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Speed Queen

Speed Queen Laundry Franchise, LLC
https://www.speedqueenlaundry.com
1-920-399-0999
221 Shepard Street, Ripon, Wisconsin 54971

Initial Investment Range

$1,199,663 to $1,983,000

Franchise Fee

$623,068 to $1,033,000

We offer franchises for the establishment, development and operation of high end laundromats under the SPEED QUEEN® name and operating system.

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Speed Queen April 25, 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.

1

Franchisor Stability Risks

Start Here
Total: 10
3
3
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

SQLF's financial statements in Exhibit A reveal significant, persistent net losses and a substantial members' deficit, raising questions about its viability without parent support. This is explicitly stated as a "Financial Condition" risk and confirmed by a "Going Concern" note from its auditors. Multiple states have imposed fee deferrals due to this financial weakness, which could impact SQLF's ability to provide ongoing support and services to you.

Potential Mitigations

  • Your accountant must thoroughly analyze the financial statements, including the 'Going Concern' note and the nature of the parent company's support letter.
  • Discuss the practical implications of the franchisor's financial state and its reliance on its parent with your franchise attorney.
  • A business advisor should help you assess the risk that support services could be reduced if the parent's support falters.
Citations: FDD Special Risks §4, Item 21, Exhibit A, Exhibit I

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a high franchisee turnover rate. In 2023, the system started with nine units and experienced two terminations and one reacquisition, representing a 33% annual churn rate. While the most recent year's data shows no terminations, this recent history of significant franchisee exits is a major red flag that may indicate potential dissatisfaction, profitability issues, or other systemic problems within the franchise.

Potential Mitigations

  • It is critical to contact former franchisees listed in Exhibit H, especially those who were terminated, to understand their experiences; your attorney can help frame questions.
  • Discuss the high 2023 turnover rate directly with the franchisor to understand the circumstances behind the exits.
  • A business advisor can help you assess if the issues that may have led to past turnover have been resolved.
Citations: Item 20 (Table 3), Exhibit H

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. Rapid growth in a franchise system can sometimes strain the franchisor's resources, potentially leading to a decline in the quality of support and training provided to individual franchisees. It is a factor to monitor as a system expands, ensuring support infrastructure keeps pace with unit growth.

Potential Mitigations

  • Your business advisor can help you research the franchisor's plans for scaling its support systems to match any future growth.
  • Inquiring with existing franchisees about the current quality and responsiveness of franchisor support is a valuable due diligence step.
  • An accountant can review the franchisor's financials to assess if they have the resources to support growth without diminishing service levels.
Citations: Item 20

New/Unproven Franchise System

High Risk

Explanation

SQLF has a "Short operating history," as explicitly disclosed in the FDD's Special Risks section. The company was formed in 2019 and has a small number of operating franchises as of year-end 2024. Investing in a newer system carries higher risk as its business model, support systems, and brand recognition are not as established as those of a more mature franchise, potentially impacting your long-term success.

Potential Mitigations

  • A business advisor can help you conduct in-depth due diligence on the viability of the business model and its track record so far.
  • Speaking with the earliest franchisees is essential to gauge the quality of support and the franchisor's development over time.
  • Your accountant should review the financials to assess if the company has sufficient capital to support its growth and overcome early challenges.
Citations: FDD Special Risks §2, Item 1, Item 20

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. A "fad" business is one tied to a short-term trend with limited long-term consumer demand. Investing in such a concept is risky because once public interest wanes, the business may no longer be viable, but your contractual obligations to the franchisor would likely continue for the full term.

Potential Mitigations

  • A business advisor can help you independently assess the long-term market demand for the product or service.
  • Careful consideration of the business's resilience to changing consumer tastes and economic downturns is a key part of due diligence.
  • Examining a franchisor's plans for innovation and adaptation can provide insight into its long-term strategy.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

Item 2 shows that key executives have significant experience with the ultimate parent company, Alliance Laundry Systems, a long-standing entity in the laundry industry. However, the franchise-specific entity, SQLF, has a shorter history. While management appears experienced in the industry, their track record with this specific franchise model is more limited, which is a factor to consider in your overall risk assessment.

Potential Mitigations

  • A business advisor can help you vet the management team's specific experience in franchising, not just the general industry.
  • Speaking with existing franchisees about the quality of management's support and strategic direction is a crucial due diligence step.
  • Inquiring about the backgrounds of the operational support team, not just senior executives, can provide a fuller picture.
Citations: Item 2

Private Equity Ownership

Medium Risk

Explanation

Item 1 discloses that BDT Capital Partners LLC, a private equity firm, owns a majority interest in the franchise system. Private equity ownership can introduce risks, as their typical focus may be on shorter-term investor returns. This could potentially lead to decisions like increased fees, reduced franchisee support, or a sale of the entire system, which might not align with your long-term interests as a franchisee.

Potential Mitigations

  • Researching the private equity firm's track record with other franchise systems they have owned can be instructive; a business advisor may assist.
  • It is wise to talk to franchisees about any changes in support, fees, or system direction since the private equity acquisition.
  • Your attorney should review any clauses related to the franchisor's right to sell or assign the franchise agreement.
Citations: Item 1

Non-Disclosure of Parent Company

Medium Risk

Explanation

The FDD discloses the parent companies, including the Ultimate Parent, Alliance Laundry Systems, LLC. However, the audited financial statements provided are for the franchisor entity (SQLF) only, not the parent. The financials note that a support letter from the parent exists to address the 'Going Concern' issue. The lack of parent financials means you cannot independently assess the financial strength of the entity guaranteeing the franchisor's viability.

Potential Mitigations

  • Your attorney should review the nature of the parent support letter mentioned in the financial statement notes to understand its terms.
  • An accountant can help assess the risks of relying on a support letter without having the parent company's full financial statements to review.
  • Understanding the legal relationship and obligations between the parent and the franchisor is a key topic to discuss with your attorney.
Citations: Item 1, Item 21

Predecessor History Issues

Low Risk

Explanation

The FDD states in Item 1, "We do not have any predecessors." This specific risk, related to issues inherited from a prior company that operated the franchise system, was therefore not identified in the FDD package. It is still important to understand a franchisor's complete history to assess the stability and evolution of the brand and its operating systems.

Potential Mitigations

  • Your attorney can help verify the franchisor's corporate history and confirm the absence of predecessors.
  • Researching the business background of the key executives listed in Item 2 can sometimes reveal links to prior related companies.
  • Asking long-term franchisees about the history of the brand and system can provide valuable context.
Citations: Item 1

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package, as Item 3 states, "No litigation is required to be disclosed in this Item." A pattern of litigation, particularly franchisee-initiated lawsuits alleging fraud or misrepresentation, can be a major red flag indicating systemic problems. The absence of such disclosures is a positive sign, but it does not guarantee a dispute-free relationship.

Potential Mitigations

  • Your attorney can conduct independent searches for litigation involving the franchisor or its principals that might not meet the criteria for FDD disclosure.
  • Speaking with current and former franchisees can provide insight into the nature of the franchisor-franchisee relationship.
  • Maintaining open communication with the franchisor can help resolve disagreements before they escalate into legal disputes.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
4
3
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

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3

Financial & Fee Risks

Total: 10
3
5
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.

4

Legal & Contract Risks

Total: 16
4
8
4

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
1
3
1

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
4
5
1

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
1
3
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.

8

Operational Control Risks

Total: 12
3
7
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.

9

Term & Exit Risks

Total: 18
9
7
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.

10

Miscellaneous Risks

Total: 1
1
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.