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How much does Upgrade Labs cost?
Initial Investment Range
$751,500 to $1,525,500
Franchise Fee
$130,000 to $310,000
A distinctive business that operates under the UPGRADELABS mark and features certain products and non-invasive treatments such as adaptive cardio, neurofeedback, pulsed electromagnetic field therapy, and many other technologies intended to supercharge clients’ bodies, minds and spirits provided to clients in a spa-like setting.
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Upgrade Labs May 19, 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The financial statements for Upgrade Labs Franchise, Inc. (Upgrade Labs) show significant signs of financial distress. As of December 31, 2024, the company had a net worth deficit of over $3.3 million and an operating loss of nearly $1.2 million for the year. The franchisor explicitly flags its own financial condition as a special risk, calling into question its ability to provide services and support. This financial weakness poses a considerable risk to its long-term viability and support capabilities.
Potential Mitigations
- Your accountant must conduct a thorough analysis of the franchisor's audited financial statements, including all footnotes and cash flow statements.
- A business advisor can help you assess if the franchisor has sufficient capital and a viable plan to achieve profitability and support the system.
- Consulting a franchise attorney is crucial to understand any state-mandated financial assurances, like fee deferrals, and their implications.
High Franchisee Turnover
High Risk
Explanation
Item 20 data from 2024 shows one franchised center ceased operations. Given the very small number of operating franchises (starting the year with two and ending with five), this represents a high percentage of churn. Additionally, the franchisor closed its only remaining company-owned outlet in 2024, leaving no corporate-operated model for you to reference. This pattern may indicate potential issues with the business model's viability or franchisee support.
Potential Mitigations
- It is critical to contact former franchisees listed in the FDD to understand their reasons for leaving the system; a business advisor can help you prepare questions.
- Your accountant should analyze the turnover rate in the context of the system's small size and rapid growth projections.
- Discussing the specific circumstances behind the unit closures with the franchisor should be a priority, with guidance from your attorney.
Rapid System Growth
High Risk
Explanation
Item 20 shows the system grew from two to five franchised units in 2024, with projections for more growth. However, the financial statements in Item 21 reveal significant operating losses and a large net worth deficit. This combination suggests that Upgrade Labs may be expanding faster than its financial and support structures can sustain, potentially leading to inadequate franchisee support and quality control issues as the system grows.
Potential Mitigations
- A business advisor can help you question the franchisor about their specific plans to scale support infrastructure to match unit growth.
- Speaking with franchisees who opened at different times can provide insight into whether the quality of support has changed as the system expanded.
- Your accountant should review the franchisor's financials to assess whether they have the capital resources required to adequately support this planned growth.
New/Unproven Franchise System
High Risk
Explanation
Upgrade Labs began franchising in July 2021, making it a very new and unproven system. The FDD explicitly highlights its "Short Operating History" as a special risk, noting that this makes the investment inherently riskier than a franchise with a longer history. An emerging system has a less-established brand, and its operational and support systems are not as time-tested, which could impact your business's success.
Potential Mitigations
- A business advisor can help you conduct extensive due diligence on the founders' and management's specific experience in this industry and in franchising.
- Contacting the earliest franchisees is crucial to understand the evolution of the system and the franchisor's ability to support its partners.
- An accountant should help you develop conservative financial projections, given the lack of a long-term performance history for the franchise.
Possible Fad Business
Medium Risk
Explanation
The business centers on "biohacking technology services," a new and developing market. While potentially innovative, the long-term, mainstream consumer demand for these specialized services is not yet established. There is a risk that the concept could be a trend with limited long-term viability. If consumer interest wanes, your business could struggle, even though your contractual obligations to Upgrade Labs would continue.
Potential Mitigations
- A business advisor can assist you in conducting independent market research to assess the long-term sustainability and demand for "biohacking" services.
- Questioning the franchisor about their research and development plans for evolving the service offerings is important for gauging adaptability.
- You should carefully consider the business's resilience to economic shifts and changing consumer wellness trends with your financial advisor.
Inexperienced Management
Medium Risk
Explanation
While some executives have experience in franchising or related industries, several key personnel listed in Item 2 have joined Upgrade Labs very recently (e.g., President in September 2024, Senior Director of Design in October 2024). This recent turnover in leadership roles for a new franchise system could suggest instability or a lack of long-term, cohesive management experience within the specific company, which can impact strategic direction and support quality.
Potential Mitigations
- In your discussions with the franchisor, inquire about the reasons for recent changes in key management positions, with guidance from a business advisor.
- Speaking with current franchisees can provide insight into the effectiveness and stability of the management team and the support they provide.
- A franchise attorney can help you assess whether the collective experience of the current team is sufficient for a young, growing franchise system.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. Private equity ownership can sometimes lead to a focus on short-term profitability over the long-term health of franchisees. It is important to know who owns the franchisor and what their strategic goals are, as a sale of the company to a new owner could significantly change the relationship.
Potential Mitigations
- A business advisor can help you research the ownership structure of the franchisor and the track record of any parent or investment company involved.
- Asking your attorney to review the assignment clause in the Franchise Agreement is important to understand what happens if the franchisor is sold.
- Discuss any known ownership changes with existing franchisees to gauge the impact on the system.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The franchisor discloses its parent company, Upgrade Labs Holdings, Inc., and several affiliates. However, financial statements for the parent company are not provided. Given the franchisor's significant net worth deficit, the financial health of the parent, which is its sole shareholder, is a material fact for assessing the overall stability and backing of the franchise system. The absence of this information creates a gap in the due diligence process.
Potential Mitigations
- Your accountant should carefully analyze the extensive "Due to related parties" liability on the franchisor's balance sheet to understand the financial dependency.
- It is advisable to ask the franchisor for financial statements of the parent company, given the franchisor's financial condition.
- Your attorney can advise on the legal requirements for parent company financial disclosure under these circumstances.
Predecessor History Issues
Medium Risk
Explanation
Item 4 discloses that an affiliate, Upgrade Labs, Inc., filed for Chapter 11 bankruptcy in 2020. While this was not the franchisor entity itself, the shared branding and affiliation with a company that underwent bankruptcy proceedings is a historical risk factor. This history could impact brand perception or indicate underlying challenges within the broader business ecosystem associated with the founder and brand name.
Potential Mitigations
- A business advisor can help you investigate the circumstances surrounding the affiliate's bankruptcy to understand its cause and resolution.
- Asking your attorney to clarify the current legal and financial relationship between the franchisor and the post-bankruptcy affiliate is important.
- You should discuss any potential impact of this history on supplier or landlord negotiations with your professional advisors.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 states that no litigation must be disclosed. A pattern of lawsuits, especially those initiated by franchisees alleging fraud or misrepresentation, can be a major red flag indicating systemic problems. It is always important to review Item 3 carefully for any disclosed legal troubles.
Potential Mitigations
- Your attorney should always perform a thorough review of Item 3 for any disclosed litigation.
- A business advisor can help you research public records for any litigation that may not be disclosed in the FDD.
- Speaking with former franchisees can often reveal past disputes, even if they didn't result in litigation disclosed in Item 3.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
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.