RestoPros
Initial Investment Range
$143,600 to $417,000
Franchise Fee
$73,500 to $203,500
You will operate a business that provides restoration and remediation services to residential and commercial properties that have been damaged by water, fire, smoke or mold.
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RestoPros April 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The FDD includes an explicit warning that RestoPros Franchising, LLC (RestoPros LLC)'s financial condition calls its ability to provide support into question. The audited financial statements in Exhibit B confirm this, showing a growing negative Member's Deficit of ($510,992) for 2024. This may impact the franchisor's capacity to support your business, invest in the brand, or remain solvent, creating a significant risk for you.
Potential Mitigations
- A comprehensive review of the financial statements and accompanying footnotes with your accountant is essential to assess the franchisor's viability.
- Your franchise attorney should determine if any financial assurance, such as a bond or escrow, is required by your state due to this financial weakness.
- It is advisable to discuss the company's capitalization and plans to address the deficit with your financial advisor before investing.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a pattern of franchisee exits. In 2024, there were 5 terminations against a starting base of 45 outlets, an 11% termination rate for that year. The list of former franchisees in Exhibit C also shows a significant number of terminations. Item 19 also excludes five terminated franchisees from its performance data. This rate of turnover could suggest potential issues within the system regarding franchisee profitability, support, or satisfaction.
Potential Mitigations
- Contacting a number of former franchisees from the list in Exhibit C is crucial to understand why they left the system.
- An analysis of the turnover rates over the last three years with your accountant can help quantify the stability of the franchisee base.
- Your attorney can help you formulate specific questions for the franchisor regarding the reasons for these terminations.
Rapid System Growth
Medium Risk
Explanation
Item 20 data shows the system is expanding very quickly, more than doubling in size each of the last two years, from 15 to 91 total franchised outlets. When combined with the financial weaknesses noted in Item 21, this rapid growth may strain the franchisor's resources. A potential risk is that the quality of training, site support, and operational assistance could decline if the support infrastructure does not grow at the same pace.
Potential Mitigations
- Engaging a business advisor to question the franchisor about their specific plans to scale support staff and systems is important.
- In discussions with current franchisees, you should inquire about their recent experiences with the quality and responsiveness of franchisor support.
- Your accountant can help assess whether the franchisor's financial statements show investment in support infrastructure commensurate with its growth.
New/Unproven Franchise System
Medium Risk
Explanation
RestoPros LLC began offering franchises in September 2019, making it a relatively young system. While it has several years of operating history, its most significant growth has occurred very recently, as shown in Item 20. Investing in a newer system carries distinct risks, including business models that are still being proven at scale and support systems that are still developing. The long-term stability and brand recognition may not be as established as more mature franchise systems.
Potential Mitigations
- A thorough due diligence investigation of the brand's market position and the management team's industry experience should be conducted with your business advisor.
- Speaking with the earliest franchisees in the system can provide valuable insight into its evolution and the franchisor's performance over time.
- Your attorney might be able to negotiate more favorable terms to account for the potential risks associated with a younger franchise system.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The business of providing restoration and remediation services for properties damaged by water, fire, or mold is based on a consistent and ongoing need. This type of service is generally not considered to be a short-term trend or fad, which reduces the risk of the business model becoming obsolete due to shifting consumer preferences.
Potential Mitigations
- A business advisor can help you research the long-term demand and competitive landscape for restoration services in your specific market.
- Understanding the franchisor's plans for innovation and adaptation to new technologies or industry standards is a key discussion to have with your attorney.
- Assessing the business model's resilience to economic cycles with your financial advisor is a prudent step.
Inexperienced Management
Low Risk
Explanation
This specific risk was not identified in the FDD. Item 2 indicates that the key executives of RestoPros LLC possess direct experience in the restoration industry and in related business management roles. For instance, the CEO has been the owner and founder of an affiliated restoration business since 2018. This suggests the management team has relevant industry knowledge, which is a positive factor for providing operational guidance.
Potential Mitigations
- A review of the executive biographies in Item 2 with a business advisor can confirm that their skills align with the system's needs.
- It's still valuable to ask current franchisees about their perception of the management team's competence and the quality of support they provide.
- Your attorney can help verify if the disclosed experience is sufficient to meet the franchisor's obligations under the Franchise Agreement.
Private Equity Ownership
Low Risk
Explanation
The risk of private equity ownership, which can sometimes prioritize short-term investor returns over the long-term health of the system, was not identified in this FDD. Item 1 indicates that RestoPros LLC is a North Carolina limited liability company and does not disclose any ownership by a private equity firm. This suggests that management decisions may be more focused on the operational goals of the brand itself.
Potential Mitigations
- Your attorney can help you verify the ownership structure of the franchisor through public records to confirm the absence of PE involvement.
- Discussing the company's long-term vision and capital structure with a business advisor is still a useful part of due diligence.
- Understanding the 'Assignment by Franchisor' clause in the Franchise Agreement with your attorney remains important, regardless of current ownership.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. FDD Item 1 does not disclose the existence of a parent company for RestoPros LLC. The franchisor entity appears to be the primary operating and franchising entity. Therefore, the financial statements provided in Item 21 should reflect the complete financial picture of the franchising organization without concern for undisclosed financial risks from a parent entity.
Potential Mitigations
- Your attorney can confirm the corporate structure and the absence of any undisclosed parent or holding company.
- A thorough review of the franchisor's own financial statements with an accountant is crucial, as there is no parent company to provide a financial backstop.
- Inquiring about any affiliate relationships listed in Item 1 with your business advisor helps build a complete picture of the organization.
Predecessor History Issues
Low Risk
Explanation
This FDD does not present risks associated with a predecessor entity. Item 1 of the FDD clearly states, 'We have no parents or predecessors.' This simplifies due diligence, as the analysis of the franchisor's litigation history (Item 3), bankruptcy history (Item 4), and franchisee turnover (Item 20) is confined to the history of the current franchising entity, RestoPros LLC.
Potential Mitigations
- Verifying with your attorney that no other entities could be construed as predecessors under franchise law is a good practice.
- Focusing your due diligence on the specific track record of the current management team is critical, a task for your business advisor.
- A deep dive into the franchisee turnover data in Item 20 with your accountant becomes even more important in the absence of a longer history.
Pattern of Litigation
Medium Risk
Explanation
Item 3 discloses that RestoPros LLC has initiated a lawsuit against one of its franchisees for a wide range of alleged breaches, including failure to pay fees and misappropriation of confidential information. While this is a single case initiated by the franchisor, not a pattern of franchisee-led fraud claims, it does indicate a willingness to pursue litigation to enforce its agreements. This could suggest a potentially contentious relationship if disputes arise.
Potential Mitigations
- A thorough review of the details of the disclosed litigation with your franchise attorney is necessary to understand its implications.
- You should discuss the franchisor's general approach to dispute resolution with current and former franchisees.
- Understanding your obligations and the consequences of default under the Franchise Agreement with your attorney is critical to avoid similar disputes.
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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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
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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
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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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