The Tox
Initial Investment Range
$258,250 to $660,800
Franchise Fee
$109,500 to $344,000
You will operate a business that provides patients with a variety of lymphatic-based body sculpting services and related products and merchandise under The Tox trademarks.
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The Tox April 21, 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor, The Tox Franchising Group, LLC (The Tox), explicitly discloses its financial condition as a special risk. The 2024 audited financial statements show a net loss of over $462,000 and a members' deficit of over $495,000. Current liabilities exceed current assets, which may indicate a strain on the ability to meet short-term obligations. This financial weakness could impact The Tox's ability to provide support or grow the brand, increasing your investment risk.
Potential Mitigations
- An experienced franchise accountant must review all financial statements, including footnotes, to assess the franchisor's viability and reliance on new franchise fees.
- Your attorney should investigate if any state financial assurance requirements, like an escrow or bond, have been imposed due to the financial state.
- Engaging a business advisor can help you evaluate if the franchisor has sufficient capital to meet its support obligations to you.
High Franchisee Turnover
Low Risk
Explanation
This specific risk was not identified. Item 20 data for the last three years shows no franchised outlets have been terminated, ceased operations, or were not renewed. However, as this is a very young system, monitoring franchisee success and satisfaction remains important. High turnover can be a major red flag indicating systemic problems with profitability, support, or the business model itself, so this data should be watched closely in future FDDs.
Potential Mitigations
- You should still contact current franchisees listed in Item 20 to discuss their satisfaction and profitability, which your business advisor can help facilitate.
- It is recommended that your accountant help you analyze future FDDs for any changes in franchisee turnover rates.
- Your attorney can help you understand the contractual reasons why a franchisee might be terminated or choose not to renew.
Rapid System Growth
Medium Risk
Explanation
Item 20 data indicates that the system is growing, with the number of franchised outlets increasing from one to six in the most recent year. While growth is often positive, very rapid expansion in a young system can sometimes strain a franchisor's ability to provide adequate training and support to all new locations. You should assess whether the franchisor's support infrastructure appears robust enough to handle this growth.
Potential Mitigations
- Question the franchisor directly about their capacity and plans for scaling support infrastructure to match unit growth; your business advisor can help assess this.
- Interview a broad range of existing franchisees about the current quality, responsiveness, and adequacy of franchisor support.
- An accountant's review of the franchisor's financials in Item 21 can help assess if they have the resources to support ongoing growth.
New/Unproven Franchise System
High Risk
Explanation
The franchisor is a new and unproven system, having been formed in January 2021 and beginning to offer franchises in February 2021. The FDD explicitly lists "Short Operating History" as a special risk. Investing in a young system carries higher risk due to the lack of a long-term track record for profitability, brand recognition, and operational support. The business model's sustainability has not yet been proven over an extended period.
Potential Mitigations
- Conduct extensive due diligence on the founders' and management's experience in both the wellness industry and franchising with your business advisor.
- Speaking with the earliest franchisees from the Item 20 list is critical to understand their experiences and the franchisor's performance.
- Your attorney may be able to negotiate more favorable terms, such as enhanced support guarantees, to compensate for the higher risk.
Possible Fad Business
Medium Risk
Explanation
The business operates in the lymphatic-based body sculpting and wellness sector. This industry can be influenced by evolving consumer trends and beauty standards. While currently popular, there is a potential risk that the specific services offered could be part of a short-term trend rather than a segment with sustained, long-term consumer demand. You should evaluate if the business model is adaptable to future market shifts beyond current trends.
Potential Mitigations
- Assess the long-term market demand for this specific type of wellness service independently with your business advisor.
- Evaluate the franchisor's plans for innovation, research, and development to ensure the service offerings remain relevant.
- Consider the business model's resilience to economic downturns or shifts in consumer wellness priorities with your financial advisor.
Inexperienced Management
Medium Risk
Explanation
Item 2 indicates the management team has experience in various business ventures and in roles at other franchise concepts like Tru Fusion. However, their collective experience in managing this specific franchise system from its inception is relatively short, beginning in 2021. The success of the support systems, training, and overall strategy is still being established. A newer management team may be learning and refining processes, which could present challenges for early franchisees.
Potential Mitigations
- Thoroughly vet the management team's specific background and relevant experience in both the wellness industry and in scaling a franchise system with a business advisor.
- Speak extensively with existing franchisees about the quality of support, system maturity, and management's responsiveness and expertise.
- In your discussions with the franchisor, inquire about the strategic lessons they have learned since starting the franchise.
Private Equity Ownership
Low Risk
Explanation
This specific risk was not identified. The FDD does not indicate that The Tox is owned or controlled by a private equity firm. The franchisor appears to be operated by its founders. However, it is important to be aware that the franchise agreement allows the franchisor to sell or assign its rights to any other entity, which could include a private equity firm in the future, without your consent.
Potential Mitigations
- It is wise for your attorney to review the assignment clause in the franchise agreement to understand the implications if the system is sold in the future.
- A business advisor can help you research the background of the current ownership to confirm their long-term vision for the brand.
- When reviewing future FDDs, your accountant can help you check for any changes in ownership structure.
Non-Disclosure of Parent Company
Medium Risk
Explanation
Item 1 discloses a parent company, The Tox Franchise Holdings Corporation. The FDD includes the financial statements for the franchisor entity, The Tox Franchising Group, LLC, but does not include financial statements for the parent. The franchisor's financials show a net loss and member's deficit. Without financial statements for the parent, it may be difficult to fully assess the overall financial strength backing the franchise system or determine if the parent has the resources to support the franchisor if needed.
Potential Mitigations
- Your accountant should carefully analyze the franchisor's financials and note the lack of information on the parent company.
- It is advisable for your attorney to inquire about the role of the parent company and whether it provides any financial guarantees for the franchisor's obligations.
- A business advisor can help research the parent company to understand its history and other business interests.
Predecessor History Issues
Low Risk
Explanation
This specific risk was not identified. Item 1 of the FDD does not disclose any predecessor entities from which The Tox Franchising Group, LLC acquired its assets or that previously offered franchises for this system. The franchisor entity appears to have started the business from its inception. Therefore, there are no concerns about undisclosed negative history from a predecessor.
Potential Mitigations
- Your attorney can confirm the corporate history outlined in Item 1 during the due diligence process.
- Engaging a business advisor to research the brand's origin can provide additional comfort regarding its history.
- An accountant's review of the financial statements can help verify the timeline of the company's formation and operations.
Pattern of Litigation
Low Risk
Explanation
This specific risk was not identified. Item 3 of the FDD states, "No litigation is required to be disclosed in this Item." This indicates there is no recent material litigation involving the franchisor, its predecessors, or its management that would require disclosure under federal franchise rules. This lack of significant legal disputes is a positive indicator, though it is not a guarantee of future performance or a problem-free relationship.
Potential Mitigations
- Your attorney can conduct independent searches for litigation that may not have met the criteria for disclosure in Item 3.
- Speaking with current and former franchisees is a valuable way to learn about any disputes that did not escalate to formal litigation.
- It is recommended that a business advisor help you maintain awareness of the franchisor's legal standing throughout the relationship.
Disclosure & Representation Risks
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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Financial & Fee Risks
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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Legal & Contract Risks
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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Territory & Competition Risks
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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Regulatory & Compliance Risks
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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Franchisor Support Risks
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.
Operational Control Risks
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.
Term & Exit Risks
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.
Miscellaneous Risks
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.
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