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Tcby

Tcby Systems, LLC
https://www.tcby.com/franchise/
1-801-412-8890
1717 S. 4800 W, Salt Lake City, Utah 84104

Initial Investment Range

$135,400 to $699,467

Franchise Fee

$35,000

We offer franchises to own and operate TCBY-branded retail outlets in two different formats: a store and a kiosk.

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Tcby April 30, 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

The franchisor is owned by a new parent entity, TCBY Franchising Holdco, LLC (TCBY), formed in August 2024. The financial statements in Exhibit A only cover five months of operation and show a net loss of $427,498. This lack of a multi-year, stable financial history and the immediate operational loss may indicate financial instability. The provided Guarantee of Performance is from this same new, loss-making entity, which could affect its ability to provide long-term support.

Potential Mitigations

  • Your accountant must carefully analyze the provided financials, including all footnotes and the parent company's guarantee.
  • In discussions with your business advisor, you should question the franchisor about its capitalization and plans for achieving profitability.
  • It is wise to have your attorney review the terms of the parent guarantee to understand its practical enforceability and limitations.
Citations: Item 1, Item 21, Exhibit A

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a significant, ongoing decline in the number of franchised outlets, from 172 at the start of 2022 to 125 at the end of 2024. In 2024 alone, 23 outlets ceased operations. Critically, a subsequent event note in the financial statements (Exhibit A) discloses that an additional 18 franchise locations closed after the end of 2024. This alarming rate of closures suggests significant, systemic problems and potential franchisee distress.

Potential Mitigations

  • You should contact a significant number of former franchisees from the list in Exhibit E to understand why they left the system.
  • A thorough review of the high turnover rate and its potential impact on brand value and support systems should be conducted with your business advisor.
  • Your accountant can help calculate the effective annual closure rate and assess what this implies about the business model's viability.
Citations: Item 20, Exhibit A

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD Package. The data in Item 20 shows the franchise system is rapidly shrinking, not growing. A rapidly growing system can sometimes strain a franchisor's ability to provide adequate support to all franchisees. While this specific risk is not present, the system's contraction presents its own set of challenges, such as declining brand presence and potential issues with supplier relationships.

Potential Mitigations

  • Engaging a business advisor to analyze system trends, whether growth or decline, can provide crucial context for your investment decision.
  • Your attorney should review the franchisor's obligations for support to ensure they are not diminished during periods of system contraction.
  • It is important to discuss with your accountant how system size might affect your potential revenue and access to resources.
Citations: Not applicable

New/Unproven Franchise System

High Risk

Explanation

While TCBY is an established brand, the franchisor entity and its parent are new, having been formed through a transaction and restructuring in late 2023 and 2024. Item 2 shows the Interim CEO was appointed in April 2025. This new ownership and leadership structure presents risks associated with an unproven management team, as their strategy and ability to stabilize the shrinking system and provide effective support are not yet demonstrated over time.

Potential Mitigations

  • A business advisor can help you research the track record of the new parent company and its principals with other brands.
  • In your due diligence calls with current franchisees, you should ask about changes in support and strategy since the ownership transition.
  • Understanding the new management team's vision and operational plans is a critical topic to discuss with the franchisor.
Citations: Item 1, Item 2

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD Package. The TCBY brand operates in the frozen yogurt industry, which is a mature and well-established market segment rather than a new or fleeting trend. The business concept does not appear to be based on a fad. However, operating in a mature market presents its own challenges, such as high levels of competition, which is disclosed in Item 1 of the FDD.

Potential Mitigations

  • Working with a business advisor to conduct a thorough competitive analysis in your specific proposed market is a crucial step.
  • You should develop a robust local marketing plan with a marketing professional to differentiate your store from local competitors.
  • An accountant can help you project financials that realistically account for operating in a highly competitive industry.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

The FDD in Item 2 indicates that the Interim Chief Executive Officer, James Carnrite, was appointed in April 2025, the same month the FDD was issued. Several other key personnel are also relatively new to their positions or have primary experience with an affiliated brand. While they may have industry experience, their limited tenure in these specific leadership roles for the TCBY system introduces uncertainty regarding their ability to execute a turnaround for the brand.

Potential Mitigations

  • A discussion with your business advisor about the potential impacts of new leadership on a franchise system could be beneficial.
  • When speaking with the franchisor, you should inquire about the long-term strategic vision of the new management team.
  • During franchisee validation calls, it is important to ask about their interactions with and confidence in the new leadership.
Citations: Item 2

Private Equity Ownership

Medium Risk

Explanation

The complex corporate structure detailed in Item 1, involving multiple layers of holding companies (e.g., FBIP, Holdco, FBH), is characteristic of private equity ownership. A recent transaction in October 2023 further suggests this. This ownership model may prioritize short-term returns for investors, potentially leading to decisions about fees, support levels, or a future sale of the brand that may not align with your long-term interests as a franchisee.

Potential Mitigations

  • Your business advisor can assist in researching the private equity firm's reputation and its management history with other franchise systems.
  • In discussions with current franchisees, ask about any changes they have experienced since the new ownership took over.
  • Your attorney should carefully review the franchisor's rights to sell or assign the franchise system and explain the potential implications for you.
Citations: Item 1

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD Package. Item 1 discloses a multi-layered parent company structure. While the financials for the ultimate parent are not provided, the immediate parent and guarantor, TCBY Franchising Holdco, LLC, is disclosed, and its financials are included. The primary risk here relates to the financial weakness of the disclosed entity, which is addressed in the 'Disclosure of Franchisor's Financial Instability' risk.

Potential Mitigations

  • A franchise attorney should always be consulted to review the corporate structure disclosed in Item 1 for clarity and completeness.
  • It is important for your accountant to verify that the provided financial statements comply with all disclosure requirements.
  • In your due diligence, asking the franchisor to explain the roles of the different parent entities can provide valuable insight.
Citations: Not applicable

Predecessor History Issues

Medium Risk

Explanation

Item 1 describes a history involving predecessors and affiliates, including a recent acquisition and restructuring. The high rate of franchisee turnover and system decline detailed in Item 20 may suggest that the current franchisor has inherited systemic issues from its predecessors. Understanding the historical context is important, as past problems with the brand or system could continue to affect your business's performance and the franchisor's ability to provide support.

Potential Mitigations

  • Your attorney can help you understand the legal implications of the predecessor history and any liabilities that may have been assumed.
  • A business advisor could help you research the historical performance and reputation of the brand under previous ownership.
  • When speaking with long-term franchisees, you should inquire about their experiences under both current and prior management.
Citations: Item 1, Item 20

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 Item.' The absence of disclosed litigation against the franchisor alleging fraud, misrepresentation, or significant contract breaches is a positive indicator. However, this does not eliminate all potential for future disputes, which are governed by the terms of the Franchise Agreement.

Potential Mitigations

  • Your attorney should still carefully review the dispute resolution clauses in the Franchise Agreement to understand your rights and obligations.
  • It is good practice to perform independent online searches for any news or discussions related to the franchisor, as guided by your business advisor.
  • While no litigation is disclosed, asking current franchisees about their relationship with the franchisor remains a key part of due diligence.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
6
2
7

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
4
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

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4

Legal & Contract Risks

Total: 16
7
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.

5

Territory & Competition Risks

Total: 5
2
2
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
5
4
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
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
4
6
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
8
10
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.

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.