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Skatetime

Skatetime SI LLC.
1-815-708-7201
4794 Colt Rd., Rockford IL 61109

How much does Skatetime cost?

Initial Investment Range

$102,159 to $143,686

Franchise Fee

$20,000

Company offers franchises for businesses providing school roller skating programs targeted for students in grades kindergarten (“K”) through 12th.

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Skatetime March 31, 2020 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.

1

Franchisor Stability Risks

Start Here
Total: 10
3
4
3

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

Item 21 contains a significant contradiction. It first states the FDD includes audited financial statements but then immediately clarifies the balance sheet is prepared without an audit. For an established franchisor, unaudited financials are a major red flag regarding financial transparency and health. This lack of clear, audited financial data makes it difficult to independently verify the financial stability of SKATETIME SI LLC. (Skatetime) and its ability to support you.

Potential Mitigations

  • Your accountant must scrutinize the provided financial statements and the accompanying contradictory disclosures.
  • Seeking clarification from the franchisor regarding the audit status and requesting fully audited statements is a critical step your attorney can help facilitate.
  • A business advisor can help you assess whether the franchisor's potential financial weakness poses an unacceptable risk to your investment.
Citations: Item 21

High Franchisee Turnover

High Risk

Explanation

Item 20 data for the fiscal year ending June 30, 2020, shows zero terminations, cancellations, non-renewals, or other cessations for a system with 15 operating units. While zero turnover is positive if accurate, for a system operating since 1998, this data may appear unusual and could raise questions about its completeness or the definitions used. This lack of apparent turnover, combined with other outdated information in the FDD, presents a risk regarding disclosure reliability.

Potential Mitigations

  • Discuss the Item 20 data with your accountant to understand its implications and potential unreliability.
  • Contacting a significant number of current and former franchisees from the provided lists is crucial to verify the disclosed turnover information.
  • Your attorney can help you formulate specific questions for the franchisor regarding the accuracy of this data.
Citations: Item 20

Rapid System Growth

Medium Risk

Explanation

The franchisor has been offering franchises since 1998 but only has 15 franchised outlets reported in Item 20 as of June 2020. This indicates very slow growth over more than two decades. While not inherently a risk of rapid growth, this slow pace could suggest potential issues with the business model's appeal, franchisee profitability, or the franchisor's ability to successfully expand its system, which may affect brand recognition and support.

Potential Mitigations

  • A discussion with your business advisor is necessary to evaluate the potential reasons for the system's slow growth.
  • Interviewing current franchisees about their performance and satisfaction can provide insight into the system's viability.
  • Your accountant should help you model the financial implications of operating within a small system with limited brand presence.
Citations: Item 20

New/Unproven Franchise System

Medium Risk

Explanation

The franchise system has been operating since 1994 and franchising since 1998, so it is not a new or unproven system in terms of age. However, the system's small size (15 units as of 2020) and the franchisor's outdated disclosures may present risks similar to those of an unproven system, such as limited brand recognition and questions about the current state of operational support and franchisee performance.

Potential Mitigations

  • A business advisor can help you conduct extensive due diligence on the current health and viability of this long-standing but small system.
  • Speaking to a representative sample of franchisees is critical to understand the modern-day challenges and support they receive.
  • An accountant's review of your financial projections should factor in the risks associated with a small, slowly growing brand.
Citations: Item 1, Item 20

Possible Fad Business

Medium Risk

Explanation

The business model, focused on providing roller skating programs in schools, is dependent on the academic calendar and the policies of local school districts. The FDD's Risk Factors section explicitly notes the seasonal nature of the business (typically 9 months a year) and reliance on the financial situations of schools. This dependency on external factors beyond your control could affect long-term viability if school budgets or physical education trends change unfavorably.

Potential Mitigations

  • Engaging a business advisor to research the long-term viability and trends in school-based enrichment programs is advisable.
  • You should independently investigate the stability of school funding and physical education programs in your target market.
  • Developing a business plan with your financial advisor that accounts for seasonality and potential dips in school participation is crucial.
Citations: Item 1

Inexperienced Management

High Risk

Explanation

Item 1 states that the franchisor, Skatetime, "does not currently operate a business of the type being franchised." While an affiliate (SSPI) operates a prototype and has experience since 1994, the legal entity you are contracting with lacks direct, current operational experience. This could potentially impact the quality and relevance of the support and guidance you receive, as the franchisor is not directly facing the same day-to-day challenges.

Potential Mitigations

  • Your attorney should clarify the legal and operational relationship between Skatetime and its experienced affiliate, SSPI.
  • It is important to ask the franchisor how they ensure their guidance remains relevant without directly operating a unit.
  • Discussions with current franchisees can help you gauge the actual quality of support provided by the non-operating franchisor entity.
Citations: Item 1, Item 2

Private Equity Ownership

Low Risk

Explanation

This risk, related to private equity ownership prioritizing short-term returns over long-term system health, was not identified in the FDD package. The document indicates Skatetime is a privately held corporation, and there is no mention of ownership by a private equity firm. However, it is always wise to understand the ownership structure and its potential impact on the business and your investment in it.

Potential Mitigations

  • Your attorney can help you verify the company's ownership structure and inquire about any potential future sales of the company.
  • Consulting with a business advisor can help you understand the different implications of various ownership structures on a franchise system.
Citations: Item 1

Non-Disclosure of Parent Company

Medium Risk

Explanation

This risk was not identified in the FDD package. The franchisor discloses its affiliate, Skatetime School Programs, Inc. (SSPI), in Item 1. Since Skatetime itself does not operate units and relies on its affiliate's experience, the financial health of the combined enterprise is important. However, the FDD does not provide financial statements for the parent or affiliate, which could obscure a complete picture of the system's overall financial stability.

Potential Mitigations

  • Your accountant should review the provided financials and note the absence of affiliate financial statements as a potential information gap.
  • It is advisable to have your attorney inquire why affiliate financials are not included, given their central role in operations.
Citations: Item 1, Item 21

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 explicitly states, "Company has no predecessors." This simplifies due diligence, as you do not need to investigate the history of prior entities that may have operated the system. However, a thorough review of the franchisor's own history, as disclosed in the FDD, remains essential.

Potential Mitigations

  • A review of the franchisor's complete history with your attorney is still a crucial step.
  • Discussing the system's evolution with long-term franchisees can provide valuable historical context.
Citations: Item 1

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package. Item 3 states, "No litigation is required to be disclosed in this Offering Circular." The absence of disclosed litigation, particularly claims of fraud or misrepresentation from other franchisees, is a positive indicator. However, this does not guarantee the absence of all disputes, only those meeting the legal threshold for disclosure.

Potential Mitigations

  • Your attorney can conduct independent searches for litigation that may not have met the criteria for FDD disclosure.
  • Asking current and former franchisees about their experiences and any disputes they may have had provides valuable insight.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
6
0
9

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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3

Financial & Fee Risks

Total: 10
4
3
3

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.

4

Legal & Contract Risks

Total: 16
4
4
8

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.

5

Territory & Competition Risks

Total: 5
2
1
2

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.

6

Regulatory & Compliance Risks

Total: 10
3
4
3

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.

7

Franchisor Support Risks

Total: 4
2
2
0

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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8

Operational Control Risks

Total: 12
3
6
3

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.

9

Term & Exit Risks

Total: 18
6
9
3

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.

10

Miscellaneous Risks

Total: 2
2
0
0

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.