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Silbar Security
How much does Silbar Security cost?
Initial Investment Range
$92,000 - $215,900
Franchise Fee
$58,500 - $109110,700
The Franchise offered is for the establishment and operation of a law enforcement-based security service business that offers uniformed security officers, vehicle patrol services, event staffing, surveillance, consulting and related security services for residential and commercial contracted clients.
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Silbar Security March 8, 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
The franchisor includes explicit risk warnings regarding its financial condition. Furthermore, state addenda for Illinois and Maryland reveal that regulators in those states required the deferral of initial franchise fees specifically due to the franchisor's financial condition. Audited financials show significant distributions to shareholders and a large, outstanding shareholder loan, which could impact the company's ability to reinvest in the system. This combination of factors raises questions about the franchisor's financial stability and ability to support you.
Potential Mitigations
- A franchise accountant should thoroughly analyze the audited financial statements, including all notes, to assess the company's capitalization and cash flow.
- It is crucial to discuss the state-mandated fee deferrals and shareholder loan with your attorney to understand their implications.
- Ask the franchisor directly about their plans to strengthen their financial position and support franchisees, and have your business advisor evaluate their response.
High Franchisee Turnover
High Risk
Explanation
The data in Item 20 Table 3 indicates a potentially high rate of franchisee turnover. For the most recently completed year, the FDD reports 20 terminations against a starting base of 68 franchised outlets, a rate of nearly 30%. This level of turnover can be a significant indicator of potential systemic problems, such as franchisee unprofitability, dissatisfaction with the system, or other operational challenges. High turnover may signal underlying issues with the business model or franchisor support.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Exhibit F to understand their reasons for leaving the system.
- Your accountant should help you analyze the turnover data across all three years to identify any persistent negative trends.
- A business advisor can help you weigh the risks associated with a franchise system that appears to have a high rate of unit terminations.
Rapid System Growth
Medium Risk
Explanation
Item 20 Table 1 shows that the system grew rapidly in 2022, adding 20 net new franchised outlets, an increase of over 40%. The system then appears to have stalled, with no net growth in franchised units in 2023 or 2024. Rapid expansion can sometimes strain a franchisor's ability to provide adequate support, and the subsequent lack of growth combined with high terminations could indicate underlying issues.
Potential Mitigations
- Engaging a business advisor to assess whether the franchisor's support infrastructure is sufficient for its current system size is recommended.
- Questioning current franchisees about their experience with the quality and timeliness of franchisor support is a vital due diligence step.
- Your accountant should review the franchisor's financials to see if resources are allocated to support functions or primarily to franchise sales.
New/Unproven Franchise System
Medium Risk
Explanation
Silbar Franchise Group Corporation (SFGC) began offering franchises in 2015, giving it a moderate history. However, the high franchisee turnover rate disclosed in Item 20 and the financial risks highlighted by state regulators suggest the business model may face challenges. The viability of a system is demonstrated over time through sustained franchisee success, and the data presents a mixed picture that warrants careful consideration of its proven track record.
Potential Mitigations
- A thorough review of the entire FDD with your franchise attorney is essential to understand the system's history and potential instabilities.
- Speaking with the longest-operating franchisees can provide valuable insight into the system's evolution and long-term viability.
- Your business advisor can help you assess the risks associated with the operational history presented in the FDD.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. Assessing whether a business concept is a temporary fad or a sustainable model is crucial. A business tied to a fleeting trend could leave you with a worthless investment and ongoing liabilities once public interest fades. Long-term success depends on sustained consumer demand, not just current popularity. Your franchise obligations continue even if the market for the services disappears.
Potential Mitigations
- Engaging a business advisor to conduct independent market research on the long-term demand for these security services is a prudent step.
- You should evaluate the franchisor's plans for innovation and adaptation to changing market needs and competition.
- Consider the business model's resilience to economic shifts and its core value proposition beyond any current trends.
Inexperienced Management
Medium Risk
Explanation
Item 2 shows that several key personnel, including the Franchise Coordinator & Marketing and the Director of Franchise Development, have limited experience in the security or franchising industries. While the founder has extensive experience, the depth of the broader management team is a factor to consider. The quality of support you receive can be dependent on the expertise of the entire team, not just the top executives.
Potential Mitigations
- In discussions with the franchisor, you should inquire about the specific roles and franchising experience of the entire support team.
- Speaking with current franchisees about the quality and expertise of the training and support staff they interact with is an important diligence step.
- A business advisor can help you assess whether the management team's collective experience is adequate to support your business.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package, as Item 1 does not indicate that SFGC is owned by a private equity firm. When a franchisor is PE-owned, there can be a risk that decisions are driven by short-term financial targets for investors rather than the long-term health of the brand and its franchisees. This could potentially lead to increased fees, reduced support, or a quick resale of the system.
Potential Mitigations
- When evaluating a franchise, your attorney should always check for private equity ownership in Item 1.
- If a franchisor is owned by a PE firm, a business advisor can help you research the firm's reputation and track record with other franchise systems.
- Speaking with franchisees who have been through a sale of their franchise system can provide valuable insights.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. SFGC does not disclose a parent company. In some franchise systems, the franchisor entity is a subsidiary of a larger parent company. If the parent's financials are not provided when they should be (for example, if the parent guarantees the franchisor's performance), it can obscure the true financial strength or weakness backing the franchise system, hiding potential risks from prospective franchisees.
Potential Mitigations
- Your franchise attorney should always confirm the corporate structure disclosed in Item 1 to ensure there are no undisclosed parent or affiliate entities.
- If a parent company exists and guarantees performance, an accountant must review its financial statements for a complete picture of financial health.
- A business advisor can help investigate the relationships between affiliated companies in a franchise system.
Predecessor History Issues
Low Risk
Explanation
Item 1 discloses a predecessor, Sentry Security, Inc., which was transferred into an affiliate of the franchisor. While the document provides this basic information, it's important to understand that the operational history and any potential issues from a predecessor can carry over to the current system. A full picture of the brand's history requires considering the performance and track record of any predecessor entities.
Potential Mitigations
- Your attorney should carefully review all disclosures related to predecessors in Items 1, 3, and 4.
- You might ask the franchisor for more details about the predecessor's operational history and the reasons for the transfer.
- When speaking with long-term franchisees, asking about their experiences under any predecessor leadership can provide valuable context.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 discloses no material litigation against SFGC. A pattern of lawsuits, particularly from franchisees alleging fraud, misrepresentation, or breach of contract, can be a major red flag. It may indicate systemic problems with the franchisor's business practices, support obligations, or sales process. Conversely, a high number of lawsuits initiated by the franchisor against its franchisees could suggest an overly aggressive or litigious culture.
Potential Mitigations
- It is always a good practice to have your attorney review Item 3 thoroughly in any FDD.
- A business advisor can help you search public records for litigation involving the franchisor that may not be disclosed in Item 3.
- Speaking with former franchisees can sometimes reveal information about past disputes, even if they didn't result in formal litigation.
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.
