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Structural Elements

Structural Elements Franchising, LLC
https://www.structuralelements.com
1-301-766-9293
13214 Fountainhead Plaza, Hagerstown, Maryland 21742

Initial Investment Range

$693,450 to $1,448,815

Franchise Fee

$70,000 to $90,400

The franchise offered is for a unit franchise business (“Unit Franchise Business”). As part of the Unit Franchise Business, the “Unit Franchisee” develops, owns, and operates a standalone Structural Elements clinic within a designated area from which clients are provided specialized orthopedic and healthcare services utilizing a blend of Eastern and Western treatment modalities to promote whole-body wellness, longevity, and performance.

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Structural Elements April 18, 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
4
2
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor, Structural Elements Franchising, LLC (SEF), explicitly warns of its financial condition. The audited financial statements in Exhibit F confirm this risk, showing significant and accelerating net losses for the past two fiscal years, barely positive members' equity, and a stated inability to meet a key loan covenant. A note also references its ability to continue as a 'going concern' is contingent on future success. This financial weakness could severely impact SEF's ability to support you.

Potential Mitigations

  • Your accountant must conduct a thorough analysis of the financial statements, including all footnotes and the auditor's report, to assess the franchisor's viability.
  • Discussing the specific causes of the losses and the loan covenant default with the franchisor is a critical step your business advisor should guide you through.
  • It is crucial to have your attorney evaluate the implications of the stated 'going concern' contingency and weak financial state.
Citations: Item 21, Exhibit F

High Franchisee Turnover

High Risk

Explanation

While Item 20 tables show no franchisee cessations, a footnote states that as of the FDD's issuance, one of the two franchised clinics is 'closed pending relocation.' This suggests a potential 50% non-operational rate for the very small franchise system, which is a significant indicator of instability and potential franchisee distress, despite the stable appearance of the data tables. This discrepancy between the tables and the notes presents a considerable risk regarding system health.

Potential Mitigations

  • Your attorney should help you draft specific questions for the franchisor to clarify the status of the closed unit and the reasons for its closure.
  • It is imperative to contact both franchisees listed in Exhibit B to understand their operational status and experiences.
  • A business advisor can help you assess the risk associated with a small system where a high percentage of units may be struggling.
Citations: Item 20

Rapid System Growth

High Risk

Explanation

The franchise system is extremely small, with only two franchised units and one company-owned unit, and has shown no growth in total unit count over the past three years. While not growing rapidly, the combination of a very small system size and the franchisor's significant financial losses, as detailed in Item 21, presents a risk. The franchisor may lack the resources and scale to provide robust support, develop the brand, or achieve economies of scale.

Potential Mitigations

  • A business advisor can help you evaluate the risks of joining a small, stagnant system and its potential impact on brand recognition and support.
  • In discussions with the franchisor, inquire about their specific, funded plans for future growth and how they will support new units.
  • Your accountant should review the franchisor's financials to determine if they can sustain operations and support you without immediate system growth.
Citations: Item 20, Item 21

New/Unproven Franchise System

High Risk

Explanation

SEF has been franchising since 2016 but has only two operating franchises, indicating a very small and slowly developing system. The business model is complex, involving unit franchisees managing other 'micro-franchisees.' Combined with the franchisor's poor financial performance disclosed in Item 21, this presents the risk of an unproven franchise concept that may lack the refined systems, brand recognition, and financial stability needed for your success. This is a significant risk for a prospective franchisee.

Potential Mitigations

  • Engaging a business advisor to perform deep due diligence on the viability and complexity of this multi-tiered franchise model is critical.
  • You should speak with all current and former franchisees to understand the reality of operating within this system.
  • Your accountant needs to scrutinize the franchisor's financials to assess if the company has sufficient capital to support its existing and future franchisees.
Citations: Item 1, Item 2, Item 20, Item 21

Possible Fad Business

Medium Risk

Explanation

The business model, centered on orthopedic wellness and specific treatment modalities, operates in a competitive and evolving healthcare and wellness market. While the services address a real need, the specific 'Structural Elements' brand and multi-tiered system are not widely established. There is a potential risk that the concept's appeal could be limited or subject to shifting consumer preferences and healthcare trends, and a prospective franchisee should consider the long-term market sustainability beyond its current niche.

Potential Mitigations

  • Commissioning market research with a business advisor to evaluate the long-term demand for these specific wellness services in your local area is advisable.
  • You should ask the franchisor about their strategy for innovation and adapting the service offerings to stay competitive and relevant.
  • Discuss the business model's resilience to economic shifts and competition with your accountant and other business professionals.
Citations: Item 1, Item 11

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD Package. Management experience is important because a team lacking experience in franchising or the specific industry may struggle to provide effective support, training, and strategic direction. An inexperienced team could lead to undeveloped operational systems, poor marketing, and a higher risk of failure for franchisees. Evaluating the background of the key personnel listed in Item 2 is a crucial step in due diligence.

Potential Mitigations

  • It is wise to have your business advisor help you research the professional backgrounds and track records of the key executives listed in Item 2.
  • Posing questions to current franchisees about the management team's competence and responsiveness can provide valuable insight.
  • An attorney can help you understand the roles and responsibilities of the management team as outlined in the franchise documents.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD Package, as Item 1 does not indicate ownership 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 franchisees. This could manifest as increased fees, reduced support, or a quick sale of the system, creating uncertainty for your investment.

Potential Mitigations

  • If considering a PE-owned franchise, it is beneficial to have a business advisor research the firm's history with other franchise brands.
  • Consulting an attorney to understand any clauses related to the sale or assignment of the franchise system is a prudent measure.
  • Speaking with franchisees who have been with the system before and after a PE acquisition can offer direct perspectives.
Citations: Not applicable

Non-Disclosure of Parent Company

Medium Risk

Explanation

The franchisor, SEF, is a wholly owned subsidiary of Structural Elements Holdings LLC (SEH). However, the FDD does not provide financial statements for the parent company, SEH. While this may be compliant with disclosure rules if the parent does not guarantee obligations, it obscures the overall financial health of the consolidated enterprise. Given SEF's weak financial state, the lack of insight into the parent company's resources and stability presents a risk to understanding the true backing of the franchise system.

Potential Mitigations

  • Your accountant should analyze SEF's financials to assess its standalone viability without parent company support.
  • Inquiring with the franchisor about the financial health of the parent company and its commitment to supporting SEF is a key due diligence step.
  • Your attorney can advise on the implications of the parent company not providing a guarantee for the franchisor's obligations.
Citations: Item 1, Item 21

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD Package. A predecessor is a company from which the franchisor acquired the business. If a franchisor has a predecessor, it is important to review their history for issues like litigation, bankruptcy, or high franchisee turnover, as these problems could be inherited by the new entity. A lack of clear disclosure about a predecessor's history can hide systemic problems and prevent you from having a complete picture of the franchise's past performance.

Potential Mitigations

  • An attorney should carefully review Item 1 to identify any disclosed predecessors and their history.
  • If a predecessor exists, researching their public records for litigation or bankruptcy could reveal important information, a task your attorney can assist with.
  • Asking long-term franchisees about their experience under any previous ownership can provide valuable historical context.
Citations: Item 1

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, particularly franchisee-initiated lawsuits alleging fraud, misrepresentation, or breach of contract, can be a major red flag. It may signal systemic problems within the franchise, such as unfulfilled promises, a flawed business model, or an overly aggressive franchisor. The absence of such litigation is a positive indicator, but should be weighed against other risk factors.

Potential Mitigations

  • Your attorney should confirm the absence of disclosed litigation and can perform independent searches for any other legal disputes.
  • Even without litigation, asking current and former franchisees about their relationship with the franchisor can reveal potential areas of conflict.
  • A business advisor can help you evaluate the overall health of the franchise system through other data points like franchisee turnover and financial stability.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
4
0
11

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
5
5
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.

4

Legal & Contract Risks

Total: 16
7
4
5

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
5
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.

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

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
6
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.

9

Term & Exit Risks

Total: 18
8
8
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: 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.