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Smash My Trash
How much does Smash My Trash cost?
Initial Investment Range
$372,050 to $492,200
Franchise Fee
$84,200 to $90,200
As a franchisee, you will own and operate a Smash My Trash® business featuring waste compaction services.
Enjoy our partial free risk analysis below
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Smash My Trash April 16, 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, Smash Franchise Partners, LLC (Smash Franchise Partners), has a significant negative net worth, with a Member's Deficit exceeding $7.4 million as of year-end 2024. The FDD's "Special Risks" section and notes to the financial statements confirm this weakness and a failure to meet loan covenants in 2024. This raises concerns about the company's long-term ability to support franchisees, invest in the brand, and fulfill its obligations.
Potential Mitigations
- Your accountant must conduct a deep analysis of the audited financial statements, including all footnotes and the auditor's report.
- Discuss the implications of the negative net worth and loan covenant defaults on the franchisor's stability with your financial advisor.
- Seeking legal counsel regarding the franchisor's financial assurance requirements, such as surety bonds mentioned in state addenda, is critical.
High Franchisee Turnover
High Risk
Explanation
The franchisor explicitly warns of a high turnover rate, stating that 115 franchised territories ceased operations, were terminated, not renewed, or were reacquired over the last three years. Item 20 data confirms a significant number of exits, with 56 in 2023 alone. Such high turnover is a critical warning sign that may indicate systemic issues, franchisee dissatisfaction, or problems with the business model's profitability or sustainability.
Potential Mitigations
- Contacting a significant number of former franchisees from the list in Exhibit F is essential to understand why they left the system.
- Your business advisor should help you analyze the turnover rates relative to the system's size over the past three years.
- Ask the franchisor for a detailed explanation of the high exit numbers, and have your attorney evaluate the response.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD Package. Rapid system growth can strain a franchisor's resources, potentially leading to inadequate support for franchisees. It's important to assess whether a franchisor's support infrastructure is keeping pace with its unit expansion to ensure new and existing franchisees receive the assistance they need to succeed.
Potential Mitigations
- In discussions with the franchisor, inquire about their plans for scaling support systems to match franchisee growth.
- Your business advisor can help you assess if the management team has experience in managing a rapidly growing network.
- Talking to franchisees who joined at different times can provide insight into whether support quality has changed as the system expanded.
New/Unproven Franchise System
High Risk
Explanation
The franchisor began offering franchises in August 2018. While not a brand-new startup, the system has experienced significant financial issues, high turnover, and litigation, as disclosed elsewhere. These factors, combined with a relatively short history, suggest that the business model and support systems may still be evolving and pose a higher risk than a more mature, stable franchise system. This is an important consideration for your investment.
Potential Mitigations
- A thorough review of the management team's prior industry and franchising experience described in Item 2 should be done with your business advisor.
- Your accountant must carefully analyze the financial statements in Item 21 for signs of stability and sustainable profitability.
- It is crucial to speak with a broad range of franchisees to understand the system's operational and financial realities.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD Package. A fad business is tied to a fleeting trend and lacks long-term consumer demand. Investing in such a concept is risky because your contractual obligations, such as royalty payments, continue even if the trend fades and sales decline. Evaluating whether a business model addresses a sustainable market need versus a temporary novelty is a crucial part of due diligence.
Potential Mitigations
- Your business advisor can help you conduct independent market research to assess the long-term demand for the services offered.
- Question the franchisor about their plans for innovation and adaptation to stay relevant beyond any current market trends.
- Assessing the business's resilience in different economic climates is a prudent step to take with your financial advisor.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD Package. The backgrounds of the key executives are detailed in Item 2. They appear to have several years of experience with Smash My Trash and its affiliates. However, a lack of deep experience in managing a large franchise system can sometimes lead to challenges in providing adequate support, training, and strategic direction, which are important factors for a franchisee's success.
Potential Mitigations
- It is still wise to discuss the quality and responsiveness of management's support with current franchisees.
- Your business advisor can help you evaluate whether the executive team's skills align with the needs of a large franchise network.
- Inquiring about the franchisor's use of experienced outside franchise consultants can provide additional comfort.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD Package. The FDD does not disclose ownership by a private equity firm. When a PE firm owns a franchisor, there is a potential risk that decisions may prioritize short-term investor returns over the long-term health of franchisees. This can sometimes manifest as reduced support, increased fees, or a focus on rapid sales over sustainable growth.
Potential Mitigations
- If you were to encounter a PE-owned franchisor, researching the firm's history with other franchise brands would be a key diligence step for your business advisor.
- An attorney could help you understand the implications of the franchisor's right to sell the system.
- Speaking with franchisees who have been through a sale from one PE owner to another would offer valuable insight.
Non-Disclosure of Parent Company
Medium Risk
Explanation
Smash Franchise Partners discloses that its parent company is SMT Holdings, LLC. The franchisor's audited financial statements are provided, but the parent company's financials are not. While not explicitly required by rule unless the parent guarantees obligations or is otherwise integral, the absence of parent financials can obscure the ultimate financial strength and resources backing the franchise system, especially when the franchisor entity itself shows a significant net worth deficit.
Potential Mitigations
- Your accountant should evaluate the franchisor's financials on a standalone basis and consider the risks associated with the lack of parent company financial data.
- A legal professional should review the relationship between the parent and franchisor, including any disclosed guarantees or support obligations.
- In discussions with the franchisor, you could ask about the financial health and commitment of the parent company to the franchise system.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD Package. Item 1 states that the franchisor has no predecessors. A predecessor is a company from which the franchisor acquired the major portion of its assets. When a predecessor exists, it is important to review their history for issues like litigation, bankruptcy, or high franchisee turnover, as these could indicate historical problems with the system that may have been inherited by the current franchisor.
Potential Mitigations
- When analyzing an FDD with predecessors, it's crucial that your attorney reviews Items 3 and 4 for any disclosed litigation or bankruptcy history.
- Your business advisor should research the predecessor's public reputation and history.
- Speaking with long-term franchisees who operated under the predecessor would provide valuable historical context.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a significant and concerning pattern of litigation. A concluded arbitration (Blanchat) resulted in a $2.8 million award to former franchisees for misrepresentations in Item 19. The State of Washington issued a consent order against the franchisor for similar antifraud violations. Multiple other franchisee-initiated lawsuits alleging fraud and misrepresentation are pending. This history suggests a high risk of disputes and raises questions about the franchisor's sales and disclosure practices.
Potential Mitigations
- A thorough review of the allegations and outcomes of all legal actions in Item 3 with your franchise attorney is absolutely critical.
- The findings of misrepresentation in past cases should be considered a major red flag when evaluating any financial claims made by the franchisor.
- You should discuss this litigation history with a significant number of current and former franchisees.
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.
