Tire Pros Francorp
Initial Investment Range
$111,475 to $503,725
Franchise Fee
$7,000 to $27,000
This Disclosure Document is for the offer of a new franchise for a TIRE PROS Center or for the conversion of an existing retail tire sales and service store to a TIRE PROS Center.
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Tire Pros Francorp 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
Asphalt Tire Pros Francorp, LLC (TPF) is a new entity formed after its parent's recent Chapter 11 bankruptcy. The FDD includes an explicit warning that its financial condition “calls into question the franchisor's financial ability to provide services and support to you.” Audited financials in Exhibit F show significant net losses and include a “going concern” qualification from the auditor, indicating substantial doubt about its ability to continue operating. This poses a critical risk to its support capabilities.
Potential Mitigations
- A franchise accountant must thoroughly analyze the audited financial statements, including the 'going concern' note and bankruptcy disclosures.
- Your attorney should investigate any financial assurances, such as bonds or escrow accounts, that may have been required by state regulators due to this instability.
- Discuss the specific plans management has to address these financial issues with your business advisor before making any commitment.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a very high rate of franchisee exits. In 2024, the system experienced 103 terminations and 6 ceased operations, totaling 109 exits from a starting base of 644 franchised outlets. This represents an approximate annual churn rate of 17%. Such a high turnover rate is a significant red flag, potentially indicating systemic issues such as franchisee unprofitability, dissatisfaction with the system, or lack of support.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Exhibit H to understand their reasons for leaving the system.
- Your accountant should analyze the turnover data for all three years presented to identify any persistent negative trends.
- A business advisor can help you assess whether this high turnover is a symptom of broader problems within the business model or industry.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. Rapid growth can strain a franchisor's ability to provide support. In this case, the system has shrunk, so the risk of overstretched resources due to rapid expansion is not the primary concern. The main issue is the high number of exits, which is addressed in the 'High Franchisee Turnover' risk.
Potential Mitigations
- A business advisor can help you evaluate the franchisor's current support infrastructure relative to the system's size and needs.
- Analyzing the franchisor's financial statements with an accountant can reveal if resources are allocated to support or primarily to franchise sales.
- Your attorney should review the support obligations outlined in the franchise agreement to ensure they are specific and enforceable.
New/Unproven Franchise System
High Risk
Explanation
TPF is a new legal entity formed in February 2025 following its predecessor parent's Chapter 11 bankruptcy. While the Tire Pros brand has history, the new franchisor entity itself is unproven and operates under the shadow of a recent bankruptcy and a 'going concern' warning from its auditors. This presents significant risks regarding the new management's ability to stabilize the system and provide effective, long-term support to you.
Potential Mitigations
- Thorough due diligence on the new ownership and management team's experience in both franchising and the tire industry is essential; a business advisor can assist.
- An accountant must review the financial statements to assess the capitalization and viability of the new entity.
- Contacting franchisees who have operated through the recent bankruptcy and ownership change can provide crucial insight into the transition.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The retail tire and automotive service industry is a long-established and essential market, not typically considered a fad. The business model is based on consistent consumer demand for vehicle maintenance and repair. Therefore, the risk of the entire business concept becoming obsolete due to shifting consumer trends appears low.
Potential Mitigations
- A business advisor can help you research the long-term stability and trends within the automotive repair and tire industry.
- Evaluate the franchisor's plans for adapting to industry changes, such as the rise of electric vehicles, with your business advisor.
- An accountant can help you assess the business model's resilience to economic downturns.
Inexperienced Management
Medium Risk
Explanation
Item 2 shows that the new franchisor's executive team was largely appointed in March 2025, concurrent with the emergence from its parent's bankruptcy. While some individuals have prior industry experience, they are new to their roles at this specific entity, which itself is new. This newness, combined with the recent bankruptcy, creates risk regarding the management team's ability to effectively lead the system through its current challenges.
Potential Mitigations
- Your business advisor should help you thoroughly research the background and track record of the new executive team members.
- In discussions with current franchisees, specifically inquire about their confidence in the new leadership and the quality of support since the change.
- It is important to understand the new management's strategic vision for stabilizing and growing the brand post-bankruptcy.
Private Equity Ownership
High Risk
Explanation
The franchisor is newly owned by Asphalt Buyer II, LLC, an entity formed by the lenders of the previous parent company as part of a Chapter 11 bankruptcy sale. This is similar in structure to a private equity acquisition, where the owners' primary goal may be to recover their investment. This could lead to decisions that prioritize short-term financial returns over the long-term health of franchisees, creating uncertainty about future support levels and fee structures.
Potential Mitigations
- With your business advisor, investigate the new ownership group's background and their stated long-term plans for the Tire Pros brand.
- Your attorney should carefully review the franchisor's right to sell or assign the franchise agreement and its potential impact on you.
- Discuss with current franchisees any changes in system direction or support they have experienced under the new ownership.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 clearly identifies the parent company as Asphalt Buyer II, LLC, and the ultimate parent's predecessor as American Tire Distributors, Inc. The FDD also includes audited financial statements for the franchisor entity itself. The ownership structure and its recent changes are disclosed, allowing for an assessment of the associated risks.
Potential Mitigations
- It is good practice to have your attorney verify the corporate structure and the relationship between the franchisor and any parent companies.
- Your accountant should review the provided financials to assess the franchisor's stability, even with parent disclosures.
- In cases where a parent company guarantees obligations, your attorney should ensure the parent's financial statements are also provided and reviewed.
Predecessor History Issues
Low Risk
Explanation
Item 1 identifies Tire Pros Francorp, LLC as the predecessor, and Item 4 discloses this entity's involvement in two separate Chapter 11 bankruptcy proceedings (2018 and 2024). The disclosures surrounding the bankruptcies and the transfer of franchise agreements to the new entity appear to be present. The risk lies not in non-disclosure, but in the negative history itself, which is covered under other stability-related risks.
Potential Mitigations
- A franchise attorney should carefully review all disclosures related to predecessors to ensure you understand the system's full history.
- Investigating the business history and reputation of any predecessor entities can provide valuable context; a business advisor can assist.
- When speaking with long-term franchisees, ask about their experience operating under any predecessor franchisors.
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.” While the predecessor parent company has undergone bankruptcy, this item does not disclose a pattern of litigation initiated by or against franchisees alleging fraud, misrepresentation, or other claims that would indicate systemic issues in the franchise relationship itself.
Potential Mitigations
- It is wise to have your attorney conduct an independent search for litigation involving the franchisor or its principals, as not all cases may meet the FDD disclosure threshold.
- Discussing any past disputes with former franchisees can provide insights that are not available in the FDD.
- Your attorney can help you understand what types of litigation are considered material and must be disclosed.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
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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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