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Service Experts
How much does Service Experts cost?
Initial Investment Range
$80,000 to $279,800
Franchise Fee
$48,500 to $88,300
Service Experts franchises provide air conditioning and heating system maintenance, repair, and equipment replacement services, ductwork service, and indoor air quality services as well as water heater repair and replacement services to residential and light commercial customers.
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Service Experts April 7, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 19, 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
Service Experts Franchising LLC (SEF) is a new entity, formed in October 2024 with no operating history. Its audited financial statement shows only initial capitalization and a net loss. While it has a well-established parent company, the franchisor entity itself is financially unproven. This lack of a track record presents a risk regarding its ability to support franchisees effectively, as also noted in the FDD's 'Special Risks' section.
Potential Mitigations
- An accountant should review the financial statements and notes, paying close attention to the franchisor's capitalization and cash position.
- In discussions with the franchisor, your business advisor can help you inquire about the financial commitment of the parent company to support the new franchise system.
- Ask your attorney about the implications of franchising with a newly-formed entity and whether any additional financial assurances are in place.
High Franchisee Turnover
Medium Risk
Explanation
As a new system, there is no franchisee turnover history. However, data on company-owned outlets reveals that 12 locations closed in 2024, some due to mergers and one was sold. While not franchisee failures, this level of churn within the affiliate's network could indicate underlying operational or market challenges. This activity warrants further investigation into the stability and profitability of the underlying business model you are buying into.
Potential Mitigations
- It is critical to ask the franchisor for detailed explanations regarding each of the company-owned outlet closures and mergers.
- A business advisor can help you analyze the potential reasons for the churn in the company-owned system and what it might imply for franchisees.
- Your attorney can help you frame questions for the franchisor regarding the health of the markets where closures occurred.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. The franchise system is new and has not yet experienced a period of rapid growth. However, rapid expansion without a corresponding increase in support staff and infrastructure can strain a franchisor's ability to provide adequate assistance to its franchisees, potentially affecting training, marketing, and operational support. Careful monitoring of projected growth is important.
Potential Mitigations
- A business advisor can help you assess the franchisor's plans for scaling its support systems to match projected franchise sales.
- Discussing the franchisor's growth strategy with your attorney can help you understand how it might impact your business in the future.
- In your own financial planning, have your accountant help you budget for potential needs that may arise if franchisor support is stretched thin.
New/Unproven Franchise System
High Risk
Explanation
The franchisor explicitly warns in the 'Special Risks' section that it is at an early stage of development with a limited operating history. The company was formed in late 2024 and began offering franchises in April 2025. Investing in a new, unproven system carries higher risks related to the viability of the business model, brand recognition, and the effectiveness of the support systems, which have not yet been tested by a franchisee network.
Potential Mitigations
- Conduct extensive due diligence with your business advisor on the experience of the management team in both the industry and in franchising.
- A franchise attorney should be engaged to review the agreements for any additional protections you might negotiate to offset the higher risk.
- Your accountant can help you assess if the franchisor is adequately capitalized to support its initial franchisees through the startup phase.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The HVAC and home services industry is a well-established sector based on sustained consumer demand for maintenance, repair, and replacement of essential home systems. It is not considered a fad business that is dependent on a short-lived trend. This provides a degree of underlying market stability for the services you will offer.
Potential Mitigations
- A business advisor can help you research the long-term outlook for the local HVAC services market to confirm stable demand.
- When creating a business plan, your accountant can assist in modeling financial performance based on the established nature of the industry.
- Consult with your attorney to understand how the long-term nature of the business aligns with the franchise agreement's term and renewal options.
Inexperienced Management
Medium Risk
Explanation
While the franchisor entity itself is new, the management team listed in Item 2 has prior experience in other large franchise systems like Mr. Rooter and Neighborly Brands, as well as in relevant industries. This experience may reduce the risk typically associated with a new franchise system. However, the team has no history of operating this specific franchise system together, which still presents a moderate risk regarding their execution and support capabilities.
Potential Mitigations
- A business advisor can help you research the professional backgrounds and track records of the key executives mentioned in Item 2.
- When speaking with the franchisor, inquire about how their past experiences will specifically benefit you as a new franchisee.
- Your attorney can help you understand the difference between industry experience and the specific experience of managing a franchise network.
Private Equity Ownership
High Risk
Explanation
Item 1 discloses that the ultimate parent company is Brookfield Asset Management, a major global investment firm. The Franchise Agreement gives the franchisor an unrestricted right to sell or assign the agreement. Ownership by a large investment firm can mean a focus on maximizing returns, which may lead to decisions (like a future sale of the system) that prioritize investor goals over the long-term interests of individual franchisees.
Potential Mitigations
- A business advisor can help you research the investment firm's reputation and history with other franchise brands it may have owned.
- It is important to have your attorney explain the implications of the franchisor's unrestricted right to sell the system and your limited recourse.
- During due diligence, ask the franchisor about the parent company's long-term vision and commitment to the brand.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The FDD discloses the parent companies, SE HoldCo LLC and Brookfield. However, as the franchisor is a newly formed, thinly capitalized subsidiary, its financial strength is entirely dependent on its parent. The FDD does not include the parent company's financial statements, which would provide a more complete picture of the overall enterprise's financial health. While this may comply with disclosure rules for startups, it leaves you with limited information about the ultimate financial backing of the system.
Potential Mitigations
- Your accountant should review the provided franchisor financials and note the dependency on the parent company.
- Asking the franchisor about any formal support or guarantee agreements from the parent entity is a key due diligence step.
- Your attorney can advise on the risks associated with a thinly capitalized franchisor entity, even with a strong parent.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 does not list any legal predecessors for Service Experts Franchising LLC. The business system is based on an affiliate's long-standing operations, but the franchisor entity itself is new and did not acquire the system from a prior franchisor. Therefore, there are no predecessor-related issues concerning litigation, bankruptcy, or franchisee turnover to assess.
Potential Mitigations
- A franchise attorney should confirm the absence of any legal predecessors and explain the distinction between a predecessor and an affiliate.
- In discussions with your business advisor, focus on the history and performance of the affiliate, Service Experts LLC, as a proxy for system experience.
- Your accountant can review the new franchisor's opening balance sheet to ensure it is free from any inherited liabilities.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 states that there is no litigation that requires disclosure. The absence of a history of lawsuits, particularly from franchisees alleging fraud or breach of contract, is a positive indicator. However, as a new franchise system, there has been little time for such disputes to arise. You should still monitor this area in future FDDs.
Potential Mitigations
- Your attorney should verify the 'no litigation' statement and explain what types of lawsuits are required to be disclosed.
- A business advisor can guide you in performing online searches for any news or informal complaints related to the franchisor or its affiliates.
- In your discussions with the franchisor, you can inquire about their dispute resolution philosophy.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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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