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Red Wagon Club

Red Wagon Club Franchise, LLC
https://www.theredwagonclub.com
1-724-750-6185
2801 Florida Avenue, Suite C, Coconut Grove, Florida 33133

How much does Red Wagon Club cost?

Initial Investment Range

$99,250 to $200,500

Franchise Fee

$50,000

The franchise offered is for a membership-based business, operating under the Red Wagon Club trademarks, which offers a variety of educational and social programs and non-legal services that are designed to complement and enhance the value proposition to the owner and clients of an existing law firm.

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Red Wagon Club July 19, 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
4
1
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

Red Wagon Club Franchise, LLC (RWC LLC) is a new company formed in June 2024 with only $90,000 in initial capital. Item 21 claims its opening balance sheet is audited, but the document in Exhibit D states it was prepared without an audit. This contradiction, combined with minimal capitalization, presents a significant risk. The franchisor's ability to provide support and withstand unexpected expenses is unproven and may depend entirely on selling more franchises.

Potential Mitigations

  • An experienced franchise accountant must critically review the balance sheet and question the conflicting "audited" status.
  • Your attorney should investigate the franchisor's capitalization and determine if any undisclosed parent company support exists.
  • Ask your financial advisor to assess if the franchisor has sufficient funds to fulfill its support obligations without relying on future franchise sales.
Citations: Item 1, Item 21, Exhibit D

High Franchisee Turnover

Low Risk

Explanation

This is a new franchise system with no operating history of franchised units, so there is no data on franchisee turnover available in Item 20. While this specific risk is not present, the lack of an operating history is itself a significant risk, as the system's viability and franchisee satisfaction are completely unproven. You would be one of the first franchisees.

Potential Mitigations

  • A business advisor should help you assess the inherent risks of joining a new, unproven system.
  • It is critical to thoroughly interview the owners of the two affiliated "company-owned" locations mentioned in Item 20.
  • Discussing the implications of being a test case for this business model with your attorney is highly recommended.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

As a new franchise system, there is no history of rapid growth to analyze. The risk of the franchisor's support infrastructure being strained by expansion is inherent in any new system but has not yet materialized as a discernible trend. Evaluating the franchisor's capacity to handle its projected growth of five new units is crucial for you as a potential early adopter.

Potential Mitigations

  • A business advisor can help you evaluate the franchisor's plans and resources for supporting its first cohort of franchisees.
  • Engage the franchisor’s management team in a detailed discussion about their intended support structure.
  • Your attorney should review the support obligations outlined in the Franchise Agreement to understand what is contractually guaranteed.
Citations: Item 20

New/Unproven Franchise System

High Risk

Explanation

RWC LLC is a startup, formed in June 2024 and commencing franchise offers in July 2024. Item 20 confirms there are no existing independent franchisees. This means you would be among the very first to test the business model, brand recognition, and support systems. The success of this concept in a true franchised environment is entirely unproven, presenting a substantial investment risk.

Potential Mitigations

  • A business advisor should help you perform extensive due diligence on the viability of this unique business model.
  • Speaking at length with the operators of the two affiliated locations is critical to understanding the concept's practical challenges.
  • Your attorney may be able to negotiate more favorable terms to compensate for the higher risk of joining a new system.
Citations: Item 1, Item 20, Item 21

Possible Fad Business

High Risk

Explanation

The business concept, a membership club providing non-legal services affiliated with an existing law firm, is highly specialized and operates in an "underdeveloped" market, as stated in Item 1. This novelty and lack of a proven, widespread market demand could mean the business model has limited long-term appeal or viability beyond a very specific client base, which represents a significant risk to your investment.

Potential Mitigations

  • Conducting your own local market research to gauge potential client interest for this niche service is essential.
  • A business advisor can help assess the long-term sustainability and market size for this business concept.
  • It would be prudent to discuss the concept's appeal with other law firm owners in your area who are not affiliated with the franchisor.
Citations: Item 1

Inexperienced Management

High Risk

Explanation

The management team detailed in Item 2 has extensive experience operating law firms and related consulting businesses. However, the FDD does not indicate that any of the key executives have prior experience in managing a franchise system. This lack of direct franchising expertise could lead to significant challenges in providing effective franchisee support, training, and system-wide strategic management, representing a considerable risk for you as an early franchisee.

Potential Mitigations

  • Questioning the management team directly about how they plan to overcome their lack of franchise system experience is advisable.
  • A business advisor can help you assess whether their legal industry expertise is sufficient to manage a franchise network.
  • It is crucial to speak with the two affiliated operators to understand the quality of the support and systems they have developed.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

The FDD does not indicate that the franchisor or its parent company, Red Wagon Club Holdings, LLC, is owned by a private equity firm. This particular risk, associated with short-term investment horizons that can sometimes conflict with franchisees' long-term interests, does not appear to be present in this franchise system's current ownership structure.

Potential Mitigations

  • With your attorney, it is always wise to verify the full ownership structure of the franchisor and any parent entities.
  • Your business advisor can help research the track record of any major corporate owner to understand their operational philosophy.
  • Understanding the owners' long-term vision is important for assessing system stability.
Citations: Item 1

Non-Disclosure of Parent Company

Medium Risk

Explanation

The franchisor discloses a parent company, Red Wagon Club Holdings, LLC, but the FDD does not include its financial statements. Since the franchisor is a newly formed entity with minimal capital, the financial strength of its parent is a material factor in assessing the overall stability and backing of the franchise system. This omission creates a significant information gap and potential risk for you.

Potential Mitigations

  • It is advisable for your attorney to request the financial statements for the parent company.
  • Your accountant should review any provided parent financials to assess the overall financial health of the combined enterprise.
  • Discuss the significance of seeking a parent company guarantee of the franchisor's obligations with your attorney.
Citations: Item 1, Item 21

Predecessor History Issues

Low Risk

Explanation

The FDD states in Item 1 that the franchisor has no predecessors. Therefore, risks associated with an undisclosed or problematic history from a prior company that operated the system are not applicable. Your evaluation should focus on the risks inherent in the newness of the current franchisor entity itself.

Potential Mitigations

  • Your attorney should confirm that no other entities should have been disclosed as predecessors under applicable franchise law.
  • With a business advisor, focus your due diligence on the current franchisor's management team and financial stability.
  • It is good practice to ask existing business operators in the system about the history of the concept.
Citations: Item 1

Pattern of Litigation

Low Risk

Explanation

Item 3 of the FDD indicates that there is no history of litigation involving the franchisor, its parent, or its management that requires disclosure. Similarly, Item 4 shows no bankruptcy history. This means the specific risks associated with a pattern of past legal disputes or financial failures are not present based on these disclosures for this new entity.

Potential Mitigations

  • Although no litigation is disclosed, your attorney can conduct public record searches to verify this information as part of due diligence.
  • Reviewing Item 3 carefully in any FDD for patterns of disputes is a standard best practice your attorney will perform.
  • Talking to current and former franchisees, when available, is a good way to learn about informal disputes.
Citations: Item 3, Item 4
2

Disclosure & Representation Risks

Total: 15
3
0
12

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
2
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.

4

Legal & Contract Risks

Total: 16
7
5
4

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
3
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.

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
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
11
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

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 1
1
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.