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How much does Sea Glass Properties cost?
Initial Investment Range
$101,500 to $402,500
Franchise Fee
$50,000 to $150,000
As a Sea Glass Properties franchisee, you will operate a real estate agency offering the purchase and sale of real estate.
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Sea Glass Properties May 20, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 22, 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
This is a high-risk area. The franchisor explicitly flags its "Financial Condition" as a special risk. The audited financial statements in Exhibit F are for a newly formed entity with a net loss and minimal assets. This financial weakness is significant enough that the state of Maryland requires the franchisor to defer collecting initial fees from franchisees there until pre-opening obligations are met. This may impact its ability to provide support.
Potential Mitigations
- Your accountant must review the financial statements in Exhibit F, the auditor's report, and the implications of the state-mandated fee deferral.
- A thorough discussion with your business advisor is necessary to assess if the franchisor has sufficient capital to support you and grow the system.
- Legal counsel should explain the potential consequences if the franchisor cannot meet its financial obligations to you or its vendors.
High Franchisee Turnover
Low Risk
Explanation
As a new franchisor, Item 20 tables show no franchised outlets have been terminated, ceased operations, or otherwise turned over. While this means there is no negative historical data, it also means there is no performance track record for any franchisee. The lack of former franchisees to interview for due diligence is a significant information gap and increases investment risk.
Potential Mitigations
- Your business advisor should help you understand the heightened risks of joining a system with no franchisee operating history.
- It is crucial to ask the franchisor for their projections on franchisee success and the support systems in place to prevent future turnover.
- An attorney can help you understand that without turnover data, other risk factors like franchisor financials become even more critical.
Rapid System Growth
Medium Risk
Explanation
Item 20, Table 5, shows the franchisor projects opening five new franchised outlets in the next fiscal year. Given the franchisor's very limited operating history and financial resources as detailed in Item 21, this projected growth may strain their ability to provide adequate training and support to all new franchisees simultaneously. This could result in a diminished level of assistance for your business.
Potential Mitigations
- A business advisor can help you question the franchisor about their specific plans and personnel for supporting this projected growth.
- Your accountant should review the franchisor's financial capacity to fund the necessary support infrastructure for five new units.
- Engaging with other early franchisees, if possible, can provide insight into the actual level of support being delivered as the system grows.
New/Unproven Franchise System
High Risk
Explanation
This is a critical risk. The FDD explicitly warns of the franchisor's "Short Operating History" as a special risk. Sea Glass Franchising, LLC (the franchisor) was formed in January 2024 and began offering franchises in 2024. Item 20 confirms there are zero operating franchised units. This lack of a track record means the business model is unproven in a franchise context, and support systems are likely underdeveloped, increasing your investment risk.
Potential Mitigations
- A franchise attorney should be consulted to understand the heightened risks and potentially negotiate more protective terms.
- Diligently investigate the business and franchising experience of the management team in Item 2 with your business advisor.
- An accountant should help you develop conservative financial projections, as there is no franchisee performance data to rely upon.
Possible Fad Business
Medium Risk
Explanation
The franchised business is a real estate agency. While real estate is a long-established industry, market conditions can be cyclical and highly dependent on economic factors like interest rates and local market dynamics. The success of this specific brand and its system, being new, is not yet proven. Your business advisor should help you assess the long-term viability and potential cyclicality of the real estate market in your specific area.
Potential Mitigations
- It is important to have a business advisor help you research the specific real estate market cycles and long-term demand in your proposed territory.
- Question the franchisor on their strategies for adapting to market downturns and supporting franchisees during slower periods.
- An accountant can help you create financial models that account for potential fluctuations in the real estate market.
Inexperienced Management
Medium Risk
Explanation
Item 2 shows that while some executives have experience in real estate and franchise sales for other companies, the franchisor entity itself is new (formed in 2024). The key personnel's collective experience in managing this specific franchise system from the ground up is limited. This could present challenges in providing established, time-tested support and strategic direction, which increases risk for the first generation of franchisees.
Potential Mitigations
- A business advisor can help you thoroughly evaluate the past roles and specific accomplishments of the management team listed in Item 2.
- Discuss with the franchisor how their past experiences will translate into effective support for a new franchise system.
- Your attorney can help assess whether the management team's experience appears adequate for the fees being charged and support promised.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. Private equity ownership can be a risk because the firm's goal is often a profitable exit within a few years, which can lead to decisions that prioritize short-term gains over the long-term health of franchisees. This may manifest as increased fees, reduced support, or a sale of the brand to a new owner with different priorities.
Potential Mitigations
- Should you encounter a franchise owned by a private equity firm, asking an attorney to research the firm's history with other franchise brands is wise.
- A business advisor can help you understand the potential impacts of a private equity firm's typical investment lifecycle on your franchise.
- Speaking with franchisees who have been with a system before and after a private equity acquisition can provide valuable insight.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. A franchisor may be a subsidiary of a larger parent company. If the parent company's financial statements are not provided when required (for example, if the parent guarantees the franchisor's obligations), you may lack a complete picture of the overall financial health and stability of the entire organization supporting your franchise.
Potential Mitigations
- An accountant should review Item 1 and Item 21 to determine if a parent company exists and if its financial data should have been included.
- If a parent company guarantee is offered, your attorney should confirm the parent's financial statements are provided and meet disclosure requirements.
- A business advisor can help you investigate the reputation and stability of any parent company mentioned in the FDD.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor, Sea Glass Franchising, LLC, was formed in 2024 and does not list any predecessors. In other cases, if a franchisor acquired the system from a predecessor, any negative history like litigation or high franchisee failure rates under that predecessor might not be fully transparent, masking historical problems with the system.
Potential Mitigations
- Your attorney should always review Item 1 for any mention of predecessors and cross-reference with Items 3 and 4 for related litigation or bankruptcy.
- If a predecessor is listed, a business advisor could assist in researching the predecessor’s public reputation and history.
- Asking long-tenured franchisees about their experience under previous ownership can provide critical context.
Pattern of Litigation
Low Risk
Explanation
Item 3 discloses no litigation history. While this is positive, it is also expected for a brand-new franchisor that has not had time to engage in franchisee disputes. In other FDDs, a pattern of lawsuits filed by franchisees alleging fraud, or by the franchisor against franchisees for fee collection, could indicate systemic problems or a poor relationship with its network.
Potential Mitigations
- Your attorney should always review Item 3 carefully for any disclosed litigation, no matter how minor it may seem.
- A business advisor can help you understand that a clean litigation record in a brand-new system provides no information about future performance.
- It is wise to periodically check public court records for litigation involving the franchisor as the system matures.
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
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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
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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
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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
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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