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How much does United Country Real Estate cost?
Initial Investment Range
$10,500 to $44,895
Franchise Fee
$10,020 to $22,745
A franchisee will conduct a real estate brokerage business or auction business at a single location as identified in the Franchise Agreement (the “Broker Office”) using the United Country Real Estate Licensed Marks.
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United Country Real Estate May 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The financial statements for United Country Real Estate, LLC (UC) show significant and recurring net losses, negative working capital, and a large negative members' deficit (equity). An auditor's note discusses 'Emphasis of Matter' regarding related-party receivables, and a management note discusses going concern risks. The FDD's 'Special Risks' page explicitly warns that the franchisor's financial condition calls its ability to provide support into question. This suggests a significant risk to the franchisor's stability and long-term viability.
Potential Mitigations
- Your accountant must conduct an in-depth review of the audited financials, including all footnotes and the auditor's report, to assess the company's solvency.
- A business advisor should help you evaluate the franchisor's dependency on its parent company for funding and its ability to continue providing support.
- Legal counsel should review any state-mandated financial assurances, such as fee deferrals, and explain their practical protections for you.
High Franchisee Turnover
High Risk
Explanation
The franchisee exit rate in 2022 was approximately 10.9% based on data in Item 20, Table 3 (44 total terminations, non-renewals, and other cessations out of 402 outlets at the start of the year). The California state addendum explicitly flags this as a special risk because the rate exceeds 10%. High turnover can be an indicator of systemic issues, such as franchisee dissatisfaction, lack of profitability, or problems with the business model or franchisor support.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Item 20 to understand their reasons for leaving the system.
- Your business advisor can help you analyze the turnover trends over the past three years to assess if there are recurring issues.
- Asking the franchisor for their explanation of the high turnover rate can provide additional context for discussion with your attorney.
Rapid System Growth
Low Risk
Explanation
This specific risk was not identified. The franchise system size has been relatively stable, with a slight decrease over the past three years rather than rapid growth. However, any franchise system's growth must be supported by adequate infrastructure. A franchisor expanding too quickly without scaling its support staff and systems can lead to a decline in the quality of service provided to franchisees, affecting training, marketing, and operational assistance, which you pay for through royalties.
Potential Mitigations
- A business advisor can help you analyze the ratio of support staff to the number of franchisees to gauge the franchisor's support capacity.
- Engaging with both new and established franchisees can provide insight into whether the quality of support has remained consistent over time.
- Reviewing the franchisor's financial statements with an accountant can help determine if they are investing sufficiently in support infrastructure.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified. United Country traces its roots to 1925 and has been franchising for many years, indicating it is not a new or unproven system. However, prospective franchisees should always evaluate the franchisor's experience and track record. An emerging franchisor may present higher risks due to unrefined systems, minimal brand recognition, and a lack of history in supporting franchisees, which can impact your potential for success.
Potential Mitigations
- Your business advisor should help you investigate the history and track record of any franchise system you consider.
- An accountant's review of the financial statements can reveal if a seemingly established company is financially stable.
- It is wise to ask your attorney to review the management team's experience as detailed in Item 2.
Possible Fad Business
Low Risk
Explanation
This risk is not prominent. The business is real estate brokerage, a long-established industry. While the market is cyclical, the core service is not typically considered a fad. However, any business can be affected by changing trends. A franchisee could be at risk if a franchisor's model is tied to a temporary market niche without a plan to adapt. This could leave you with a long-term contract for a business with dwindling demand.
Potential Mitigations
- A business advisor can help you research the long-term stability and prospects of the specific real estate niches the franchisor targets.
- Assessing the franchisor's commitment to innovation and adaptation to market changes is a prudent step.
- Creating a business plan with your accountant that accounts for market cycles is essential for long-term viability.
Inexperienced Management
Low Risk
Explanation
This risk was not identified. The executives listed in Item 2 appear to have extensive experience within the company, its predecessors, and the real estate industry. However, it is always important to assess management's capabilities. Inexperienced leadership could lead to poor strategic decisions, inadequate franchisee support, and a failure to adapt to market changes, which directly impacts your investment and potential for success.
Potential Mitigations
- A thorough review of the professional backgrounds of the key executives listed in Item 2 is a worthwhile exercise with your business advisor.
- Speaking with current franchisees can provide valuable insight into their confidence in the current management team's leadership and strategic direction.
- Your attorney can help you formulate questions for the franchisor about their management philosophy and long-term vision.
Private Equity Ownership
Medium Risk
Explanation
UC is majority-owned by McCarthy Capital Fund V, a private equity firm. This ownership structure may create a focus on short-term profitability and a timely exit for the investors, which could potentially conflict with the long-term health of the franchise system and individual franchisees. Decisions regarding fees, support levels, and system changes might be influenced by the need to maximize returns for the fund's investors rather than for the benefit of franchisees.
Potential Mitigations
- A business advisor can help you research the private equity firm's reputation and its track record with other franchise brands.
- Discussing any changes in franchisor support or culture since the acquisition with long-term franchisees can provide valuable insight.
- Your attorney should analyze the franchisor's right to sell the system and what protections, if any, you have under a new owner.
Non-Disclosure of Parent Company
Medium Risk
Explanation
This specific risk was not identified. The FDD discloses the parent companies, Five D I, LLC and United Real Estate Holdings, LLC. However, financial statements for these parent entities are not provided. The franchisor's own financials are weak, and its ability to meet obligations appears to depend on funding from its parent. The lack of parent financials makes it difficult to fully assess the ultimate financial strength backing your franchise.
Potential Mitigations
- Your accountant should carefully review the provided financials and note the dependency on the parent company.
- It is important to ask the franchisor about the financial health of the parent company and its commitment to supporting the franchise system.
- Your attorney can advise on the legal implications of a franchisor that may not be independently financially viable.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified. The franchisor discloses its predecessors, including United Country Real Estate, Inc. and United National Franchise Company, Inc. Item 3 also discloses a settled lawsuit involving a predecessor. It's crucial to understand the history of a franchise system, as unresolved issues or a negative track record under previous ownership can sometimes carry over and affect the current operation and brand reputation.
Potential Mitigations
- A review of all information regarding predecessors in Items 1, 3, and 4 with your attorney is a prudent step.
- Engaging with long-tenured franchisees who operated under previous ownership can provide valuable historical context.
- A business advisor can help you research the public reputation of any predecessor entities.
Pattern of Litigation
High Risk
Explanation
The franchisor and its parent/affiliates are defendants in multiple ongoing, nationwide class-action lawsuits (e.g., Gibson, Umpa, Batton) related to real estate commission structures. These lawsuits allege anticompetitive behavior and could fundamentally disrupt the industry's traditional business model. The franchisor explicitly states in the FDD that they expect franchisees to be sued in similar 'copycat' cases. This represents a significant, direct legal risk and potential liability for your business.
Potential Mitigations
- Your attorney must review the litigation disclosed in Item 3 and explain the potential impact these industry-wide lawsuits could have on your business.
- Discussing potential impacts on commission structures and your business model with a real estate business advisor is crucial.
- An insurance broker should be consulted to ensure you understand the scope and limitations of your Errors & Omissions coverage for such claims.
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
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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
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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
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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
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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
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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