Signal Health Group
Initial Investment Range
$40,200 to $345,800
Franchise Fee
$29,500 to $120,000
As a Signal Health Group franchisee, you will operate one of four possible, home-based medical or non-medical service-based businesses, including medical/hospice, medical/home health, non-medical/wellness and mental health, and non-medical/personal support and companionship services.
Enjoy our complimentary free risk analysis below
Unlock the full risk analysis to access 9 more categories covering 100+ risks.
Signal Health Group April 30, 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 franchisor’s financial statements in Exhibit F show significant and complex related-party transactions, with large balances due to and from affiliates owned by the same principal. More critically, the California Addendum explicitly states that state regulators determined Signal Health Group Franchise, Inc. (SHGFI) is not adequately capitalized and imposed a fee deferral condition. This indicates a potential reliance on new franchise fees to fund operations and a significant risk to the franchisor's financial stability and ability to support you.
Potential Mitigations
- Your accountant must thoroughly analyze the audited financial statements, paying close attention to the footnotes on related-party transactions and the implications of the regulatory action mentioned in the California Addendum.
- It is crucial to discuss with a franchise attorney the direct risks associated with a franchisor deemed undercapitalized by a state regulator.
- A business advisor can help you assess whether the franchisor has the necessary financial resources to provide the promised support and grow the brand.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data shows the franchise system is in a rapid growth phase, expanding from 7 to 18 units over two years. However, it also reveals that one franchise 'ceased operations' in 2023, and there have been zero transfers to new owners over the last three years. The combination of some franchisee exit and no successful sales to third parties could indicate potential challenges with franchisee profitability or the resale market for this particular franchise, presenting a risk to your exit strategy.
Potential Mitigations
- It is essential to contact current and especially former franchisees listed in Item 20 to understand their experiences and reasons for leaving.
- Your business advisor should help you analyze the growth and turnover data to question the franchisor about system health and franchisee success rates.
- Discussing the lack of franchisee-to-franchisee transfers with your franchise attorney can help clarify potential exit strategy risks.
Rapid System Growth
Medium Risk
Explanation
The system has more than doubled in size in two years, from 7 to 18 franchised units. This rapid expansion, combined with the financial weakness identified by California regulators, presents a risk that SHGFI's support infrastructure may not keep pace with its growth. This could potentially lead to diluted or inadequate training, site selection assistance, and ongoing operational support for new franchisees like you, despite the fees you pay.
Potential Mitigations
- With your business advisor, you should question the franchisor directly about their specific plans and resources for scaling their support team to match unit growth.
- Speaking with franchisees who opened at different times can provide insight into whether the quality of support has changed as the system has grown.
- Your accountant should review the franchisor's financials to assess whether they are investing adequately in support infrastructure.
New/Unproven Franchise System
High Risk
Explanation
SHGFI was formed in late 2019 and, according to Item 1, does not operate any of the businesses of the type being franchised. This lack of direct, hands-on operational experience is a significant risk, especially in the complex and highly regulated home healthcare industry. An unproven franchise system managed by a team without recent experience running corporate-owned locations may lack refined systems, effective marketing, and the ability to provide practical, real-world operational support.
Potential Mitigations
- A thorough vetting of the management team's prior specific industry and franchising experience with your business advisor is critical.
- You should speak with the earliest franchisees to gauge the maturity of the operating systems and the quality of support provided.
- Your franchise attorney can discuss negotiating for stronger performance guarantees or better support terms to offset the higher risk.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A fad business is one based on a short-term trend without long-term consumer demand. Investing in a fad carries the risk that your business could become obsolete once public interest wanes, even though your contractual obligations to the franchisor would continue. Assessing the long-term market viability of any business concept is a crucial step in your due diligence.
Potential Mitigations
- Your business advisor can help you conduct independent market research to assess the long-term sustainability and demand for the services offered.
- It is wise to evaluate whether the business model is adaptable to changing consumer preferences and economic conditions.
- Consider the business's resilience and its core value proposition beyond any current trends with your financial advisor.
Inexperienced Management
High Risk
Explanation
Item 2 details the business experience of SHGFI's management team. While some individuals have experience in the healthcare industry, the franchisor entity itself does not operate any corporate-owned outlets, as stated in Item 1. This lack of current, direct operational experience at the corporate level could impact the quality and relevance of the training and support provided to you, as it is not based on day-to-day management of the same business model.
Potential Mitigations
- You should thoroughly interview existing franchisees about the quality, relevance, and responsiveness of the management team's support and guidance.
- A business advisor can help you assess whether the management team's collective experience is sufficient to support a complex, regulated franchise system.
- Clarifying the specific roles and experience of each management team member during discovery day is advisable.
Private Equity Ownership
Low Risk
Explanation
This FDD package does not indicate ownership by a private equity firm. This risk arises when a franchisor is owned by a PE firm, which may prioritize short-term returns for investors over the long-term health of franchisees. This can sometimes lead to increased fees, cuts in support, or pressure to use affiliated vendors. Understanding the franchisor's ownership structure is an important part of due diligence.
Potential Mitigations
- When analyzing a franchise, your attorney can help you investigate the ownership structure for any private equity involvement.
- If PE ownership is present, a business advisor can help research the firm's track record with other franchise brands.
- Speaking with franchisees who have been through a PE acquisition can provide valuable insight into changes in the system.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. A franchisor must disclose any parent companies in Item 1. If a parent's financial stability is critical to the franchisor, for instance if it guarantees the franchisor's obligations, its financial statements should also be included in Item 21. Failure to provide a parent's financials when required can hide financial weaknesses and present a risk to the franchisee who is relying on the larger entity's stability.
Potential Mitigations
- Your attorney should verify the franchisor's corporate structure to identify any undisclosed parent or controlling entities.
- If a parent company provides a guarantee, your accountant should confirm that their financial statements are included and properly audited.
- Understanding the full corporate structure is vital for assessing the true financial backing of the franchise system.
Predecessor History Issues
Low Risk
Explanation
Item 1 discloses that SHGFI has a predecessor entity, Signal Health Group Franchise, LLC, which operated from May 2018 to September 2019. While no negative history is disclosed for this predecessor in Items 3 or 4, the transition to a new corporate entity can sometimes obscure historical performance issues. You should be aware that the franchise system's history extends beyond the 2019 formation date of the current franchisor entity.
Potential Mitigations
- Engaging your attorney to review all disclosures related to the predecessor entity is a prudent step.
- It is important to ask the franchisor about the reasons for the change in corporate structure from the LLC to the current corporation.
- When speaking with long-term franchisees, ask about their experience under the predecessor entity with the help of your business advisor.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package, as Item 3 states that no litigation is required to be disclosed. A pattern of litigation, especially franchisee-initiated lawsuits alleging fraud or misrepresentation, can be a major red flag about a franchisor's practices and the health of the system. The absence of such litigation is a positive indicator, but it does not eliminate all other risks.
Potential Mitigations
- Your franchise attorney can conduct independent searches for litigation that may not have been required to be disclosed in Item 3.
- It is always recommended to ask current and former franchisees about any disputes they may have had with the franchisor.
- A clean litigation history is positive, but your business advisor would still recommend a full due diligence process.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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.
Related Healthcare Franchises
Any Lab Test Now
$60,025 to $318,837.50
BrightStar Care
$101,199 to $235,038
Executive Home Care
$99,950 to $143,700
Gameday Men's Health
$224,575 to $410,496
Home Matters Caregiving
$92,525 to $218,500
HomeCare Advocacy Network
$130,750 to $212,600
HomeWell Care Services
$54,401.20 to $233,912
Hydralive
$257,150 to $538,400
NexGen Franchising
$124,500 to $1,766,725
One You Love Homecare
$95,400 to $170,800
Signal Health Group
$40,200 to $345,800
Talem Home Care
$51,725 to $250,475