the list in Exhibit E to understand their reasons for leaving.
- Analyzing the multi-year turnover data with your accountant can provide context on system stability.
- Your attorney can help formulate probing questions for both the franchisor and former franchisees about these high churn rates.
Rapid System Growth
Medium Risk
Explanation
Item 20 data shows very rapid growth in 2024, with 42 new outlets opened on a base of 55. When viewed alongside the franchisor's significant net losses and negative net worth detailed in Item 21, this rapid expansion may strain Poolwerx LLC's ability to provide adequate training, site selection assistance, and ongoing operational support to all new and existing franchisees. This could dilute the quality of support for your business.
Potential Mitigations
- Discussing the company's plans for scaling its support infrastructure to match growth is a key conversation to have with your business advisor.
- It is important to interview a range of existing franchisees about the current quality and responsiveness of franchisor support.
- Your accountant should help you analyze whether the franchisor's financials can sustain both current support levels and this rapid expansion.
New/Unproven Franchise System
High Risk
Explanation
While Poolwerx LLC began franchising in 2015, giving it several years of operating history, its financial instability and high franchisee turnover suggest that the business model may not yet be consistently proven for franchisees. The significant losses and high churn could indicate challenges in achieving franchisee profitability or sustainability, which are risks often associated with newer systems. These factors combined may suggest the system has not yet reached a stable, proven state for prospective franchisees.
Potential Mitigations
- Extensive due diligence with your business advisor on the management team's experience in stabilizing franchise systems is warranted.
- Your accountant should help you perform a rigorous analysis of the business model's viability given the franchisor's financial state.
- A thorough discussion with a wide range of current franchisees about their profitability and operational challenges is critical.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A fad business is one tied to a short-lived trend, creating risk for long-term franchisee investment. The pool service and supply industry is well-established and generally tied to home ownership and maintenance cycles rather than fleeting trends. Therefore, the business concept itself does not appear to be a fad, though local market success can vary.
Potential Mitigations
- A business advisor can help you conduct independent market research to confirm sustained local demand for pool services.
- Investigating the long-term presence of competitors in your target market can provide insight into the industry's stability.
- Your financial advisor can help you assess the business model's resilience to local economic fluctuations.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 shows that the key executives have several years of experience with Poolwerx LLC or in related industries. For instance, the CEO and VP of Franchise Operations have been with the company since 2018-2019. Lack of management experience can be a significant risk, but the disclosed leadership appears to have relevant tenure and industry background.
Potential Mitigations
- A business advisor can assist you in further vetting the backgrounds of the key management team members.
- During discussions with existing franchisees, it's beneficial to ask about their direct experiences with the management team's competence and support.
- Understanding the franchisor's strategic vision during discovery day can offer insights into leadership's long-term capabilities.
Private Equity Ownership
Medium Risk
Explanation
Item 1 discloses that the majority owner of Poolwerx Holdings is Norwest Venture Partners XVI, LP, a private equity firm. Private equity ownership can create pressure for short-term returns, which may lead to decisions (e.g., increased fees, reduced support) that don't align with your long-term interests. The Franchise Agreement also gives Poolwerx LLC broad rights to sell or assign the franchise system, which is a common strategy for private equity firms looking to exit their investments.
Potential Mitigations
- Your business advisor can help you research the private equity firm's reputation and track record with other franchise brands.
- Discussing any changes in support or company culture since the private equity acquisition with current franchisees is advisable.
- Your attorney should review the assignment clauses to clarify your rights if the franchise system is sold.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor, Poolwerx LLC, clearly discloses its parent companies up to the ultimate controlling entity, Wells Fargo & Company, in Item 1. Furthermore, audited consolidated financial statements for the franchisor are provided in Item 21 and Exhibit B, as required. There does not appear to be an attempt to obscure the corporate structure or withhold necessary financial information about the direct franchisor entity.
Potential Mitigations
- It is always prudent for your attorney to verify the corporate structure and the identity of any entities providing guarantees.
- Your accountant should confirm that the provided financial statements meet all disclosure requirements under franchise law.
- Understanding the relationships between the franchisor, parent, and affiliate companies can be clarified with your business advisor.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 discloses that an affiliate, Poolwerx Development, purchased assets from a predecessor, Cactus Valley, in 2015. However, this appears to be a historical event at the beginning of the franchisor's operations. The FDD does not indicate any recent predecessor acquisitions or a history of issues being inherited from other companies that would pose a current risk to you.
Potential Mitigations
- An attorney can help you review any predecessor information to ensure it is complete and understand its historical relevance.
- Independent online research, assisted by a business advisor, can sometimes uncover history about a brand's predecessors.
- Asking long-term franchisees about their experiences under any previous ownership can provide valuable context.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 states, 'No litigation is required to be disclosed in this Item.' While a complete lack of litigation can sometimes be a red flag for very large systems, in this context it simply means there is no pending or recent litigation meeting the specific, material disclosure requirements of franchise law (e.g., involving fraud, misrepresentation, or franchise law violations).
Potential Mitigations
- An attorney can perform an independent public records search to verify if there is any litigation that may be relevant but not required for disclosure.
- Asking current and former franchisees about their experiences with disputes, whether they resulted in litigation or not, provides valuable insight.
- A business advisor can help you understand what level of litigation is typical for a franchise system of this size and age.
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
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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