ProColor Collision Logo

ProColor Collision

ProColor Collision USA LLC
https://www.procolorusa.com
1-952-944-8000
650 Pelham Boulevard, Suite 100, St. Paul, Minnesota 55114

Initial Investment Range

$38,300 to $3,129,500

Franchise Fee

$10,000 to $20,000

The franchise offered is for the operation of a full-service auto collision repair facility under the “ProColor Collision” service mark that provides certain automotive repair and replacement products and services using Franchisor’s proprietary methods of operation.

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ProColor Collision March 29, 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.

1

Franchisor Stability Risks

Start Here
Total: 10
3
3
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor's audited financial statements reveal a history of significant net losses and a cumulative deficit of over $4.1 million as of year-end 2024. The notes state that the company's ability to continue as a 'going concern' depends on continued financial support from its parent company. This indicates potential financial weakness, which could affect ProColor's ability to support you and grow the brand.

Potential Mitigations

  • A thorough review of the audited financial statements, including all footnotes and the auditor's report, with your accountant is essential.
  • Understanding the nature and reliability of the parent company's financial support commitment should be discussed with your franchise attorney.
  • Developing conservative financial projections with your accountant that account for the potential impact of limited franchisor resources is a prudent step.
Citations: Item 21, Exhibit E

High Franchisee Turnover

High Risk

Explanation

The franchise system has experienced notable turnover. Item 20 data shows a total of 6 terminations over the past three years on a relatively small base of initial outlets, including a termination rate of 50% in 2022 (3 terminations on 6 starting units). While the rate has decreased, this historical churn could suggest potential issues with franchisee profitability, satisfaction, or the support system, presenting a significant risk to your investment.

Potential Mitigations

  • Contacting former franchisees listed in Exhibit D-2 is critical to understand their reasons for leaving the system; your attorney can help frame questions.
  • Analyzing the year-over-year turnover rates with your accountant can help assess if system stability is improving.
  • Discussing the specific reasons for the high number of terminations with the franchisor should be part of your due diligence.
Citations: Item 20, Exhibit D-2

Rapid System Growth

Medium Risk

Explanation

The franchise system is growing very quickly, expanding from 6 to 30 franchised outlets in three years. While growth can be positive, rapid expansion can strain a franchisor's resources. This may lead to potential challenges in providing consistent and high-quality training, site selection assistance, and ongoing operational support to all franchisees as the system scales.

Potential Mitigations

  • Inquiring with the franchisor about their specific plans to scale support staff and infrastructure to match outlet growth is advisable.
  • Speaking with a range of both new and established franchisees can provide insight into the current quality and responsiveness of franchisor support.
  • A review of the franchisor's financials with your accountant can help assess if they have the capital to adequately support this expansion.
Citations: Item 1, Item 20

New/Unproven Franchise System

High Risk

Explanation

ProColor is a young franchisor, having formed in April 2020 and begun franchising in July 2020. The FDD's 'Special Risks' section explicitly flags its 'limited operating history' as a risk factor. Investing in a newer system carries inherent risks, including an unproven long-term business model, developing support systems, and limited brand recognition compared to more established competitors. The success of the system is not yet fully demonstrated over time.

Potential Mitigations

  • A business advisor can help you conduct extensive due diligence on the long-term viability of the business model and its competitive landscape.
  • Thoroughly investigating the business and franchise experience of the management team outlined in Item 2 is crucial.
  • Speaking with the earliest franchisees in the system will provide valuable insight into their experience with the developing brand.
Citations: Item 1, Item 4, Special Risks

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, which can threaten long-term viability after public interest fades. It is important to assess whether a franchise concept has sustainable, long-term consumer demand or if its appeal is based on a current novelty. The franchisee's obligations under the franchise agreement continue even if the business concept becomes obsolete.

Potential Mitigations

  • Engaging a business advisor to research the industry and assess the long-term market demand for the products or services is recommended.
  • Evaluating the franchisor's stated plans for research, development, and system evolution in Item 11 is important for gauging adaptability.
  • Your financial advisor can help you consider the business model's resilience to economic shifts and changing consumer tastes.
Citations: Item 1, Item 11

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD package. The executive team appears to have extensive experience in the automotive and franchise industries through their roles at affiliated companies like Mondofix and Fix Auto. However, you should still verify that their experience is relevant and directly applicable to supporting a growing franchise network. Inexperienced management can lead to poor strategic decisions and inadequate support for franchisees.

Potential Mitigations

  • It is still prudent to ask the franchisor about the specific franchising experience of the key personnel who will be supporting you.
  • A discussion with existing franchisees about their perception of management's competence and the quality of support is a valuable step.
  • Your business advisor can help you research the professional backgrounds of the key executives listed in Item 2.
Citations: Item 2

Private Equity Ownership

Medium Risk

Explanation

The franchisor is part of a larger corporate structure owned by Mondofix Inc. While not explicitly stated to be private equity, this structure means decisions could be influenced by parent-company objectives. The Franchise Agreement allows the franchisor to be sold or assigned to a new owner without your consent. A new owner could have different priorities, potentially affecting support levels, fee structures, or the overall direction of the brand, impacting your long-term investment.

Potential Mitigations

  • A discussion with your attorney is important to understand the full implications of the franchisor's right to assign the agreement.
  • Researching the parent company, Mondofix, and its history with other brands can provide valuable context for a business advisor.
  • Talking to current franchisees about any changes they have experienced due to parent company influence is recommended.
Citations: Item 1, Item 17, FA § 23.2

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. The FDD clearly discloses the parent companies, Mondofix USA LLC and Mondofix Inc. The franchisor's financials in Item 21 explicitly note a dependence on the parent company for financial support, which highlights the importance of the parent's stability. Failure to disclose a parent or provide its financials when it guarantees obligations or is critical to the system can hide significant risks from a potential franchisee.

Potential Mitigations

  • Your accountant should always confirm that parent company financials are included if the franchisor is a new or thinly capitalized entity.
  • It is wise to have your attorney review Item 1 to ensure the corporate structure and all relevant parent companies are clearly disclosed.
  • If a parent provides a guarantee, your attorney should review the terms of that guarantee to understand the extent of the backing.
Citations: Item 1, Item 21, Exhibit E

Predecessor History Issues

Medium Risk

Explanation

ProColor acquired rights from its parent, Mondofix, which is identified as a predecessor. Item 3 discloses litigation involving Mondofix, including an arbitration it lost against a U.S. master franchisee and a settled dispute in Ireland. While these do not directly involve ProColor, this history is part of the system's lineage. This information provides context on how the parent organization has handled significant disputes in the past, which could be relevant to your relationship.

Potential Mitigations

  • Reviewing the details of the predecessor's litigation history in Item 3 with your attorney is an important step.
  • You should ask the franchisor about these past issues and how they may or may not affect the current ProColor system.
  • A business advisor can help you research the predecessor's reputation and history in the franchise industry for more context.
Citations: Item 1, Item 3

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package regarding ProColor itself. ProColor discloses no litigation against it. However, its parent and predecessor, Mondofix, has a history of material litigation, including an arbitration over agreement renewal and a termination dispute. A pattern of litigation, especially claims of fraud or breach of contract brought by franchisees against a franchisor, can be a major red flag indicating systemic problems or a contentious franchisor-franchisee relationship.

Potential Mitigations

  • It is critical to have your attorney carefully review any and all litigation disclosed in Item 3 for patterns and severity.
  • Engaging your attorney to research the outcomes of disclosed cases can provide deeper insight than the FDD summary.
  • Speaking with current and former franchisees about their experiences with disputes, even those not resulting in litigation, is wise.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
3
1
11

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
3
5
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

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4

Legal & Contract Risks

Total: 16
7
2
7

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

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5

Territory & Competition Risks

Total: 5
3
1
1

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

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6

Regulatory & Compliance Risks

Total: 10
3
4
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

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7

Franchisor Support Risks

Total: 4
0
4
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
4
6
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
5
6
7

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
0
1
1

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.