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January 1, 2024 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
2
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor explicitly discloses that its financial condition “calls into question [its] financial ability to provide services and support to you.” This is a significant warning. Furthermore, the audited financial statements provided in Exhibit D for the year ended December 31, 2023, appear to be blank templates with no actual financial data. This lack of transparency presents a substantial risk, as you cannot independently verify the franchisor’s financial stability or its ability to support your business.

Potential Mitigations

  • Your accountant must demand and thoroughly review complete, audited financial statements for the last three fiscal years.
  • It is crucial to have your franchise attorney investigate if a financial performance bond or fee escrow is required by your state due to this instability.
  • A business advisor can help you assess if the franchisor has sufficient capital and cash flow from royalties, not just initial fees, to sustain operations.
Citations: Special Risks, Item 21, Exhibit D

High Franchisee Turnover

High Risk

Explanation

The data in Item 20 suggests a notable rate of franchisee turnover. In 2023, four franchises were terminated out of a starting base of 44 (a 9% termination rate). Similarly, in 2022, four units were terminated from a base of 40 (a 10% rate). Such figures could indicate potential issues within the system, such as unprofitability, franchisee dissatisfaction, or conflicts with the franchisor, creating a higher risk for your investment.

Potential Mitigations

  • It is imperative to contact a significant number of former franchisees from the list in Item 20 to understand their reasons for leaving the system.
  • Your accountant should analyze the turnover data across all categories (terminations, non-renewals, ceased operations) to assess the system's overall health.
  • Discussing the specific reasons for the high termination rate directly with the franchisor is a key step your attorney can help you navigate.
Citations: Item 20

Rapid System Growth

Medium Risk

Explanation

Item 20 data shows the system has grown rapidly, from 21 franchised outlets at the start of 2021 to a projected 47 by the end of 2023. While growth can be positive, such quick expansion, especially for a young franchisor with disclosed financial concerns, may strain its ability to provide adequate training, site selection assistance, and ongoing operational support to all franchisees. This could compromise the quality of support you receive.

Potential Mitigations

  • In discussions with current franchisees, a business advisor can help you formulate questions about the quality and timeliness of the support they currently receive.
  • Inquire with the franchisor about how they have scaled their support infrastructure, including personnel and systems, to match this rapid growth.
  • Your accountant should review the franchisor's financials to determine if they have allocated sufficient resources to support an expanding system.
Citations: Item 20

New/Unproven Franchise System

High Risk

Explanation

THE B-12 STORE FRANCHISE, INC. (The B-12 Store) explicitly warns of its limited operating history as a “Special Risk.” The company was formed in April 2021 and only began offering franchises in November 2022. Investing in a young franchise system carries higher risk because its business model, support systems, and brand recognition are not yet fully proven in the marketplace. This could affect your potential for success compared to investing in a more established brand.

Potential Mitigations

  • A thorough investigation of the management team's prior experience in both franchising and the healthcare services industry should be conducted with a business advisor.
  • Speaking with the earliest franchisees is essential to understand their experience with the developing systems and support.
  • Your attorney may be able to negotiate more favorable terms, such as reduced fees or enhanced support, to compensate for the higher risk of a new system.
Citations: Special Risks, Item 1

Possible Fad Business

Medium Risk

Explanation

The business focuses on providing injectable vitamin therapies. While wellness services are a growing market, the specific demand for injectable vitamins could be tied to current health and social media trends. There is a risk that this business model could be a fad with limited long-term, mainstream viability. If consumer interest wanes, your business could face declining sales, even though your long-term contractual obligations to The B-12 Store would remain.

Potential Mitigations

  • Engage a business advisor to research the long-term market projections for elective vitamin injection services beyond current trends.
  • Question the franchisor on their plans for research, development, and service innovation to adapt to changing consumer demands.
  • A financial advisor can help you assess the business model's resilience to economic shifts and evolving wellness trends.
Citations: Item 1

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD package. Management experience is critical; if a franchisor's leadership lacks experience in the specific industry or in managing a franchise system, they may be unable to provide effective support, training, and strategic direction. This can lead to operational inefficiencies and a higher risk of failure for franchisees who rely on that expertise.

Potential Mitigations

  • With a business advisor, you should thoroughly vet the backgrounds of the key executives listed in Item 2.
  • Posing questions to current franchisees about the competence and responsiveness of the management team can provide valuable insights.
  • Your attorney can help you research the professional history of the franchisor's leadership team.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. When a franchisor is owned by a private equity firm, there's a risk that decisions may prioritize short-term investor returns over the long-term health of the system. This can sometimes lead to reduced support, increased fees, or a quick sale of the franchise system, creating uncertainty for franchisees.

Potential Mitigations

  • Researching the track record of any involved private equity firm with other franchise brands is a task for your business advisor.
  • Your attorney should analyze any clauses that give the franchisor a broad right to sell or assign the franchise agreement.
  • It is wise to ask current franchisees about any changes in operations or support since a private equity acquisition.
Citations: Item 1

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. Franchise law may require a parent company's financial statements to be disclosed if it guarantees the franchisor's obligations or is otherwise critical to the franchisee's success. Failure to provide these can hide the true financial stability and backing of the franchise system, preventing a complete risk assessment.

Potential Mitigations

  • Your attorney should verify the corporate structure and determine if a parent company's financials are required to be disclosed.
  • If a parent entity exists and provides guarantees, your accountant should insist on reviewing its financial statements.
  • Understanding the legal and financial relationship between a franchisor and its parent company is a critical discussion to have with your attorney.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

The franchisor states in Item 1 that it has no predecessors. This means the current entity, The B-12 Store Franchise, Inc., did not acquire its assets from a prior company that operated a similar business. Therefore, there is no hidden history of predecessor bankruptcy, litigation, or franchisee failure to consider. The risk profile is based entirely on the current franchisor's short operating history.

Potential Mitigations

  • Your attorney should confirm the accuracy of the 'no predecessors' statement through public record searches.
  • Focus your due diligence on the very limited operating history of the current franchisor entity with your business advisor.
  • An accountant can help analyze the financial health of the current entity, as there is no predecessor history to review.
Citations: Item 1

Pattern of Litigation

Low Risk

Explanation

Item 3 discloses one past lawsuit initiated by the franchisor's principals against a third party for trademark infringement, which was settled. There is no disclosure of a pattern of litigation initiated by franchisees against the franchisor alleging fraud or misrepresentation. The absence of such franchisee-initiated lawsuits is a positive sign, though the franchisor's limited history should be considered.

Potential Mitigations

  • Your attorney should still review the details of the disclosed litigation to understand its nature and outcome.
  • Performing an independent search for any other litigation involving the franchisor or its principals is a prudent step your attorney can take.
  • It is always wise to ask current franchisees if they are aware of any disputes, even those not rising to the level of disclosed litigation.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
3
1
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
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.

4

Legal & Contract Risks

Total: 16
6
5
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
2
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.

6

Regulatory & Compliance Risks

Total: 10
6
2
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.

7

Franchisor Support Risks

Total: 4
3
0
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.

8

Operational Control Risks

Total: 12
5
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.

9

Term & Exit Risks

Total: 18
9
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.

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.