Not sure if The Ten Spot is right for you?

Take our 1-minute franchise matching quiz to get in touch with a Franchise Advisor that can match you with your perfect franchise based on your goals, experience, and investment range.

Take the Quiz & Get Matched

The Ten Spot

The Ten Spot Ltd.
https://www.the10spot.com
1-416-561-4253
2967 Dundas St. W. #162D, Toronto, Ontario M6P 1Z2, Canada

How much does The Ten Spot cost?

Initial Investment Range

$335,000 to $599,000

Franchise Fee

$75,750 to $125,000

We offer franchises for a beauty bar and grooming boutique under THE TEN SPOT® name and mark (each, a “Beauty Bar”) specializing in manicures, pedicures, facial treatments, body waxing and other grooming services we authorize and certain designated beauty and/or other grooming-related products that we designate or otherwise approve for retail sale from your Beauty Bar.

Enjoy our partial free risk analysis below

Unlock the full risk analysis to access 9 more categories covering 100+ risks.

The Ten Spot August 16, 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, The Ten Spot Ltd. (Ten Spot), explicitly warns of its questionable financial condition. Audited financials in Exhibit F confirm this, showing very low stockholder equity of only $14,825 in 2024 after two prior years of net losses. This weakness, which has prompted some states to require fee deferrals, raises serious concerns about Ten Spot's ability to provide support, grow the brand, or even remain a viable business, putting your investment at significant risk.

Potential Mitigations

  • A franchise accountant must conduct a deep analysis of the financial statements, including footnotes and cash flow, to assess the franchisor's viability.
  • Understanding the implications of a fee deferral requirement in certain states should be discussed with your attorney.
  • Inquire with your business advisor about the franchisor's capitalization and its plans to improve its financial position.
Citations: Item 21, Exhibit F, Special Risks to Consider About This Franchise, State-Specific Addenda (IL, MD)

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a highly unstable and shrinking U.S. franchise system. Over the past three fiscal years, the number of U.S. outlets has declined from a peak of five to just three. During this period, there were two closures ('ceased operations') and one unit was reacquired by the franchisor. This extremely high turnover rate in such a small system is a critical red flag, suggesting potential issues with profitability, franchisee satisfaction, or the overall business model.

Potential Mitigations

  • It is crucial to contact former franchisees listed in Item 20 to understand their reasons for leaving the system; your attorney can help prepare questions.
  • With your accountant, analyze the turnover rates as a percentage of the total system size to grasp the scale of the instability.
  • You should question the franchisor directly about the specific circumstances of each closure and reacquisition with guidance from your business advisor.
Citations: Item 20, Exhibit E

Rapid System Growth

Low Risk

Explanation

This specific risk was not identified in the FDD package. The U.S. franchise system is currently shrinking, not growing rapidly. A franchisor expanding too quickly can strain its resources, potentially leading to inadequate support, training, and quality control for its franchisees. This can diminish the value of the brand and negatively impact your business operations.

Potential Mitigations

  • When evaluating any franchise, your accountant should review financials in conjunction with growth data to ensure support resources are scaling appropriately.
  • A business advisor can help you assess if a franchisor's support staff and infrastructure seem adequate for its current and projected system size.
  • Asking existing franchisees about the quality and timeliness of support is a vital due diligence step your attorney can guide you on.
Citations: Not applicable

New/Unproven Franchise System

High Risk

Explanation

Ten Spot is an unproven franchise system in the United States, a fact highlighted as a 'Short Operating History' in its own Special Risks section. The franchisor began offering U.S. franchises in 2018 but has only three operational units as of April 2024, a number that has declined recently. Investing in such a new and small system carries a heightened risk of business model flaws, inadequate brand recognition, and potential system failure.

Potential Mitigations

  • Intensive due diligence is required; speak with all current U.S. franchisees listed in Item 20 about their experience and challenges.
  • With a business advisor, carefully research the brand's much larger Canadian operations to understand its history, but be aware that success may not translate.
  • Your attorney should help you scrutinize the entire agreement for protections given the higher risk profile of an emerging system.
Citations: Items 1, 20, Special Risks to Consider About This Franchise

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD. The concept of a beauty bar offering services like manicures, pedicures, and waxing is part of an established industry, not a temporary fad. A fad-based business carries the risk that consumer interest could decline rapidly, potentially leaving you with a worthless business and ongoing contractual obligations long after the trend has passed.

Potential Mitigations

  • A business advisor can help you research any business concept to assess its long-term market demand and sustainability.
  • It is wise to evaluate a company's plans for innovation and adaptation to stay relevant beyond initial trends.
  • Your financial advisor can help model the business's potential resilience to economic shifts and changing consumer tastes.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

While Ten Spot's leadership has experience operating the brand in Canada, their track record in successfully managing and growing a U.S. franchise system is very limited. As shown in Items 20 and 21, the U.S. operation is small, shrinking, and financially weak. This lack of demonstrated success in the target market suggests that management's experience may not be sufficient to overcome the significant challenges the U.S. system faces, creating a risk of inadequate strategic guidance and support.

Potential Mitigations

  • A thorough review of the management team's specific experience in U.S. franchising should be conducted with your business advisor.
  • Question the franchisor on their specific strategies for addressing the challenges and lack of growth in the U.S. market.
  • Speaking with U.S. franchisees about the quality of management's support and guidance is a critical step your attorney can facilitate.
Citations: Items 1, 2, 20, 21

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Private equity ownership can introduce risks, as the firm's goal is typically to generate a return for its investors over a fixed period. This can sometimes lead to decisions that prioritize short-term profits, such as cutting franchisee support or raising fees, over the long-term health of the brand and its franchisees.

Potential Mitigations

  • If a franchisor is PE-owned, your business advisor should help you research the firm’s reputation and track record with other franchise brands.
  • Consulting an attorney is important to understand how an assignment clause could affect you if the PE firm sells the franchise system.
  • It's valuable to ask existing franchisees about any changes in operations or support since a PE acquisition.
Citations: Not applicable

Non-Disclosure of Parent Company

Medium Risk

Explanation

The franchisor is a subsidiary of a parent holding company. The FDD provides financial statements only for the subsidiary, which show it to be very thinly capitalized. The parent company does not provide a financial guarantee for the franchisor's obligations. This structure obscures the true financial strength of the overall organization and means the entity you are contracting with has minimal assets to support its commitments to you, which is a significant risk.

Potential Mitigations

  • Your accountant must analyze the provided financials and recognize the risk associated with a thinly capitalized subsidiary.
  • Have your attorney inquire why the parent company is not providing its own financial statements or a guarantee of performance.
  • A business advisor can help you assess the operational risks when the direct franchisor has such limited financial resources.
Citations: Items 1, 21, Exhibit F

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package, as Ten Spot states it has no predecessors. When a franchisor has predecessors, it is important to scrutinize their history for issues like litigation, bankruptcy, or high franchisee turnover. Such problems could be inherited by the current franchisor and may indicate underlying systemic weaknesses that could affect your investment.

Potential Mitigations

  • Your attorney should always carefully review Item 1 of an FDD to identify any predecessors.
  • If predecessors exist, a business advisor can help you research their history and reputation independently.
  • It is wise to ask long-term franchisees about their experiences under any previous ownership.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD. Item 3 does not disclose any material litigation against the franchisor involving claims of fraud, misrepresentation, or franchise law violations. A pattern of such lawsuits can be a major red flag, potentially indicating systemic issues with the franchisor's sales practices, support obligations, or overall business conduct.

Potential Mitigations

  • It is always prudent to have your attorney review Item 3 and conduct an independent search for litigation not required to be disclosed.
  • Consulting with a business advisor to understand typical litigation levels in a given industry can provide valuable context.
  • You should discuss any disclosed litigation with current and former franchisees to understand their perspective.
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

Unlock Full Risk Analysis

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

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
10
2
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
3
1
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
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.

7

Franchisor Support Risks

Total: 4
3
1
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
8
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.

9

Term & Exit Risks

Total: 18
14
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.

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.