Not sure if Trapped 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
Trapped Logo

Trapped

Trapped US Franchise Inc.
https://www.trapped.com
1-905-940-6500
614 N. DuPont Hwy, Suite 210, Dover, DE 19901

How much does Trapped cost?

Initial Investment Range

$538,400 to $958,300

Franchise Fee

$155,000 to $285,000

The franchise being offered is to establish and operate a Trapped escape room business.

Enjoy our partial free risk analysis below

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

Trapped February 14, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: August 19, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
4
1
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The FDD explicitly warns that the franchisor's financial condition calls its ability to provide support into question. Financial statements in Exhibit D show Trapped US Franchise, Inc. (Trapped US) is a new entity, formed in July 2024 with minimal capital and no operating history. This financial weakness creates a significant risk that Trapped US may rely on your initial fees to fund its own operations, potentially impacting its long-term viability and support capabilities.

Potential Mitigations

  • An experienced franchise accountant should thoroughly analyze the franchisor's balance sheet and the financials of any guaranteeing parent company.
  • Your attorney should investigate if any financial assurances, such as a performance bond or escrow of your initial fees, are required by the state.
  • Discussing the company's capitalization and funding plans directly with the franchisor's management could provide additional insight for you and your business advisor.
Citations: FDD Page 5, Item 1, Item 21, FDD Exhibit D

High Franchisee Turnover

Low Risk

Explanation

This risk was not identified, as Trapped US has not yet established any franchises in the United States and therefore has no franchisee turnover history. However, it's crucial to understand that high turnover in a franchise system can signal systemic problems, such as a lack of profitability or poor franchisor support. The system's health in Canada should be investigated.

Potential Mitigations

  • Scrutinizing the Item 20 tables in future FDDs will be a critical step for assessing system health once franchising begins; an accountant can help analyze the data.
  • It is advisable to contact a significant number of the Canadian franchisees listed in Exhibit C to inquire about their experiences and satisfaction.
  • Engaging a business advisor to help you monitor system growth and turnover rates over time can provide valuable insights.
Citations: Not applicable

Rapid System Growth

Low Risk

Explanation

This risk is not present, as the franchise system has not yet begun selling franchises or opening outlets in the United States. While rapid growth is not currently a factor, it is a potential future risk. A franchisor expanding too quickly can strain its ability to provide adequate training and support to all franchisees.

Potential Mitigations

  • Should the system begin to grow, your business advisor can help you evaluate if the franchisor's support infrastructure is scaling appropriately.
  • Ongoing conversations with other franchisees would provide insight into whether support levels are diminishing as the system expands.
  • Your accountant can review future financial statements to see if the franchisor is reinvesting in support systems during growth phases.
Citations: Not applicable

New/Unproven Franchise System

High Risk

Explanation

The FDD explicitly warns that this is a riskier investment due to the franchisor's short operating history. Trapped US was formed in July 2024 and has no prior franchising experience in the United States. While an affiliate has experience in Canada, you will be one of the first US franchisees. This increases risks related to unproven support systems, minimal brand recognition, and potential operational challenges.

Potential Mitigations

  • Conducting extensive due diligence on the Canadian affiliate's performance and franchisee satisfaction is critical; your attorney can help you frame questions for Canadian franchisees.
  • A business advisor can help you assess the franchisor's business plan and support infrastructure for the US market.
  • Consider asking your attorney to negotiate for more favorable terms, such as reduced initial fees or royalties, to compensate for the higher risk.
Citations: FDD Page 5, Item 1, Item 20, Item 21

Possible Fad Business

Medium Risk

Explanation

The FDD describes the market for escape room experiences as "still developing." While popular, concepts tied to entertainment trends can face risks if consumer preferences shift. Your long-term success may depend on the enduring appeal of escape rooms and the franchisor's ability to innovate with new themes and experiences. The franchise agreement binds you for 10 years, which could outlast a potential trend.

Potential Mitigations

  • It would be prudent to conduct independent market research with a business advisor to assess the long-term demand for escape rooms in your area.
  • Question the franchisor on their plans for game development, innovation, and adapting to changing entertainment trends.
  • Discussing the business model's resilience to economic shifts and changing tastes with a financial advisor is recommended.
Citations: Item 1

Inexperienced Management

High Risk

Explanation

While the management team has experience operating and franchising in Canada, Item 2 indicates they lack direct experience franchising within the complex US regulatory environment. This presents a risk, as navigating US-specific franchise laws, supply chains, and market conditions is different. The success of the US launch will depend on their ability to adapt their Canadian experience effectively.

Potential Mitigations

  • Inquiring about any US-based franchise professionals or consultants they have hired to guide their US expansion can be a valuable topic for you and your attorney.
  • A discussion with your business advisor about the specific challenges of a Canadian brand entering the US market would be insightful.
  • Speaking with the Canadian franchisees listed in Exhibit C can provide information on management's general competence and support style.
Citations: Item 1, Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD. The franchisor does not appear to be owned by a private equity firm. However, as a franchisee, it is good to be aware that private equity ownership can sometimes introduce a focus on short-term returns, which may not always align with the long-term health of franchisees' businesses.

Potential Mitigations

  • Your attorney can help you review the "Assignment" clause in the Franchise Agreement to understand your rights if the system is sold in the future.
  • A business advisor can help research the ownership structure of any company you consider investing in.
  • Regularly communicating with a franchisee association, if one forms, can provide updates on any changes in ownership.
Citations: Not applicable

Non-Disclosure of Parent Company

High Risk

Explanation

The FDD discloses a Canadian parent and affiliate, but does not include their financial statements. Because the US franchisor is a newly formed entity with no operating history and minimal capital, the financial health of the experienced Canadian affiliate is critical to your risk assessment. Without these financials, you cannot fully evaluate the stability and resources of the organization that provides the underlying system and support.

Potential Mitigations

  • A direct request should be made for the financial statements of the Canadian affiliate, REG Entertainment Inc.; your attorney can draft this request.
  • An accountant's review of those financials, if provided, would be essential to gauge the overall health of the enterprise backing your franchise.
  • Proceeding without this information increases your investment risk and should be a significant factor in your decision, as discussed with your financial advisor.
Citations: Item 1, Item 21

Predecessor History Issues

Low Risk

Explanation

This specific risk was not identified, as the FDD states that Trapped US does not have any legal predecessors. Understanding a predecessor's history is important because it can reveal inherited issues with a franchise system, such as past litigation or high franchisee turnover, which could impact a new owner.

Potential Mitigations

  • Your attorney can confirm the definition of a predecessor and ensure the franchisor's disclosure is accurate.
  • Even without a legal predecessor, researching the history of the brand and its Canadian affiliate with a business advisor is a key part of due diligence.
  • Asking long-term Canadian franchisees about the history of the system can uncover relevant information.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

The FDD discloses no history of litigation for the US franchisor, which is expected for a new entity. A pattern of lawsuits, particularly those initiated by franchisees alleging fraud or misrepresentation, can be a serious warning sign about a franchisor’s practices and the health of the system.

Potential Mitigations

  • It is advisable to periodically review public records or consult with an attorney for any litigation that may arise as the system grows.
  • Speaking with Canadian franchisees may reveal any history of disputes or litigation within the Canadian system.
  • A business advisor can help you monitor the franchisor's litigation history in future FDDs.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
3
0
12

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
7
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.

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
3
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.

6

Regulatory & Compliance Risks

Total: 10
4
5
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
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.

8

Operational Control Risks

Total: 11
5
5
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
7
7
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.

10

Miscellaneous Risks

Total: 1
1
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.